Going Small to Meet New Demands: The Rise of Outpatient Facilities


Just 20 years ago, the health care industry was still intently focused on increasing inpatient volume. Today, the landscape looks vastly different.

By Ellen Decareau

Urgent care centers are nearly as common as the neighborhood Starbucks as patients come to expect the same kind of speed and convenience at the hospital as they do getting a morning coffee. Along with urgent care centers, there is a fast-rising crop of freestanding emergency centers, retail clinics and ambulatory surgery centers that may very well be unaffiliated with a hospital. Texas has a total of 345 freestanding emergency centers, more than 60 percent of which are not owned by or affiliated with a Texas hospital. Most recently, small, inpatient facilities called “micro-hospitals” are popping up to provide short-stay and observation services in communities that may not be able to sustain a full-service hospital.

Hospitals themselves are diversifying and now in addition to an inpatient facility, they likely have an outpatient clinic or network of clinics that provide primary and specialty care. Hospitals are investing in outpatient care not only because of competition from non-hospital outpatient providers but also in response to value-based payment models that reward outcomes, not volume, and to reduced lengths of stay, lower reimbursement and consumer demand for convenience.

Advances in medical technology and “technique,” such as less invasive surgery practices have turned what once was a complicated procedure like a total knee replacement requiring four or five days of recovery in the hospital to one that requires just one or two days of inpatient care, or in some cases, can be done entirely in an outpatient setting, explains Brad Holland, CEO, Cedar Park Regional Medical Center. On the consumer side, patients have an increasingly growing demand for convenience and ease. When the urgent care market alone is estimated at $25 billion and includes 7,400 centers, the market opportunity cannot be ignored, and the trend away from inpatient care shows no signs of abatement. The number of inpatient hospital admissions declined by more than 2 million between 2010 and 2014 while the number of outpatient hospital visits increased by more than 40 million, according to the American Hospital Association.

“Hospitals must focus on managing their outpatient business because that’s the future of health care,” said Holland.

Extensions of Brand, Reach

Stacy Rudd, an architect, developer and health care strategist for FlintCo, sees (literally) from the ground floor how the health care market takes shape. FlintCo has been in the construction business for more than a century with a large portion of its business focused on health care.

Rudd said at first many outpatient facilities were privately owned. But as urgent care centers and other outpatient clinics proliferated, hospitals began to take notice, investing in their own facilities or partnering with management groups and physician practices.

That was the case for Cedar Park Regional, located inWilliamson County, which is one of the fastest growing counties in the nation. What once were empty pastures are now filled with shopping centers, residential communities and schools. With that population growth comes a demand for health care services and, importantly, for a population used to getting the song or TV show they want instantly, the demand is for convenient health care services.

Cedar Park Regional recently invested in a gastrointestinal surgery center — partnering with physicians and a management group to offer care for lower complexity GI cases in an outpatient setting. Investments like the GI center aren’t just a business decision, they are a commitment to improving patient experience, explained Holland. For instance, in an isolated inpatient setting, there is no risk of surgical delays due to trauma or emergency surgeries taking precedence for operating room and staff availability.

Going Small: Rise of Micro-Hospitals

While the shift to outpatient care is here to stay, the need for inpatient care has not gone away. For hospital leaders, marrying the convenience of outpatient care with the capacity of inpatient care can be a challenge. For some, the solution is micro-hospitals. These inpatient facilities typically have eight to 15 “short-stay” beds and are about the size of ambulatory centers. The purpose is to provide some inpatient care to communities looking for convenience and quick access to health care services.

Most metropolitan areas experience sprawling growth: new subdivisions and other housing are created, and residents are pushed farther away from traditional city centers, described Rudd. Micro-hospitals are targeted to those areas. He said suburban residents see a micro-hospital as a local alternative to the potentially long waits at or long drive to major hospitals in city centers. In addition, available services can be tailored to the needs of the community. For example, a mini-hospital in community with more older, retired residents may include a catheterization lab and one in a community with a younger demographic might plan for more orthopedic procedures.

“They (micro-hospitals) serve as a bridge between freestanding emergency centers that don’t offer inpatient care and all the services that large hospitals have that may be more than the community needs,” describes Rudd.

The rapid shift toward outpatient care and alternative models of inpatient care speak to patients’ demand for a better health care experience — defined as low cost, high quality and convenient care. “It’s what the consumers are asking for. Care closer to home, shorter recovery time, less wait time — this is the roadmap for creating a good patient experience,” Rudd said.

Hospitals and health systems must seek ways to meet patients in the setting they prefer or risk losing market share, explains Rudd. Micro-hospitals, ambulatory centers, surgical centers can’t replace the need for high acuity inpatient care, and “but they can play an important role in closing care gaps” as health care systems shift patients toward less costly points of care while keeping them within the system.