Northwestern EVP and COO Peter McCanna will take over Baylor Scott & White’s president role and some responsibilities from CEO James Hinton.
Baylor Scott & White Health says it will split the office of President and CEO, a little more than six months into President and CEO Jim Hinton’s tenure at the Dallas- and Temple, Texas-based organization. Hinton had been serving in both roles since he took over the nonprofit health system in January, as had his predecessor Joel Allison, who retired.
Pete McCanna, who is currently executive vice president and chief operating officer at Chicago-based Northwestern Memorial Healthcare, will assume the new president role in September, and will take over a number of Hinton’s current duties, according to a press release.
While his expected duties as president were not immediately apparent, McCanna has ties to Hinton, having served as chief financial officer at Presbyterian early in Hinton’s 20-year career at that organization, where Hinton served as president and CEO before coming to Baylor Scott & White. Hinton said the new office of the president will expand the capabilities of the health system’s “already talented leadership team, helping us more rapidly evolve.”
Presumably that rapid evolution involves Hinton focusing more intently on integrating the Scott & White Health Plan into the entire organization.
In fact, one reason for Hinton’s appointment in the wake of Allison’s retirement was his extensive experience running an integrated delivery system at Presbyterian, where the provision of healthcare services is combined with a proprietary health plan, allowing for smoother integration of population health principles and tactics. Baylor Health Care System’s 2013 merger with Scott & White Healthcare created the blueprint for such an integrated system, which includes 48 hospitals, 44,000 employees, and the Scott & White Health Plan.
“We are committed to extending Baylor Scott & White’s long history of success by transforming into a nationally recognized, high-value integrated delivery network; and to transform, we must drive costs down, while making the right investments in key areas,” said Hinton, in the release.
McCanna should be instrumental in helping Baylor Scott & White achieve financial and strategic growth targets. In his 15 years at Northwestern, operating revenue grew from $700 million to more than $5 billion, while patient experience, employee engagement and quality goals exceeded targets.
He also gets credit for helping integrate the faculty physician practice plan at Northwestern University Feinberg School of Medicine with Northwestern Memorial Hospital.
“Pete is a highly respected senior executive with a track record of helping to grow organizations, create and implement successful, long-range strategic plans and lead financial turnarounds,” said Hinton. “He is one of the best and brightest in healthcare.”
He was born at a WellStar hospital. His first office there was the back of a landscaping truck as a summer college job. And since he started in human resources after college 15 years ago, he hasn't worked anywhere else.
As director of HR at the 11-hospital health system in Atlanta, he was asked to develop a job description for the new position of chief of staff.
CEO Candice Saunders had him in mind for the job; she just didn't tell him. And he says he didn't have a clue.
If she had told him, he's not sure he would have wanted it anyway, because he loved management and human resources. Researching the position was difficult, even for someone with a background in HR and an MBA degree to boot, says Cox.
He began the process while Saunders was a CEO-in-waiting. Although she had already been named, she was a year away from taking over the CEO role from her predecessor, Reynold Jennings.
If he had known Saunders wanted him in the role, "I think there would have been a lot of anxiety, so I built the job description not realizing I was going to pursue it," says Cox, who is about to celebrate his third anniversary as assistant vice president and chief of staff.
Borrowed from Politics
Long associated with politics, hospitals and health systems are increasingly adding chief of staff to the executive team, says Andrew Chastain, CEO of Witt/Kieffer, an executive search firm. Ironically, it does not currently conduct chief of staff searches for its clients.
One major reason the title has grown more popular is that CEOs need someone to help manage tasks such as community speaking engagements, project management, managing executive searches, or managing the health system's agenda.
That's largely because of the degree of consolidation in healthcare, says Chastain.
"The systems have just gotten much larger, so the constituency group CEOs must deal with is getting so much bigger too," he says. "Having someone who can help navigate the agenda of outside influences for agenda mapping is incredibly complex."
One health system where Chastain helped conduct a recent CEO search had grown to 60,000 employees and multiple constituent groups. No matter how personable they are, it's unrealistic to think CEOs can be accessible to that many people.
"If this position helps facilitate and extend the reach of the CEO, it absolutely validates its existence," Chastain says.
Chief of staff, in the political sense, is someone who controls access to the boss. In the healthcare sense, that person is seen more as a person to help manage the CEO's priorities and to help deliver the CEO's messaging to internal and external audiences, not mention managing projects and the work streams that emanate from strategic projects the CEO doesn't have time or bandwidth to supervise.
It's not a management position, says Chastain. Instead, it helps control and facilitate access to the CEO for those who do manage the health system's huge number of employees.
Cox says it takes a certain amount of strategic humility about one's own career to serve as a chief of staff. It's a top leadership position, but unlike other leadership positions, there's no management component, and taking the job ties one inexorably with the CEO personally.
As part of his research on building the chief of staff's job description, Cox visited extensively with every member of the leadership team and individual hospital presidents, finding out how the candidate who was hired for it would ideally interact with them.
"I went to key executives, scheduled one-on-ones with them and asked how they saw this role benefiting the organization," he says.
In addition, in HR role, Cox arranged individual focus groups to help understand how a chief of staff should interact with key co-workers, such as the government relations director, the director of public relations.
After he was named chief of staff, he spent his first few months "going out and reintroducing myself as chief of staff, not as an HR professional," he says. "The biggest challenge is you have to step away the furthest from what you're comfortable at."
Now, his normal routine includes rounding with executive vice presidents as an extension of the CEO.
"Also, there's lots of face time with the CEO, continuing the work of her office and giving her updates, for example, if she's traveling, to keep her looped into the organization, including progress on projects."
He also spends lots of time with Saunders' direct reports, and assisting them where they may need direction in projects. He works closely with the government relations director as well on local and national efforts. He says that based on perceptions of the job thanks to programs such as House of Cards, people are sometimes intimidated by his title. But he tries to focus on being visible and approachable.
"I work very closely with all of them and I do regular rounding," he says. "I try to pop in frequently and I'm working on key projects with them. We're all in the same building and work very closely together even when Candice may not be there. Great working relationships are built over time."
The lack of preparedness could hit physicians in the pocketbook, even amid new flexibility shown by CMS.
As a group, doctors are ill-prepared to meet the requirements of a law that will change the way they are paid, shows a survey of a thousand physicians by the American Medical Association and Big Four auditing firm KPMG.
That lack of preparedness could hit them in the pocketbook, even amid new flexibility shown by CMS in last week’s proposed changes that would delay mandatory reporting data for another year and reduced reporting burdens for small physician practices.
Physicians must choose one of two reimbursement tracks under the Medicare Access and CHIP Reauthorization Act (MACRA). One, known as the Merit-based Incentive Payment System, is where most physicians will start, but some will participate in approved Advanced Payment Models (APMs) that will reward physicians with as much as 5% annual payment bonuses in return for taking more upside and downside risk based on value measures.
In either scenario, physicians rate themselves as less prepared than they should be, with half calling MACRA requirements “very” burdensome, according to the survey.
More than 56% of those surveyed still planned to participate in the MIPS program in 2017, while 18% are expected to quality for higher and more stable payment as an APM participant.
Many physicians, 90% of whom felt the reporting requirements were “somewhat” or “very” burdensome, felt that the time required to report performance was the most significant challenge they face with MACRA, while understanding the requirements, how MIPS performance is scored, and the cost required to accurately capture and report performance were also noted as challenges.
AMA president David O. Barbe, MD, said that physicians needed to be more proactive about accessing resources that would guide them toward minimum compliance levels.
“This survey showed that about a third of respondents are unlikely to meet the basic standard of one patient, one measure, no penalty,” he said in a press release. “In just 10 steps, physicians can successfully meet the standard under MACRA.”
The survey was conducted prior to CMS’s changes to the 2018 proposed rule, which would exempt markedly more, mostly smaller, physician practices, from MACRA’s reporting requirements.
New research claims the typical health system risks $4.9 million each year due to claims denials.
A healthcare software company says its data shows that of an estimated $3 trillion in claims submitted by hospitals in 2016, an estimated 9% of charges were initially denied. And even though the same data show that up to 63% of denied claims are recoverable on average, representing $262 billion in revenue, it may cost hospitals and health systems nearly $9 billion more in administrative costs to recover that money.
According to the data, hospitals had to rework as much of 3.3% of net patient revenue in 2016.
That additional work to overturn denied claims can be expensive in itself, says Change Healthcare, which compiled its first-ever Healthy Hospital Revenue Cycle Index in 2017 based on 2016 data. According to data from inpatient and outpatient claims processed by the company, appeals cost providers roughly $118 per claim. Extrapolated nationwide, that amounts to as much as $8.6 billion in administrative costs necessary to recover initially denied claims.
To compile the Index, Change Healthcare analysts used claims processed by the company in 2016, and calculated the average charged amount and first denied amount for the 724 hospitals included in the sample. Although the numbers in the Index may not be representative of the more than 5,500 hospitals in the nation, as much as $4.9 million per hospital could be at risk due to denials, the company said.
By region, the Pacific, South Central, and Midwest posted the highest denial rates, at 10.89%, 10.5% and 10.32%, respectively. Northern Plains and Mountain states represented the smallest denial rates, at 6.64% and 6.99%, respectively.
Causes for the denials ran the gamut, but most of the errors were concentrated in front-end processes such as registration/eligibility, at 23.9%. On the back-end, missing or invalid claims data represented 14.6% of initial denials. Authorization and pre-certification problems resulted in 12.4% of denials, while medical documentation issues caused 10.8% of denials.
The Senate version of the AHCA shows that politicians can be counted on for only one thing: Making a bad situation worse.
A college professor of economics once told me that the dismal science deals with what is, and it's up to others, such as politicians, to decide what should be.
The Congressional Budget Office will weigh in soon on the effect on the budget from the Senate's newly unveiled healthcare bill. In the meantime, we have what a group of politicians have decided should be.
Let's dispense with the notion of determining whether this bill or any other "healthcare reform" legislation is gentle, harsh, or "mean," or any other of a number of subjective judgments. What's more important is, is it smart?
Well, not really.
It's pretty clear that Senate Republicans went into this not with the attitude of fixing what's wrong with healthcare—which is largely still the fee-for-service system (no matter what anyone tells you about value-based care. Incidentally, real progress has been made on that front, but not because of Congressional decisions).
The Senate version of the AHCA jettisons the smart policy aspects of the Affordable Care Act such as:
Requiring most Americans to have health coverage or pay a penalty (doing so helps eliminate the "free-rider phenomenon" to an extent).
Neither the ACA nor the AHCA really deals with this problem seriously, but at least the ACA's provision was fair. The AHCA version only allows a 30% surcharge for those re-enrolling after dropping coverage, which is not a legitimate deterrent.
The employer mandate—requiring large employers to offer health insurance or pay a fine. If employers are to continue to get huge tax benefits for offering employees insurance, they shouldn't be able to game the system.
Repealing a 3.8% tax on investment income for individuals making more than $200,000 annually and married couples making more than $250,000.
This is nothing more than a giveaway to the Republican base at the expense of the poor. You can debate whether one group should be taxed for another group's benefit, but essentially, this is what all taxes do.
At the same time, the Senate bill doesn't do much to repair the problems with the ACA, such as:
Excessive "essential health benefits," some of which are inarguably essential, but some of which unnecessarily drive up premiums. The Senate bill will allow states to decide what's essential.
Open-ended federal matching funds for anyone who qualifies for Medicaid.
The ACA's lack of progress on cost containment. The ACA got more people coverage, but its impact on bending the cost curve in healthcare has been minimal.
The bill cuts Medicaid by giving states "block grants," that allow them to determine how to disburse the funds, but funding from Medicaid will be cut, eventually falling from 90% of the cost of the Medicaid expansion to much less, possibly even to the standard Medicaid matching rate, which is 57%.
As many as 8 states will drop Medicaid expansion should matching funds for it fall below 90%. The number of people who are covered by Medicaid would be cut.
We'll still pay for these people to receive care, it'll just be that hospitals and health plans will eat it through providing emergency services to those without coverage. Providing care this way is much more expensive, and hospitals and health plans will get back what they give away in bad debt through cost-shifting, as they always have.
A Pennsylvania health system CEO says physicians need to be partners in strategy, but to be effective, they may need to go back to school.
When Reading Health System CEO Clint Matthews signed on as CEO seven years ago, he quickly realized the Pennsylvania system’s medical staff was one of the best he’d ever worked with. But as a group, they had one glaring deficiency: There no pathway to develop them as future leaders.
Many health systems recognize that their future leaders increasingly need to come from the clinical arena.
As decision-makers on how illness is treated, physicians wield the power of the pen, and it’s increasingly important to show them how that power affects the hospital or health system as a business.
Physicians need to be partners in change management, and they need to learn how to work together. Further, as boards and current occupants of the c-suite look to put physicians in leadership roles, they’re discovering the same deficiency Matthews noticed: a lack of training in leadership skills, business acumen, and change management.
“We feel physicians need to be a partner and they need to be leaders—advocates for the change that is necessary in order to manage patients over a continuum rather than episodes of care,” Matthews says.
A Tumultuous Time
Reading Health System launched the Applied Physician Leadership Academy about two years ago with its partner, The Leadership Development Group. The first group of physician leaders graduated from the 18-month program in April.
Another group of 26 physicians, whose program overlapped with the first, is in session now.
Matthews says the program is already paying off by fostering an esprit de corps in the system’s 680-physician clinically integrated network, which includes affiliated physicians as well as the 525 who are employees.
Matthews and the board decided to make a more robust offering of courses available to physicians after a less ambitious eight-week program on physician leadership proved so popular that many physicians asked for more.
“They know healthcare is going through a tumultuous time, and they wanted to learn, participate, and be at the table with the executive leadership and the management teams to help as we evolve from a volume-based reimbursement system to a value-based reimbursement system,” he says.
Matthews, a registered nurse, says it’s critical for all hospitals and health systems to bring physicians into strategic decision-making.
Further, the value of the structured Leadership Academy program is that physicians representing many different specialties go through it together as a group.
The program is not geared toward theory and individual learning behaviors, he says. Rather, physicians work together on various initiatives that will likely be put into action by the health system.
In addition to the physicians undergoing the training, medical staff leadership as well as c-suite leadership participate in the group projects, says Matthews.
The system’s chief operating officer, chief strategy officer and business development officer, the vice president of human resources, and the vice president of quality and chief transformation officer participate, as well as the system CMO, and the CEO of the employed physician group.
“There’s no hierarchy and we learn from each other,” says Vinti Shah, DO, Reading Health’s chief of Palliative Medicine, a recent graduate. “The CMO is in the room, and the infection chair, among others. And I’ve developed relationships with people who otherwise I wouldn’t have much interaction with.”
Those relationships are valuable not only in the projects completed during the course work, but will be important later as value-based healthcare principles become more deeply embedded in the organization, requiring more teamwork among groups that previously had no driving need to interact together.
“Also, it’s humbling to know that my administration valued me enough to make this investment in me,” Shah says. “The message I received that your input is valued and now we’re going to give you the skill set to contribute.”
Those enrolled in the 18-month program attend lectures once or twice a month on leading self, leading for results, leading others, and leading change.
They are expected to work with seven or eight colleagues on a project that requires at least weekly half-hour meetings and homework.
Shah’s group worked on incorporating quality initiatives across the health system, and outside partners included oncology nurses and the quality transformation officer, among others.
Participants could choose among 6 or 7 different projects, and they worked on whom to consult among leadership to move a project forward, how to develop a particular initiative, and how to create a proposal.
There is a significant time commitment, which is a huge concern for physicians, says Shah, but “there’s no better way to make you physicians feel valued and it’s great for recruitment and retention. If you really put your heart in it, it does not feel burdensome.”
Chief Operating Officer Charles (Chuck) Stokes will take over as interim CEO effective immediately as health system’s first physician CEO leaves after one year to "pursue his passion in health and public policy."
By Philip Betbeze
Memorial Hermann President and CEO Benjamin Chu, MD, is out after a year on the job.
Whether or not the decision was entirely his, as the health system’s press release on the matter suggests, no governing board goes through the laborious process of finding, vetting and paying a new top leader, not to mention the upheaval among clinicians and employees such a transition entails, only to have to repeat the process a year later. Especially when the previous CEO, Dan Wolterman, is a legend in healthcare administration who served 17 years in the role.
But, it happens.
Chu was replaced immediately, on an interim basis, with executive vice president and chief operating officer Charles (Chuck) D. Stokes, who is also a registered nurse. Stokes has been with Memorial Hermann since 2008, and is the current board chair of the American College of Healthcare Executives.
Though the release gave no specific future destination for Chu, it did note that he plans to pursue his passion in health and public policy. He has served as board chair for the Commonwealth Fund and as a member of the Advisory Committee to the director of the Centers for Disease Control and Prevention, and served in 2014 as the chair of the American Hospital Association Board of Trustees.
Chu, the first physician to become CEO of the 14-hospital Memorial Hermann, was hired away from Kaiser Permanente, where he served as the executive vice president of Kaiser Foundation Hospitals and Health Plan Inc., and Group President of Kaiser Permanente Southern California and Georgia regions.
Upon naming him as Wolterman’s successor in March 2016, Will Williams, who chaired the Memorial Hermann board at the time, said that after a comprehensive search that included internal candidates, “the decision to appoint Ben as the new president and CEO came down to his exceptional experience. That, along with his remarkable career, passion for people and commitment towards patient-centered care, is what makes Ben the right leader at the right time.”
Just a year later, the separation, at least publicly, was amicable.
"I have admired Memorial Hermann from afar for many years, and I was incredibly honored to join this prestigious organization," said Chu in the release announcing his departure. "It has been a privilege to have led one of the nation’s largest and most successful health systems—one that advocates for improved access to safe, high-quality care."
Current Board Chair Deborah Cannon was also complimentary of Chu as he departed.
"As a physician and longtime public policy advocate, Dr. Chu plans to continue his mission to enhance access to high-quality care and improve the overall health of our population," she said. "With the current state of the healthcare industry, I can think of no better time for a champion like Dr. Chu to help lead public policy efforts. We thank him for his service and wish him the very best in his future endeavors."
In the release, Stokes expressed appreciation for the board’s confidence in selecting him, at least in the immediate term, to lead the organization through the leadership change.
"During this transition period, I am committed to reinforcing and advancing Memorial Hermann’s unwavering commitment to patient safety, quality, and high reliability," he said.
An alternative construct for the Merit-Based Incentive Payment System would withhold a portion of payments for clinicians that they would get back based on their performance on quality metrics.
The Medicare Payment Advisory Commission unveiled its June report on Medicare and the healthcare delivery system today and its recommendations, should they be enacted, would represent a big shift in how Medicare’s Merit-based Incentive Payment System (MIPS) and its advanced alternative payment models (A-APMs) would be administered by changing incentives in both programs. The group also recommended big changes in payments for post-acute care.
MIPS and A-APMs
The programs were created in the 2015 “doc-fix” law, otherwise known as the Medicare Access and CHIP Reauthorization Act of 2015, which repealed the sustainable growth rate methodology for updates to the physician fee schedule. That methodology was replaced with MIPS, which consolidated three incentives that focused on quality reporting, value-based payments and the electronic health record incentive program. Clinicians could avoid MIPS to some degree by participating in A-APMs.
MedPAC contends in its report that MIPS, as it is presently designed, won’t help beneficiaries choose physicians, help clinicians change practice patterns to improve value, or help the Medicare program reward clinicians based on value, as it was intended to do.
Its recommended fixes to change that calculus would involve Medicare’s withholding of an unspecified portion of payments from clinicians under MIPS, who would be able to recoup that withhold based on their performance on quality measures. The independent, nonpartisan federal agency recommends that in such a redesign, CMS should eliminate the current set of MIPS measures and rely on a much smaller set of population-based outcome measures. The proposed outcome measures could be calculated from claims or surveys and, says MedPAC, would thus minimize burdensome clinician reporting. Clinicians could get the quality withhold back by joining a virtual group or an A-APM.
MedPAC would also change how MACRA qualifies clinicians to receive a 5% incentive payment for participating in A-APMs by eliminating the threshold of clinicians’ revenue that must be reached to qualify. Instead the incentive would be proportional to clinicians’ A-APM involvement, which in theory should encourage smaller practices to participate in A-APMs. MedPAC also proposed moving the $500 million per year fund (from 2019-2024) intended to reward clinicians with “excellent performance” on their MIPS scores to the A-APM program, which would make MIPS less attractive to clinicians.
Post-Acute Prospective Payments
MedPAC also recommended creating a unified prospective payment system for post-acute care. MedPAC’s idea would attempt to eliminate the incentive the current fee-for service program encourages for skilled nursing facilities, home health agencies, inpatient rehab facilities and long-term care hospitals to select certain patients over others.
A unified post-acute prospective payment system would decrease payments for rehab care unrelated to patient characteristics and would increase payments for medically complex care. MedPAC says Medicare payments currently exceed providers’ costs by 14% across all care setting and recommends aggregate payments be lowered by 5% to more closely align with costs. It recommends the new PAC PPS should begin in 2021, with a three-year transition.
MedPAC also recommended reforming Medicare payment for drugs under Part B, and an examination of the design issues surrounding the idea of premium support in Medicare.
It's not for everyone, but for Marin General Hospital, being a standalone hospital means it doesn't have to be a capital contributor to the mothership and can serve its community better.
Lee Domanico wasn't party to the acrimonious decision that broke Marin General Hospital away from the control of Sutter Health. But he was brought on in 2008, shortly after the decision, to help engineer the transition.
It took place in the middle of 2010, and later he became CEO.
Since then, the 235-bed public hospital has continued to successfully buck the trend of hospitals being acquired by larger parent companies that typifies the consolidation that's been the norm in healthcare for years.
In fact, it's been so successful, that MGH has broken ground on a $400 million replacement hospital that will open in 2 1/2 years. With 177 private rooms, floor-to-ceiling windows, skylights, multiple gardens, and the latest in healthcare technology, the new facility is designed to be "at the corner of highly complex medicine and the healing arts," says Domanico.
With its independence secured, Domanico wants other CEOs and boards to know that jumping into the arms of the nearest big-capital acquirer isn't always the best strategic decision.
"There are two types of member hospitals: those that contribute capital and those on the receiving end," he contends. "Marin General, historically, had been a contributor."
If you aren't sure your hospital will be a receiver of capital, you should think over your decision to join a larger health system very carefully, he says.
Know Your Characteristics
To be sure, Marin General has some significant advantages over other small hospitals. Perhaps the most obvious is the affluence of its location.
But the community's wealth doesn't necessarily translate to wealth in the coffers of the local hospital, at least operationally.
That's because there's a significant pocket of indigent population, for which Marin General provides nearly all services as the county's safety net. While the hospital takes care of 80% of the indigent, it only gets about 45% of the area's insured population, says Domanico.
Furthermore, the affluence in the county exists primarily in the senior population, and they don't pay for their care any differently than any other Medicare beneficiary.
"The people who have the wealth are on Medicare reimbursement," he says.
Marin General does have some geographic advantages—it's bounded by the Golden Gate Bridge to the south, the mountains to the west and a large body of water (the San Francisco Bay) to the east.
To the north is the sparsely populated wine country. These barriers to entry make up one of three characteristics that Domanico says are essential to being successful on a freestanding basis.
"Second, we have an alternative source of funding," he says. As a district hospital, it has the power to use the local tax base for capital.
"For many independents, it's hard to amass capital to replace themselves and reinvest over time," he says. "In our case, we have the tax base to provide funding to create a new hospital."
Third, and most important, Marin General has a cooperative and partnership-oriented medical community, where local providers want to partner with the hospital and see it be successful.
"We don't have a lot of physicians who might be known as splitters," he says. "They only practice here because it's the only full-service hospital in the county."
There is one area where the county's affluence does come in handy: philanthropy.
About $50 million for the construction of the new hospital has been raised from donors. That's another advantage of being a standalone. In a health system, it's not as easy to make the case to donors that their dollars will stay in the community.
"In a health system, the system becomes dominant and the individual flavor of the local hospitals becomes subordinate," says Domanico. "That can make it more challenging to fund-raise."
Open to Partners
But just because Marin General is a standalone doesn't mean it wants to face the future alone. Indeed, since its independence in 2010, the hospital has cultivated many clinical and business partnerships that wouldn't have been available under a parent's umbrella.
UCSF Health and Stanford Health Care are clinical partners now, and an alternative source of capital is a 15-year, $90-million managed services deal with Phillips, whereby the company provides technology and embedded employees on-site to help Marin General deploy technology properly and smooth out cash flow in preparation for moving into the new hospital.
"We have to look for new ways of doing things. Our partnerships now feature collaboration in a peer-to-peer approach rather than as a subordinate subsidiary to a parent," Domanico says.
"That allows us to focus what we do 100% on the residents of our service area."
Being a standalone, at least for Marin General, opens new doors that would have been closed before, says Domanico.
Being part of a system means competition with providers in a broad geographic area, but when your organization is no longer owned by a system, all those former competitors become potential partners and collaborators.
"You have to be very partnership-oriented and friendly," he says.
"As we cement our academic partnerships even further, we will expand our ability to serve a broader geography. Ultimately, that benefits county residents because they can stay close to home and still receive complex medicine."
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.
"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:
Investment: More than one billion dollarsis currently invested in various stages of micro-hospital development in 15 states
Demographics: Micro-hospitals target communities with a population mix that does not support a full-service hospital.
Site Selection: Investors identify locations for development using "hot spot" data mapping that highlights areas with the right demographic mix and underserved healthcare options
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
Design: On average, facilities are 30,000 to 40,000 square feet and licensed for 10 to 20 beds.
Care: Typically micro-hospitals are low-trauma facilities (level 4 or 5) with advanced surgical capabilities and high nurse-to-patient ratio.
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.
Part of the growth strategy at CHI-St. Luke's, a six-hospital health system in Houston, TX, involves combining inpatient and outpatient services into micro-hospitals, which are smaller, more scalable, and less capital-intensive than traditional hospitals.
CHI St. Luke's opened its first such four-bed facility, Springwoods Village Hospital, in January, and David Argueta, its president, calls it an "innovative solution to get clinically appropriate high-quality care in a low-cost environment."
Speed-to-Market is Key
Argueta, who is president of CHI's Woodlands-area facilities, which includes the micro-hospital as well as the 242-bed The Woodlands Hospital and 30-bed Lakeside Hospital, views micro-hospitals as one of the ways the health system is able to expand its access points in a thoughtful manner.
"It really brings value-added services together in a more cost-effective manner than a big hospital or individual clinics," he says.
Spingwoods Village Hospital features four inpatient beds, 10 ED bays, four operating suites, two endoscopy suites, imaging, labs, and pharmacy and dietary departments.
It has everything a hospital has; it's just scaled appropriately, says Kevin Harney, a principal and architect with Earl Swensson Associates, the Nashville-based architecture firm that designed Springwoods Village Hospital.
"Some owners see this concept as a way to establish their brand and identity within a community and have even planned these micro-hospitals for growth to become a larger tertiary hospital," he says.
Springwoods Village is its first such facility, but Harney says the niche will grow, and the firm has several other such facilities in various stages of design.