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7 Reasons Micro-Hospitals are Poised for Big Growth

By Philip Betbeze  
   June 14, 2017

Health insurers want to shrink costs and get the chain of acuity away from traditional hospitals. Advances in outpatient technology and eager investors are carving out a niche for tiny hospitals.

Micro-hospitals are about to take off in a big way, if you believe Eric Johnson.

He says that the ability to deliver new facilities quickly compared to full-service hospitals, along with the low overhead required to operate them, make micro-hospitals very attractive to healthcare leadership teams.

Johnson is the national director of healthcare advisory services at Transwestern, a national commercial real estate firm.

Perhaps best of all, he says, unlike many other capital projects, these small facilities aren't as vulnerable to the whims of government legislation as their full-size counterparts.

Micro-hospitals: Sometimes Tiny Is Just The Right Size

"The goal of insurers is still to get the chain of acuity away from the hospitals and out to the constituents at a lower cost, which is exactly what micro-hospitals do," says Johnson. "No legislation passed will negatively impact this niche."

With advances in technology adding to the practicality of moving procedures out of the hospital, the outpatient environment is poised for growth, while inpatient may stagnate.

Poised for Growth

Johnson expects growth at an accelerated pace for seven reasons:

  1. Investment: More than one billion dollarsis currently invested in various stages of micro-hospital development in 15 states
  2. Demographics: Micro-hospitals target communities with a population mix that does not support a full-service hospital.
  3. Site Selection: Investors identify locations for development using "hot spot" data mapping that highlights areas with the right demographic mix and underserved healthcare options
  4. Services: Micro-hospitals fill the gap between freestanding emergency centers and full-scale hospitals by providing 24-hour access to care, little to no waiting for patients as well as inpatient and surgical options. Most are associated with not-for-profit systems and align with major hospital values
  5. Design: On average, facilities are 30,000 to 40,000 square feet and licensed for 10 to 20 beds.
  6. Care: Typically micro-hospitals are low-trauma facilities (level 4 or 5) with advanced surgical capabilities and high nurse-to-patient ratio.
  7. Outcomes: Their small size and low complexity often helps micro-hospitals beat the national average of infection, mortality, and CAUTI rates compared to large hospitals.

Philip Betbeze is the senior leadership editor at HealthLeaders.

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