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Outpatient Care: Strategic Growth Lives Here

Philip Betbeze, for HealthLeaders Magazine, May 12, 2010
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This strategic thinking, he believes, has to be structured around patient convenience, access, cost, and quality. If Atkinson's comments seem like something more likely to come out of a consumer-based CEO's mouth rather than from someone running a health system, an industry that is not known for being customer-centric, so much the better, he says.

"If any of those components are left out, it's not an appropriate response that will help patients."

A new model for partnership
The medical mall has become a new buzz phrase for the delivery of a multitude of outpatient-focused services. They're not always developed by hospitals or health systems, but the concept is becoming very attractive to hospitals. Dayton, OH-based Kettering Health Network has an interest in 11 of them, totaling more than a million square feet, and has plans to develop at least two more within the next 18 months.

Each is dispersed geographically in the five-hospital system's 10-county market area such that patients need to travel only 10 minutes to get to one of them, says CEO Frank Perez, who adds that the complex ownership arrangement with physicians that Kettering has devised has allowed it to bring modalities, like urinary incontinence specialists and pelvic floor surgeons, that previously didn't exist in the market.

Kettering combines the outpatient expansion strategy with working to achieve significant physician integration through the medical malls. Interestingly, physician LLCs own the buildings, while Kettering owns the land and leases it to the physicians. The health system then leases back space from the physician groups to install specific outpatient modalities, such as imaging and surgical suites, to support not only primary care physicians who maintain offices at the mall, but also to provide support services for the number of specialists who have offices there as well.

Furthermore, Kettering has specialties in the centers that were not present previously in the community, says Fred Manchur, Kettering's president. "That drives surgical volume to the hospital. Previously, we had outmigration to hospitals and facilities in larger cities by patients within the community."

Perez agrees with WakeMed's Atkinson that outpatient services will continue to grow while inpatient may stagnate, meaning that hospitals and health systems that don't pursue a coherent outpatient strategy will struggle to grow volumes and fail to compete financially.

Adds Atkinson: "We're a health system that owns hospitals. In previous times, we'd be the exact opposite, a hospital that owns a health system. For many of us who grew up in hospitals, that's not a natural way to think. It's a transition, but trust me, we've made it."


Philip Betbeze is senior leadership editor with HealthLeaders Media. He can be reached at pbetbeze@healthleadersmedia.com.

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