Warding Off Decline, Hospitals Invest in Outpatient Clinics

Giant U.S. hospital operators, including Tenet Healthcare Corp., Dignity Health and HCA Healthcare Inc., are investing heavily in surgery centers, emergency rooms and urgent care clinics located outside hospitals, chasing after patients who increasingly want cheaper and more convenient care.

Insurers and employers that pay for health care are helping drive the change as they shift more Americans to high-deductible insurance plans, which require patients to pay more of their medical bills before insurance kicks in. That has pushed more patients to seek lower-cost options, says RBC Capital Markets managing director Frank Morgan, a hospital analyst.

Hospital demand slumped during the last recession, a trend that has continued even as the economy recovers, American Hospital Association data through 2014 show. Admissions growth at HCA hospitals has slowed in recent quarters to 1% to 2%, as a boost from the Affordable Care Act faded, while Tenet’s admissions have been flat or down 1% to 3% most quarters since late 2015.

In an effort to strengthen their hold on their markets and prevent rivals from siphoning off patients, hospitals are investing outside their own walls. They are “following the patient,” Mr. Morgan said.

The strategy also places hospital satellites closer to where patients live and work, which executives say they hope will win over new, loyal customers.

In July, Ashley Hammack rushed to a new free-standing ER in Spring Hill, Tenn., after growing weak from vomiting. The facility, a satellite of TriStar Centennial Medical Center, is a 10 minute drive from her home, about 20 minutes closer than the hospital where she delivered her daughter five months before.

Doctors saw her quickly. “I never even sat down,” Ms. Hammack recalled. She was treated for severe dehydration from what doctors suspected was food poisoning and sent home with medication.

Trevor Fetter, Tenet’s outgoing chief executive, says company executives have pursued rapid outpatient expansion partially out of necessity. Slumping admissions contributed to Tenet and HCA lowering their earnings estimates for 2017, which in turn hit stock prices.

By Melanie Evans | Fox Business

Image Credit: The Wall Street Journal

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About Peter Coffaro 1149 Articles

A growth-driven and strategic executive, Peter Coffaro commands more than 20 years of progressive management success within the medical device industry. As a District Sales Manager for Stryker Orthopaedics, Peter was responsible for managing and directing a regional sales force to achieve sales and profit goals within the Rocky Mountain region. Previously, he was the Director of Sales & Marketing for Amp Orthopedics. In this role, Peter was responsible for planning, developing, and leading all sales and marketing initiatives. Peter is a former orthopedic distributor in the Pacific Northwest. He has also worked with DePuy Orthopaedics as well as Zimmer, and held positions in sales, sales training, and sales management. Peter has an extensive background in organizational development, business development, sales management, negotiating and P&L management. Peter holds a B.S. degree in Biology from Northern Illinois University.

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