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Outpatient Growth Must Keep Pace with Population

By Jacqueline Fellows  
   April 22, 2013

This article appears in the April 2013 issue of HealthLeaders magazine.

As healthcare leaders continue to face reimbursement challenges, the No. 1 strategy they are embracing to fuel financial growth is expansion of outpatient services. This approach—cited by 69% of hospital leaders and 66% of health system leaders in the HealthLeaders Media Industry Survey 2013—presents attractive opportunities for organizations large and small, especially in light of anticipated growth in patient volume as millions of Americans become insured under the Patient Protection and Affordable Care Act.

In the Houston area, strong population growth also has been a factor in outpatient services planning.

One part of the strategy is basic, says Rod Brace, chief regional operations officer for Memorial Hermann Health System, 12-hospital, 3,514-licensed-bed nonprofit. "Our approach at Memorial Hermann has been to grow with Houston."

That's easier said than done considering the massive increase in population and economic activity in the port city known for its oil and gas industry.

Patrick Jankowski, vice president of research for the Greater Houston Partnership, the city's main business and economic organization, says there are an additional 1.3 million more people living in Houston since 2000. The city also has seen a rapid rise in jobs recently.

"The recession bottomed out for us in February of 2010. Starting then, the region started adding jobs and we've added jobs every month since," he says.

Dots on a map and beyond
Memorial Hermann says it started planning for growth 10 years ago, but back then it was cheaper to "put a dot on the map" with ambulatory care sites. Now, with Houston's map nearly filled in with 110 of the organization's ambulatory sites, Memorial Hermann is introducing a new concept for patient care.

The massive system recently opened its first all-in-one service site called Convenient Care Center Summer Creek, a pilot that is meant to be a one-stop shop for patients in the growing Summer Creek suburb on the northeast side of Houston. The $7.4 million medical center opened the doors to its 30,000-square-foot facility in January. It includes nearly everything except hospital beds. There's a 24-hour emergency room, primary care physicians, specialty physicians, imaging, physical therapy, and other related services.

"The goal is to make it more convenient; it's to reduce some of the fragmented nature of healthcare," says Brace. "In the past, I had to go to the imaging center, then go for orthopedic surgery, then drive over here for my PT. And so [at] the Convenient Care Center site, you go in, you're triaged. If it's an emergency, you go to the emergency room, you pay an emergency room bill; if it's not, then we take walk-ins over on the primary care side, and you pay a primary care bill. It takes that guesswork out."

The all-in-one service site also gives the system room for potential consolidation. If all goes as planned, an additional eight to 10 CCCs will be added to Memorial Hermann's roster over the next three to five years.

"The idea is that in key locations throughout the greater Houston area, we can start to put these [centers offering] the imaging, the ambulatory surgery, all the elements of ambulatory services. A lot of these 110 sites are in leased space. We think there will be an opportunity through population management where you have a greater ability to have a smaller network serve a larger population that we can—over time, as our leases are up in some of these locations—start to aggregate those sites to a more centrally driven site that has all the services in one location."

Memorial Hermann isn't abandoning its physician offices and other stand-alone sites entirely. Rather, Brace says the health system is redefining its targets to prepare for the paradigm shift in healthcare reimbursement.

"If you take a population approach, as opposed to just building facilities in tight little circles where you already have existing facilities, then that prepares us for moving into risk-based arrangements with payers or population health management arrangements as well," says Brace.

To measure how well it is keeping pace with population, Memorial Hermann will monitor its market share, which Brace says is approximately 30%. Any increase in population will hopefully mirror an uptick, explains Brace.

"It's trying to grow at the same market share with that growth that's happening," says Brace.

That market share increase is likely to be incremental—Jankowski says estimates show Houston's population growth is projected to be 1.8% annually through 2040. But when the population is 6 million, even a small increase means a large raw number. Brace says they'll also be looking at patient volume, patient experience, and health outcomes at the CCCs.

Memorial Hermann's outpatient growth strategy also includes growing its physician network of primary care physicians. Christopher Lloyd, CEO of MHMD–Memorial Hermann Physician Network, one of the largest independent physician organizations in Texas, says growth means repositioning primary care through patient-centered medical homes.

"Outpatient to us doesn't mean just bricks and mortar; that's a component of it, and being in the right place with a new kind of array of services—Convenient Care Centers," he says. "But the management of any of those populations has to be married up to a care delivery network of primary care physicians that need to be organized in different ways, too, which is around patient-centered medical homes."

MHMD's 3,900 physician members include more than 2,000 who participate in its clinical integration program; more than 1,700 specialists, and more than 500 primary care physicians. But Houston's physicians mirror a Texas trend of doctors who retain their independence from hospitals. That's somewhat of a challenge, says Lloyd, but he also adds "just because physicians here are not rushing to employment does not mean they're not rushing to engagement."

Proof of physician engagement, says Lloyd, is in the numbers. More than 200 independent, clinically integrated primary care physicians signed on to Memorial Hermann's PCMH created just a year ago, Advanced Primary Care Practices.

"That's an informal way of sort of getting a litmus test on whether or not we are doing the right thing and whether or not physicians want to be engaged and involved, and whether or not they want to be involved in partnership with a hospital system and an organized physician network," says Lloyd.

Lloyd says Advanced Primary Care Practices is aiming to include over 300 primary care physicians by October.

Moving closer to try to serve patients where they live isn't new. And it isn't just for large, well-financed, and well-known health systems.

Creating new service lines
Winona (Minn.) Health is a nonprofit system with a 60-staffed-bed community hospital, the only hospital in the small town of about 30,000. Leaders there, too, are making plans to meet patients with care closer to home.

One challenge that the organization faces, says Michael Allen, chief financial officer, is that it can't "cherry-pick" the commercial paying customers in the suburbs. "We have to take the entire community as they come."

And despite being the only hospital in town, the Mayo Clinic in Rochester and Gundersen Lutheran Health System in La Crosse are both within driving distance. And all three systems are competing for primary care physicians.

Allen says outpatient care is growing organically with help from Winona Health's "front door" approach.

"What we've built is an integrated system, so the front door to our system is our clinics. If we can get patients through the front door … that puts them in the outpatient setting and, hopefully, we can keep them in the outpatient setting," says Allen.

One challenge to Winona Health is opening up schedules to accommodate patients who want to come through that front door. It's a familiar cry heard from organizations that bring in once-independent primary care physicians and specialists under the umbrella of one system.

"We had 27 different types of patient appointments," he says. "So we couldn't do anything in a standard way … we had all these scheduling rules."

Using Lean management techniques, Allen says, Winona is working on standardizing schedules and also improving the patient flow to associate providers instead of the physician. He says in three years they're aiming to show a 20% increase in patients based on a strategy of involving midlevel providers who can free up the doctors to work on the most complicated cases.

"From a financial perspective, all the payment is built on surgery, lab, x-ray, pharmacy; that's where the gravy is. But, in a population health world going forward and a value-based payment [world], the reasons are going to change. But the premise will be the same because that is the front door. We're trying to think of what's the new front door besides the clinics."

For Winona Health, the new front door may open to another organization entirely. Allen says the system is contemplating a partnership with the local YMCA. The partnership would mimic the one that Clive, Iowa–based Mercy Medical Center has with its local Y for medically integrated services. The partnership with the Y is a natural fit, says Allen, because both organizations aim to keep people healthy. For Winona Health, that also means keeping them in outpatient settings as long as possible.

"We're getting paid if somebody's sick, we're not getting paid if somebody's well—but you have to make that switch somewhere; you have to make the change," says Allen.

The potential Y partnership is part of Winona Health's strategy to introduce a new health and wellness service line, which, Allen says, is still in the planning stages; but with value-based payment systems ahead, organizations must develop more financially feasible ways of caring for patients.

"Some of it will take place outside the four walls, some of it won't. It'll try to address issues outside the four walls, but it's really services and resources dedicated to prevention and health and wellness," he says.

The way the Y partnership could work for a patient is that instead of getting a pill to lose weight, the patient would get a physician's order to see a nutritionist, then a physical activity coordinator. The orders would likely flow through physical therapy for reimbursement. The physical activity would take place at the Y's gym, as well as nutrition services if there is a kitchen set up. The Y would maintain its own identity and continue to operate separately, but nearby. Allen says Winona Health is considering donating a piece of property adjacent to the hospital for the project. He says it's coming at the right time because the local Y needs a new facility.

Allen also says the health and wellness service line would also include services like food and nutrition, health screenings, and other preventive services.

"Occupational health might end up there, because workplace health is a big deal and prevention is a big part of that. We're taking it from concept, and once we have enough things in place, we'll formally put them into a service line."

Allen says he looked at economic models predicting a $900 million increase in healthcare spending in the county over 10 years. In part by adding a new health and wellness service line, he projects Winona Health can reduce spending significantly and potentially attract new revenue through the new service line.

"Our goal," Allen says, "is to take $150 million–$200 million out of that increase. If we can, … you know a $12 million or $15 million investment in a facility is pretty small. That's a tenfold payback."

Allen also says the there's another reason the hospital needs to invest in health and wellness.

"Our mission is to improve the health and well-being of our community. Our mission is not to make money. I have to generate resources to make it pay, but right now, surgery, radiology, lab, those things are paying the bills. We have to start to siphon off a certain amount of investment to start to plug in to what's coming in the future, and it's core to our mission."

Reprint HLR0413-8

 


This article appears in the April 2013 issue of HealthLeaders magazine.

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