The new wing of Hoag Hospital’s outpatient health center in Huntington Beach, which opened for business this week, is a gleaming symbol of what many see as the future of health care.
The 50,000-square-foot addition to an existing Hoag site offers a state-of-the-art imaging center, advanced mammography, numerous cardiac services and a pediatric unit – all housed together with 30 Hoag-affiliated doctors, who will offer evening and weekend office hours.
Medical specialties available at the center include oncology, rheumatology, pulmonology, orthopedics and gynecology, among others.
The new, enlarged center – which Hoag will replicate at its Irvine location and, to a lesser extent, in Aliso Viejo – is part of a growing hospital industry move away from the traditional inpatient business.
The trend is being driven in large part by advances in technology and cuts in payments from insurers, particularly Medicare. There are also a number of incentives and penalties – some contained in the Affordable Care Act, or Obamacare – that are motivating hospitals to drive down costs and improve the quality of their care.
All of these factors are spurring hospital executives to de-emphasize the traditional setting and bring more medical services out into the communities they serve.
“Many of our investments going forward are going to be in this kind of outpatient setting,” says Robert T. Braithwaite, Hoag’s president and CEO. “And these kinds of platforms allow that to be done with maximum efficiency.”
Given the pressure to provide care more cheaply and produce better outcomes – which often means prevention rather than intensive treatment – “it is very, very important that hospitals, in order to survive, participate in the shift from inpatient to outpatient care,” says Sheryl T. Skolnick, a hospital analyst and managing director at CRT Capital in Stamford, Conn.
Skolnick said the shift toward more outpatient care has been happening for more than a decade, driven largely by medical technology. As minimally invasive surgeries became more commonplace – including a number of orthopedic, gynecological and spinal procedures – they began to move from hospitals to outpatient surgery centers, often owned by the surgeons themselves, she said.
Even when surgeries do require hospitalization, recovery times are often shorter and discharges sooner than they used to be, which means more follow-up care outside the hospital.
“Over time, not only has technology continued to drive that shift, but payers are now taking advantage of readily available and pretty well-vetted technology, and saying ‘not only is it less expensive, but you get better outcomes, so you really ought to go there,’” Skolnick said. And insured patients, motivated by higher deductibles and co-payments, are now jumping on the bandwagon “by choosing the lowest-cost sites that have good outcomes,” she said.
The idea behind Hoag’s new center – and many others like it across the region – is to provide easy, nearby access to patients so that they will become more engaged in managing their own care.
That, especially for people with chronic illnesses, will mean fewer hospitalizations, Hoag officials say. They note that the availability of doctor appointments at off hours should also reduce the number of trips to the emergency room.
They also expect the layout of the center – with one common check-in area and waiting space – to reduce the size of staff. Even the environmental design – using recycled construction materials, drought-resistant landscaping and copious natural sunlight inside the building – is saving costs.
The location of the new center is certainly no accident: more patients at Hoag Hospital are from Huntington Beach than any other city, and more residents of that city go to Hoag than to any other hospital, says Dominic Shields, Hoag’s head of strategy and business development.
The building, located on Beach Boulevard, about 2 miles from the Pacific Ocean, is designed to reflect the seaside feel of Huntington Beach. The exterior is shining white and silver, with tinted green windows. Palm trees adorn the parking lot. Walls are lined with photos of local scenes taken by members of the construction crew.
Braithwaite, a Huntington Beach native, counts himself as “one of the biggest fans” of the center’s expansion.
But the move toward this kind of integrated community-centered care is driven by the hard numbers. In the five years from 2008 to 2012 – the last complete year for which figures are available – inpatient discharges from Hoag declined 18.3 percent, according to the Office of Statewide Health Planning and Development. Inpatient billing dropped 1.7 percent.
The hospital’s billing for outpatient services grew in the same period by 57.6 percent. The average revenue Hoag received for outpatient services grew from $607 per visit to $978, an increase of 61.1 percent.
“We don’t see anything in the near term that will arrest that trend,” Braithwaite said. “Hospitals in the future will be largely places for people to receive intensive care, not just medical care.”
Insurance companies, under pressure to reduce premiums, are reducing their own spending by narrowing the size of their networks. They often prefer medical providers that offer a full complement of outpatient services.
So far, the outpatient trend is less pronounced statewide. Inpatient discharges across all California acute care hospitals dropped by just 1.7 percent from 2008 to 2012, while both billing and actual revenue on inpatient care increased at a double-digit pace – though they were far outstripped by the outpatient side.
At MemorialCare, a large integrated medical company that runs Saddleback Memorial, Orange Coast Memorial and Long Beach Memorial hospitals, the trend toward more outpatient care is reflected in shorter hospital stays rather than fewer patients in the hospital. Inpatient discharges from those three hospitals have actually ticked up by 1.3 percent in the past five years, but the average length of a hospital stay has declined from 4.58 to 4.34 days during the same period, according to data provided by the company.
MemorialCare, like Hoag, is investing heavily in outpatient care. The Orange Coast Patient Care Pavilion, next to the hospital of the same name, is one of six integrated outpatient care centers it operates. The pavilion has its own parking and driveway and offers imaging services, ambulatory care, a comprehensive cancer center, doctors’ offices and a surgery center.
“It’s basically a one-stop shop for everything except acute care, which you can get to across the bridge to the hospital,” says MemorialCare CEO Barry Arbuckle.
The organization expects to double its number of outpatient surgery centers by next year, through acquisitions in the works, Arbuckle says.
“Hospitals that remain just hospitals, without this kind of integrated outpatient care, will soon be a thing of the past.”
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