Outpatient Care Expansion Comes Under Scrutiny
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For outpatient centers to succeed, "you really have to have a very narrow focus, and as long as you do that, you can be very successful," Karlovich says. That's important because "what might look like a solid economic opportunity today, maybe five years from today may not be as solid an economic opportunity. It would be very difficult to say there is one 'broad strategy' in this environment. Each of the outpatient strategies is tied to an area and the geographic needs and competitive marketplace in which they operate.
"It's a very nebulous time in which we are operating," he says. "I think you are going to see people feel their way through the process."
Managing and partnership
For a while, officials of the Baylor Health Care System had been running outpatient programs themselves, but with increased specialization, Baylor has increasingly turned to partnerships to manage outpatient operations.
"The healthcare market is a competitive one, and especially in large urban areas, while we see large growth possibilities in Dallas, so do other systems in the city," says LaVone Arthur, Baylor's vice president of business development. "Opportunities present themselves in different parts of the city. Suddenly, there is an access area where people didn't have convenient healthcare, so you try to get into that market."
A significant partner for Baylor has been United Surgical Partners International, based in Dallas. USPI has ownership interest or operates 190 surgical facilities, with 133 jointly owned with not-for-profit health systems such as Baylor. Baylor has more than 30 joint venture partnerships with USPI and other program managers in ambulatory care settings.
"We were looking for a partner that had an expertise in that modality of care. We look at these relationships with a focused factory concept to harness that expertise that allows us to focus on the acute care that is our greatest expertise," Arthur says. "What they bring to the table is intellectual capital, partnerships, and management expertise," she says of Baylor's various partners "With an outpatient service, you know that there are existing buildings that can be converted to provide outpatient care, so there's a lot of flexibility from a capital standpoint for how you can do it," Arthur says.
In planning for outpatient facilities, James Cavanagh, vice president and CIO of the 610-licensed, 570-staffed-bed St. Joseph's Healthcare System of Paterson, NJ, says hospitals don't have many choices. "There seem to be two approaches to dealing with the notion that business is moving away from the hospital to outpatient settings. One is to ignore that; the other is to be a part of that activity and capture some of the revenue," says Cavanagh.
At St. Joseph's, hospital officials are examining various management approaches to running outpatient facilities, Cavanagh says. "We are looking at partnerships with physicians, or bringing in joint ventures or partnership with outpatient services. This is one of our approaches with imaging centers and a cardiology practice. We are looking at doing ambulatory surgery outpatient in the future. The partnerships are all different. In some cases, there's a management structure with our own service line, or we may outsource management.
"I think it's just the nature of the business that people will peel off the more profitable business and take them to outside settings," he adds. "I think from a hospital's perspective, if you aren't going to be part of that, you are just going to lose revenue, and it's harder and harder for hospitals to survive that way."
This article appears in the January 2012 issue of HealthLeaders magazine.
Joe Cantlupe is a senior editor with HealthLeaders Media Online.
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