Doctors Inc.

Hospital opens posh outposts across Northland to bolster the bottom line

Updated: 2014-01-02T16:35:00Z

By ALAN BAVLEY

The Kansas City Star

With their wood and rough stone exteriors, the eight new Mosaic Life Care centers dotting the Northland look more like Colorado ski resorts than suburban medical clinics.

Inside are lobbies with multistory atriums and waterfalls tumbling down wrought-metal sculptures. No glassed-in reception desks here, no waiting rooms with stacks of old People magazines.

Instead, a chef gives cooking demonstrations. Greeters check you in on their iPads, then whisk you down a hall to be seen by one of the clinics’ 17 physician employees.

The experience feels almost theatrical. Not surprising, as it was designed by former Disney Imagineers to be as different as possible from a typical encounter with a doctor’s office.

Is this what patients want? Heartland Regional Medical Center, which built the clinics, is banking on it.

Heartland is the large nonprofit hospital that serves St. Joseph. As the only major hospital in the northwest corner of Missouri, it has maintained a healthy bottom line.

But the hospital faced an uncertain future if it didn’t make some changes.

Incomes in the St. Joseph area are well below the national average. And the population is growing older rather than larger.

“We knew we would end up slowly dying by a thousand cuts,” Heartland president and CEO Mark Laney said. “We needed to dramatically reinvent ourselves to survive and thrive in a new environment.”

As Laney tells it, the idea for the Mosaic clinics started to germinate in 2010 when developers of an upscale Parkville golf community invited the hospital to build a clinic befitting the area’s new, affluent residents.

Heartland surveyed the northern suburbs of Kansas City and found a youthful and growing market there, a land of prosperous, well-insured soccer moms who took charge of their own health and that of their families.

The hospital’s marketing research determined that 65 percent of its target patients in the Northland were willing to switch from their current doctors if a “more caring, holistic experience” were available, Laney said.

Mosaic clinics would do that with extra services like life coaches to help people sort through personal issues and buildings designed to serve as community centers for weddings and other events.

Heartland was sitting on $360 million — nearly a year’s operating cash. It decided to go big.

“They wanted us,” Laney said. “We had a great cash position. If ever we were going to take a swing for the fences, this was it.”

Over the past two years, Heartland has built Mosaic clinics in Parkville, Excelsior Springs, Gladstone, Kearney, Smithville and Kansas City, North. Some have imaging equipment, surgical suites and exercise rooms for physical therapy. They’re all staffed with employed physicians who either already worked for Heartland or were recruited from other practices.

Other hospitals across the country also are building and acquiring outpatient clinics at a rapid clip.

These clinics are cheaper to run than hospitals and generate more cash and higher profits, Kyle Burtnett, a Tenet Healthcare Corp. vice president, told investors last year. The Dallas-based hospital chain has been adding dozens of outpatient clinics to its roster.

Hospitals see outpatient clinics as a way to grow their business as new technology makes it possible to do more kinds of procedures without a hospital stay. The clinics also position hospitals to take advantage of new financial incentives from Medicare and commercial insurance plans to keep patients healthy through good primary care.

The usual hospital outpatient strategy is to create a “hub and spoke” model, building clinics that feed patients in need of specialized care to the hospital, said Joy Grossman of the Center for Studying Health System Change.

Hospitals may enter new territories where they bump up against established medical practices or other hospitals, but they keep their clinics close enough to make referrals practical.

Heartland has ventured so far from its home base that it isn’t looking to draw Northland patients to its hospital. Liberty Hospital, North Kansas City Hospital and St. Luke’s North Hospital already are nearby.

Instead, Laney expects the clinics to make money on their own.

Some Northland physicians grumble privately about the extravagance of the Mosaic clinics and how the region already has enough doctors. Some question whether Heartland will attract enough patients to make its investment pay.

None say they have been hurt by the competition.

Jim Hall is half of a two-physician family practice that’s been in the same location north of Parkville for 32 years. None of his patients has left for Mosaic, he said.

“I don’t consider this a threat to me or our organization,” Hall said. “We see new patients every day. I’ve got more than I can say grace over.”

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