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Micro-hospitals: The challenge of bringing care to the community

The days of traveling long distances to get broken bones set or have routine keyhole surgery could soon be over for millions of Americans.

October 14, 2017

These small-scale in-patient facilities, averaging about 20-40,000 square feet per location and typically housing a dozen or fewer beds for 24-7 care, are gaining favor as healthcare organizations seek alternative ways to extend acute care services across a populated area without the massive footprints of a typical hospital.

Unlike the average 100,000-foot hospital, micro-hospitals are built for short-term care and routine procedures, rather than long-term intensive care or complex surgeries. They are a step up from free-standing emergency rooms, with beds to admit patients and the same level of service that’s expected at the hospital, minus the extended wait times.

“Many people have become accustomed to to a consumer culture that delivers near-instant gratification. So it makes sense that they’d be drawn to similar convenience in their healthcare experience as well,” says Richard Taylor, Managing Director, JLL’s Healthcare Solutions Group. “But to offer better care locations closer to where people live, work, and play, healthcare organizations needed to get very strategic about what services are offered, and where.”

Getting it right behind the scenes

While the physicians offer similar emergency care services to those found in a hospital, it’s a different challenge for facilities managers. Micro-hospitals create a whole new ballpark in terms of size and layout, regulatory requirements and geographic distribution and require a new approach to traditional facility management.

A robust facilities management model is an important element to incorporate into planning, earlier than might be traditionally considered. “Managing a complex network of smaller facilities is more complicated than the centralized facilities management model that hospitals are used to running on their main campus,” says Taylor. He points to the challenges of cost-effectively managing facilities in compliance with licensing requirements without a large staff under one roof.

“Organizations will need to look beyond the usual parameters like patient demographics and square footage,” he says. “To successfully launch a micro-hospital, healthcare leaders should also look at how advanced automation offerings will help offset reduced on-site personnel, as well as whether the local labor pool offers the talent needed to service those technologies.”

Some organizations have found it is wise to partner with a network of reputable third-party providers that have the expertise to serve micro-hospitals with advanced facilities management technologies that can integrate compliance, engineering and building management into one smooth process.

Small-scale facilities, big-picture motivations

There are big benefits for healthcare organizations that successfully introduce and operate micro-hospitals. By building them in the right communities, healthcare organizations can fill gaps in coverage and potentially enable more people to gain access to care. Micro-hospitals are also significantly less expensive than large hospitals to bring to market.

The average micro-hospital costs between $7 million and $30 million to build—a bargain compared with full-scale hospital development. For an industry grappling with uncertain policy futures and ongoing budgetary constraints, a lower-cost opportunity to serve more patients is more than intriguing—it’s pragmatic.

Some healthcare companies have already spotted the opportunities; one major Texas-based healthcare company has already invested in and is currently running 20 micro-hospitals across the country, in locations selected primarily because they had a clear need for more emergency care beds.

But micro-hospital strategy is not a one-bed-fits-all matter. “Micro-hospitals have the potential to play a meaningful role in a healthcare organization’s goal to make care more accessible for patients,” says Taylor. “They are a compliment to other offerings, not a replacement. The real advantages they offer come to life as part of a concerted effort to offer the right care, in the right location.”

A strategically located part of the healthcare mix

Theoretically, a micro-hospital can serve patients in most any setting, from urban and suburban areas as well as rural areas. But that doesn’t mean it should, says Taylor: “It’s important to examine a broad range of criteria, from patient demographics to real estate costs to existing infrastructure.”

Big data analytics can help healthcare developers pinpoint communities where a micro-hospital could succeed, by helping them answer questions around whether the population is under-served and how the existing system currently feeds into local hospitals as well as building a profile of potential patients.

There are other important challenges to consider, too, from whether or not to develop in-house or enlist partners in a joint venture model. Many healthcare systems are partnering with independent developers with expertise in micro-hospitals, who can help navigate the unique design requirements and complex licensing and permitting processes.

“Micro-hospitals may or may not be the answer for any given community,” says Taylor. “There’s no question, however, that the growing interest in these facilities points to the industry’s mounting desire to meet patients where they are.”

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