Enter the micro hospital.
St. Luke’s Health System of Kansas City is working on an array of tiny hospitals that will have just eight to 10 beds for overnight stays as well as round-the-clock emergency rooms equipped and staffed like the ERs in their big parent hospitals.
The micro trend, gaining traction nationally, provides one more option for patients beside the existing cornucopia of health care clinics in grocery stores, drug stores, strip malls and doctors offices.
St. Luke’s thus far acknowledges plans to plant at least four micro hospitals — in Roeland Park, Overland Park, Leawood and Kansas City, Kan. — to augment the regional system’s nine existing hospitals.
Despite having St. Luke’s South Hospital in Overland Park, “our Kansas footprint was fairly small,” said Robert Bonney, a senior vice president in the St. Luke’s system. “We wanted to improve access for people who wanted to access our health system.”
It’s the overnight beds that make micro hospitals different from free-standing ERs rooms that HCA Midwest Health and Shawnee Mission Health introduced years ago to the area.
The overnight beds also help explain why the micro hospital burst in the area will be concentrated in Kansas rather than Missouri.
To add overnight beds in Missouri, hospitals must prove the greater bed capacity is needed by going through an expensive and lengthy Certificate of Need process with the state.
Around the country, micros are blooming in Colorado, Texas, Nevada and Arizona — states like Kansas that don’t require Certificates of Need.
Most of the new breed of micro hospitals are 15,000- to 50,000-square-foot facilities that cost $10 million to $30 million to build — far smaller and less expensive than large hospitals and far faster to bring to market.
The micro introduction in prosperous Johnson County illustrates another economic reality: Competition is intense for patients who are likely to be paying customers and those who have insurance.
One way to get them into a hospital system is through emergency room doors, so it helps if there are more places to go so they don’t face long waiting times.
Spokesmen for the University of Kansas Hospital, Prime Health, North Kansas City and HCA Midwest all said their hospital companies have no immediate plans to jump into the micro game. Each is concentrating on improvements and expansions at their existing hospitals or already announced clinics.
Darryl Nelson, chief medical officer for the MidAmerica division of HCA, points out that one of the HCA hospitals, Overland Park Regional, already operates three free-standing ERs.
Would it add beds to turn them into a micro hospital, thus capturing some patients for admission?
Nelson said HCA wants to weigh such an investment against the response from consumers to the micro hospital concept.
“We’re watching to see if it makes sense,” Nelson said.
Shawnee Mission suggests it actually was the first to introduce the micro concept. It opened a free-standing ER in western Johnson County in 2007 and then later added 12 overnight beds.
“Ours was put in place where there wasn’t anything comparable,” said Robin Harrold, Shawnee Mission’s vice president of its ambulatory network. The nearest ER choice in western Johnson County, she pointed out, was Lawrence.
Shawnee Mission will open its second free-standing ER in January in southwest Johnson County. It will be part of a medical office complex “and could well grow into a full hospital,” Harrold said.
What was important to Shawnee Mission, she said, was entering markets not fully served by emergency care providers.
In Denver, an early leader in micro hospital expansion, the SCL Health system began building what it called “community hospitals” some distance away from the parent hospital in order to reach a different geographic quadrant of the city.
That isn’t necessarily the case with all new micro hospitals. One of the planned St. Luke’s micros is in the shadow of Shawnee Mission Medical Center.
“Some of the (announced) micros,” said Shawnee Mission’s Harrold, “are being located where you’d be hard-pressed to say they’re in underserved areas.”
HCA Midwest also notes that it’s no stranger to the stand-alone ER concept. After closing the former Baptist-Lutheran Medical Center, it has maintained the property as a stand-alone ER. Patients who need overnight admission are taken to Research Medical Center.
(Subsequent development plans would turn the rest of the former Baptist-Lutheran building into a senior continuum-of-care center.)
The American Hospital Association points out that micro hospitals have to be licensed and follow the same regulations as large hospitals.
Priya Bathija, senior associate director and public policy expert at the association, said it hasn’t tracked exactly where micro hospitals are developing, “but we’ve seen them in some areas because hospitals evolve to meet the needs of patients in their communities.”
From 2010 to 2014, the association records showed, inpatient hospital admissions declined by more than 2 million nationally to 33.1 million. Meanwhile, the number of outpatient visits rose to 693.1 million from 651.4 million.
“They’re finding less use of in-patient space, so they can put their resources on the out-patient side,” Bathija said. “There’s no point in building 150 beds if the community doesn’t need 150 beds.”
Bathija said she couldn’t speak to the competitive nature of micro developments in areas that already are well served by existing hospitals.
But one reason why St. Luke’s and other hospital companies around the country like the concept is that patients can be billed at the same rates as large hospitals, even though the micro hospitals have smaller overhead costs.
Furthermore, new Medicare reimbursement rules are expected to qualify micro hospitals for the same reimbursement rates as large hospitals, provided they have overnight beds. That distinction would give them higher reimbursement rates than free-standing surgical centers or free-standing ERs without beds.