- TripleTree

Viewpoint
THE HOSPITAL OF THE FUTURE MAY NOT BE A HOSPITAL AT ALL: AN ASSESSMENT OF
HOW CHANGES IN REIMBURSEMENT, ALTERNATE CARE SITES AND AMPLIF IED CONSUMER
EXPECTATIONS ARE BLUR RING THE LINES OF WHERE CARE IS BEING DELIVERED
2014
Executive Insights
UNCOMMON CL ARIT Y
VIEWPOINT / 2014
1
VIEWP OINT
T R I PL E T R E E
TripleTree is an independent merchant bank focused on mergers
and acquisitions, financial restructuring, and principal investing
services. Since 1997, the firm has advised and invested in some
of the most innovative, high-growth businesses in healthcare.
Our team is continuously engaged with decision makers
across the sector including best-in-class companies balancing
competitive realities with shareholder objectives, global
companies seeking growth platforms, and financial sponsors
assessing innovation investments or under-performing assets.
H E A LT H E X E CU T I VE ROU NDTA B LE
Our Health Executive Roundtable consists of senior executives from diverse industries who bring forth
unique and sometimes disruptive ideas about the complex issues facing the healthcare industry.
The Health Executive Roundtable has independent opinions which are not necessarily reflective of the
views of TripleTree, but our firm’s perspectives are included at the conclusion of each forum.
Health Executive Roundtable members include:
SUSAN ALPERT, MD, PHD
MARK DIXON
STEVE PARENTE, PHD
RALPH BERNSTEIN
ARCHELLE GEORGIOU, MD
ALBERT PRAST
BRIGID BONNER
DON JONES
MICHAEL QUILTY
DAVID COCHRAN, MD
CAROLYN PARE
SIMEON SCHINDELMAN
Principal
SFA Consulting
Former EVP, Emerging Strategies
US Bank
Principal
Bonner Consulting
Principal
Lightship Health
President
The Mark Dixon Group
Chair, Health Executive Roundtable
Senior Advisor, TripleTree
Chief Digital Officer
Scripps Translational
Science Institute
President & CEO
Minnesota Health Action Group
Professor of Finance
University of Minnesota
SVP, Cloud Technology
United Health Group
Founder
Matrix Medical Network
Chairman & CEO
Bloom Health
Table of Contents
INSIDE THIS ISSUE:
02 / EXECUTIVE SUMMARY
03 / POST-ACUTE CARE: LOOKING BACK TO SEE AHEAD
06 / HOSPITALITY MEETS HEALTHCARE
09 / HOSPITALS LOSE THEIR MONOPOLY ON ACUTE CARE
11 / HEALTH REFORM TO CARE REFORM: HOTEL SERVICES FOR ACUTE CARE
13 / HOSPITALS WITHOUT BEDS: THE NEXT GENERATION OF HOSPITAL REAL ESTATE
16 / LOOKING AHEAD
EXECUTIVE SUMMARY
Over the last forty years,
and architectural innovation; in fact, our research
there has been a significant
shows that it may not be a hospital at all.
shift in where healthcare
is delivered. Primarily
High-quality healthcare is frequently described as
driven by regulatory
delivering the right care to the right person at the
change and reimbursement
right time in the right place. This report focuses on
opportunity, alternatives to
the right place. It describes the ongoing evolution
hospital-based acute care
of healthcare real estate and offers realistic insight
services have emerged
to the characteristics of the hospital of the future.
with a consistent flattening
We hope it provokes dialogue and stimulates new
of inpatient admissions and a continued increase in
considerations as hospitals, integrated health
outpatient visits.
systems, and other providers consider where and how
to make long-term healthcare real estate investments.
With the nation’s 5,723 registered hospitals1 being
at the center of this painful, messy, yet necessary
disruption of the healthcare industry, our Health
Executive Roundtable addressed the question,
“What does the hospital of the future look like?” Our
take is that the hospital of the future is more than
ubiquitous technology, expanded robotic systems,
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Between 1991 and 2011,
there was a 9% decrease in inpatient
admissions and a concomitant 6.2%
increase in outpatient surgeries.2
POST-ACUTE CARE: LOOKING BACK TO SEE AHEAD
Acute care hospitalization rates have gone through dramatic changes
As shown in Figure 1, Medicare benefits first became
since the mid-1980s because of regulatory and reimbursement changes.
available in July 1966, and the number of hospital discharges
Over the last decade, that momentum has been maintained by the demands
progressively increased until they peaked at 169.3 per
of consumerism and the expectations of a better customer experience.
thousand in 1981. The Medicare Prospective Payment System
Taking a historical look at three key dynamics that fueled the shift of acute
was introduced in October 1983 as a financial incentive to
inpatient care to outpatient settings sets the stage for understanding and
encourage more cost-efficient care, and by 1986 discharge
predicting how hospitals are likely to shift in the next decade.
rates declined to 143.1 per thousand. While the Prospective
Payment System only applied to admissions for Medicare
• The Emergence of Post-Acute Care Facilities. Following
beneficiaries, there was an indirect effect on hospital
the introduction of Medicare in 1966, hospitalization rates reached
admission rates for the commercial population, and the
all-time highs only to have utilization plummet when the Health Care
Department of Health and Human Services (HHS) estimated
Financing Administration (HCFA) switched reimbursement from fee-
that it fueled an overall 30% decrease in hospital utilization
for-service to a prospective payment system in 1983.
rates between 1965 and 1986.3
Figure 1
175
170
165
155
150
145
140
135
130
125
Hospitalization Rate per 1000 Population
Medicare
Coverage Begins
Start of Medicare Prospective
Payment System
65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86
19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19
Source: HHS, Vital and Health Statistics Trends in Hospital Utilization:1965-1986
VIEWPOINT / 2014
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At the same time, Medicare’s continued fee-for-service
and minimally invasive surgery along with technological and payer
reimbursement for post-hospital extended care created opportunities
trends has supported the growth of ASCs. By 2000, there were
and incentives for delivering care in less acute and less costly
approximately 3,000 ASCs in the country, and today there are
settings. In addition, the Omnibus Reconciliation Act of 1980 and
5,300 facilities performing 23 million surgeries annually (26% of all
a series of additional regulatory changes over the next decade
surgeries).5
expanded Medicare’s coverage for home health services. As a
result, between 1990 and 1996 the number of home health agencies
• Convenience is Added to the Value Proposition. Long emergency
increased by 68%, inpatient rehabilitation facilities went up by 29%,
room waiting times and inconvenient hours for primary care visits
and hospital-based skilled nursing facilities (SNFs)
spawned the introduction of urgent care centers in the 1970s.
rose by 82%.
Studies show that urgent care visits are 33%-50% of the cost of
4
comparable services delivered in an emergency room; however,
Hospitals compensated (and overcompensated) for the decrease
economics are not the only factor driving their growth.6 Patient
in utilization by increasing their capacity for complex patients and
demand for more convenient access to care has increased, prompting
procedures that generated higher reimbursements.
significant interest and investment in urgent care centers. With hours
of operation expanded significantly beyond typical office hours and
• Ambulatory Surgery Centers Threaten the Status Quo. The more
the scope of services broader than that provided in many primary
significant pain point for hospitals came with the explosion of
care offices (70-80% of urgent care centers offer fracture care,
ambulatory surgery centers (ASCs). While only a few ASCs existed
minor suturing, and intravenous fluids), the nation’s 9000+ urgent
in the mid-1970s, the turning point came in 1981 when Medicare
care centers have siphoned low- to mid-acuity patients away from
began reimbursing facilities for selected procedures. Commercial
hospital emergency departments.7,8
payers not only followed Medicare’s lead, but for certain procedures,
their utilization review policies completely denied inpatient payment
In contrast to urgent care centers, retail clinics do not directly erode
for certain surgical procedures that could be safely performed
the bottom line of hospital emergency rooms since they primarily divert
in an outpatient setting. Widespread advancements in anesthesia
patients away from primary care physician offices and urgent care
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centers. However, we believe retail clinics spawned the greatest threat to hospitals since they fundamentally changed the long-held definition of the
right place. Retail clinics take care to patients, conveniently offering healthcare services in locations where people shop, live, and work at costs that
are 30%-40% less than similar care at physician offices and approximately 80% less than emergency departments.9 In addition, retail clinics’ parent
companies (e.g. Target, Walgreens, CVS, Wal-Mart) bring deep customer relationship competencies to the service model where patients are treated
as valued guests.
Although the American Academy of Pediatrics10 and American Academy of Family Physicians11 have taken a strong stand against the use of retail
clinics, a PricewaterhouseCoopers survey showed that 23% of consumers have received care at a retail clinic and 73% of them would use the
service again.12 A survey conducted by researchers at the Washington University School of Medicine found that among parents who take their
children to a retail clinic, 47% of visits are when the pediatrician’s office is open, thus suggesting that convenience and the power of consumerism
made a difference in their decision regarding where to seek care.
VIEWPOINT / 2014
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HOSPITALITY MEETS HEALTHCARE
In 2008, the Centers for Medicare and Medicaid Services (CMS)
“guestology” to help administrators, physicians, nurses and other
launched the public reporting of performance on the Hospital Consumer
manager-level healthcare personnel consistently exceed the
Assessment of Healthcare Providers (HCAHPS) and in 2010, passage of
expectations of patients. Disney’s website includes testimonials from
the Affordable Care Act linked financial incentives (and disincentives)
Massachusetts General Medical Group, Arkansas Children’s Hospital,
to HCAHPS results. These regulatory dynamics along with consumers’
Florida Hospital for Children, Barton Memorial Hospital as well as
expectations for better service sent a clear message to hospital
Humana and Siemens Healthcare.
executives; improving patients’ experience was a necessity to maintain
their profit margin and remain viable. Forward-thinking executives
While these hospitality immersion programs help improve the service
realized that delivering an outstanding experience could be leveraged as
experience and hotel functions of a hospital to drive a more memorable
a competitive strategy to capture market share.
experience (and ultimately, better HCAHPS scores), the Cornell School
of Hotel Management points out that the intersection between hospitality
The hospitality market saw a business opportunity to share their
and healthcare extends beyond the notion that family members of
expertise with the healthcare industry.
patients should be viewed as guests with overnight accommodations
near the patient. The larger opportunity is leveraging hotels as
• In 2011, the Ritz-Carlton Leadership Center introduced their Gold
Standard13 customer service program to hospitals. The Ritz has
transitional care facilities that deliver healthcare-related services to
patients themselves.16
shared their best practices with Stanford University Medical Center,
New York Presbyterian Hospital, Loyola University Medical School,
Self-Pay Consumers Demand a Better Experience at Lower Cost.
and Bon Secours Health System of Virginia, among others.14
Plastic surgeons were some of the earliest physicians to routinely
• That same year, the Disney Institute created a professional
integrate hotel services into their post-operative care plans. This was
development program specifically for hospitals and healthcare
primarily a response to self-pay patients who shopped and compared
organizations. The program, Building a Culture of Healthcare
costs for cosmetic surgery while also demanding privacy, comfort and
Excellence, uses Disney’s customer care philosophy, called
service. Instead of admitting patients for surgery with a one to two night
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hospital stay to manage dressing changes and drains, many surgeons
moved their procedures to outpatient settings and admitted patients to a
nearby hotel, often with private duty nursing.
Hotel care is not limited to cosmetic surgery. Wellness tourists, generally
wealthy, middle-aged and highly educated, are looking to extend the value
of their high insurance deductibles and out-of-pocket costs by receiving
non-emergent preventive medical services and procedures in five-star
vacation settings.17 Canyon Ranch, one of the early trailblazers, expanded to
a medi-spa and offers health consultations and diagnostic medical services
such as cardiac stress testing, bone densitometry, and genomic testing.
The Greenbrier in West Virginia touts a full-time staff of 11 board-certified
physicians (cardiologists, gastroenterologists, endocrinologists, and
radiologists) in the Greenbrier Clinic who schedule no less than an hour for
the history and physical examination of each patient.18
Dr. Louis Bucky, a plastic surgeon in Philadelphia,
has had a long-standing relationship with the
Ritz-Carlton since 2000. This relationship was at
the core of the company’s Medical Concierge
Program which launched in 2010. Services include
transportation to and from doctor’s offices or hospitals
in greater Philadelphia, 24-hour room service with
accommodation to special dietary requirements,
prescription pickup and coordination of medical
services and equipment as well as handicappedaccessible room accommodations.19 Taking it one step
further, The Miami Institute for Age Management
and Intervention, complete with operating rooms
and treatment rooms, opened its doors as a tenant
in the Four Seasons Hotel and Resort.
According to Marketdata Enterprises, medi-spas emerged about ten years
ago and approximately 2,100 are now operating in the United States.
Revenues in 2012 were estimated at $1.94 billion and projected to increase
to $3.6 billion by 2016.20
Some Hospital-Hotel Partnerships Create (or Protect) Revenue. Hospitals
have frequently identified local hotels where they can direct visiting
family members who need a place to stay. However, these relationships
have evolved. Hospitals are establishing formal relationships with hotels
to accommodate the patients themselves for non-acute post-discharge
care. As a destination medical facility, Mayo Clinic attracts patients from
across the United States and abroad. However, Mayo used to turn away
approximately 70 out-of-town patients per month who needed surgery
because they didn’t have accompanying family or friends that could help
them with post-recovery needs.21 In 2013, a newly formed home healthcare
agency, Kahler-Marr In-Room Home Care Services, partnered with the
Mayo Clinic and the Kahler and Marriott Hotels to offer in-room, privateVIEWPOINT / 2014
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Hospital-hotel partnerships for sleep studies are yet another example.
With 50-70 million Americans having sleep disorders and up to 80%
being undiagnosed, sleep studies provide a meaningful source of
Kahler-Marr
In-Room Home Care Services22
revenue.23 However, hospitals lose a significant number of diagnostic
tests to independent sleep study centers whose charges, on average,
can be 30-50% less than a hospital-based center. In 2003, Vanderbilt
Wound Assessment/Dressing Change
$48
Vital Signs & Sedation Checks
$39
Blood Sugar Checks
$15
Blood Draws
$24
study patients. The strategy also allows them to capture their share of
Re-Education of Discharge Orders
$48
the $5.8 billion sleep study market. Since then, numerous hospitals have
Range of Motion Exercises
$58
Ambulation/Gait Training
$68
Medical Center opened the first hotel-based sleep center in the Marriott
at Vanderbilt University to offer a more comfortable night’s sleep for
partnered with local hotels to establish accredited sleep centers:
**All Services are Private Pay, must be billed to the Room
2. Sample list from Kahler-Marr website; Complete list at
www.kahlerinroomcare.com/nursing-services/nursing-services.htm
• Duke with the Millennium Hotel in Durham, North Carolina
• Northwestern with the Radisson Hotel in Chicago
• Truman Medical Center with the Hyatt Regency in Kansas City
• Southern Maine Medical Center with the Comfort Suites; a
demonstration of how this strategy works in smaller markets
pay home care services for patients recovering from surgery. As shown
The examples above are simple but impactful for hospital executives
in Figure 2, a la carte prices are clearly listed on their web site and costs
since they attract and / or retain patients and have a favorable financial
for services are added to the guest’s (patient’s) hotel bill.22
impact, except when shifting to hotel care erodes their bottom line.
St. Vincent Healthcare in Billings, Montana attracts patients from a wide
geographic region, and the hospital has negotiated rates and special
amenities with the Hilltop Hotel for those needing to recover in close
proximity to the hospital.
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HOSPITALS LOSE THEIR MONOPOLY ON ACUTE CARE
One of the more innovative alternative care models for acute care we
The outcomes are significant. According to, Dr. Mark Swiontkowski, CEO
uncovered was at Minnesota-based TRIA Orthopedics. Established in
of TRIA, the cost for a total knee replacement procedure is $1,500-$2,000
2003 as a joint venture between a private practice, a multi-specialty
less than the same surgery done in a traditional inpatient care setting
healthcare provider (Park Nicollet Health Services) and an academic
with similar or better outcomes. Out of approximately 1,000 cases, patient
center (University of Minnesota Physicians), TRIA offers comprehensive
satisfaction rates average 99.7%, and there’s only been one emergency
orthopedic care in a 100,000 square foot facility with services ranging
when a patient had a brief syncopal episode.24
from outpatient clinics, acute injury care and diagnostic radiology to same
day surgery and rehabilitative care.
The program has been a triple win. In addition to Swiontkowski surmising
in Figure 3 that similar potential exists for other specialties, TRIA
In its first five years of operation, TRIA did not perform total hip and
has expanded the TRIA/Hilton Recovery Program to include total hip
knee replacement surgeries since these procedures typically require a
replacements, complex ligament reconstruction, fracture and soft tissue
two-night inpatient stay. However in 2008, TRIA partnered with a newly-
procedures.25
constructed Hilton Hotel located directly across the street and developed
the TRIA/Hilton Recovery Program, which diverts patients away from local
In addition:
hospitals and allows TRIA surgeons to perform total knee replacement
• Patients have an enhanced overall experience with lower out-of-
surgeries in their outpatient surgery center with the overnight recovery
pocket expenses paid toward their deductible or co-insurance.
taking place in a private room at the Hilton. Complete with one-on-
• For commercial payers, the clinical and economic outcomes are such
one onsite nursing care, the TRIA/Hilton partnership is fully compliant
a strong value proposition that they’ve willingly negotiated case rates
with regulatory and licensing requirements since patients are formally
with TRIA that include hotel care as an alternate place of service for
discharged from the outpatient surgery center and merely check-in to the
acute care recovery.
hotel with the nursing services classified as home health care services.
• For TRIA and its affiliated surgeons, the expanded scope of services
gives them a share of the facility revenue that was previously billed
and collected by hospitals.
VIEWPOINT / 2014
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Figure 3
The Eventuality of Expanding Into Other Specialties
Likely Areas of Hotel Model Growth
Oncology
“The general hospital operating room
will eventually go away. My vision of the
future includes healthcare being delivered
outside of ambulatory specialty centers
with a hotel model in place for all elective
cardiovascular, gynecologic, urologic,
ENT, and even cancer surgeries.”
— Mark Swiontkowski, CEO of TRIA
Urology
Gynecology
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Otolaryngology
Gastroenterology
HEALTH REFORM TO CARE REFORM: HOTEL SERVICES FOR ACUTE CARE
The Affordable Care Act is a pay-for-performance program and other
provisions are set to cut hospital payments by $260 billion over the next
six years. In addition, private payers are rewarding value and quality
by partnering with integrated healthcare systems and establishing
Accountable Care Organizations that shift financial and clinical risk.
“The fee-for-service reimbursement model
as we know it today is dying quickly; we just
don’t know the date of the funeral yet.”
— Richard Umbdenstock, President and CEO
of the American Hospital Association
In order to survive this shift, hospitals are under the gun to make
significant cultural and operational changes, and we believe that a
critical success for hospitals is redefining the right place.
Steve Brown, Executive Director of the Healthcare Advisory Team for
Cushman & Wakefield | NorthMarq, describes an evolving array of
healthcare projects where surgery centers are being built or re-
Ambulatory Surgery Centers Establish Their Own Hotel Capabilities.
designed to include onsite hotel accommodations for patient recovery.
Partnerships between ambulatory surgery centers and hotels are getting
Similar to the TRIA model, patients are discharged from the outpatient
established across the country, a newer trend, being reported first by
facility and then checked in to the facility's hotel beds. Co-location of
real estate firms and real estate investment trusts (REIT), are ambulatory
the facility and hotel accommodations eliminates the requirement of
care centers establishing their own hotel-like facilities.
geographic proximity between a surgery center and hotel. It also
simplifies patient transport needs and eases access to clinical
services and specialists, if needed.
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Financially, this strategy gives providers more control over the cost of care for patients and, theoretically, could be yet another profitable revenue
stream for surgery centers if they can provide overnight stays less expensively than the negotiated rate with a hotel.26 Duke Realty Corporation,
(NYSE: DRE), a publicly traded REIT that owns and operates approximately 80 healthcare properties, has an interesting view of medical office
buildings (MOBs) and states,, “MOBs offering higher-acuity care and/or non-acute care are an attractive solution because they cost less to build,
operate and maintain than hospitals and inpatient facilities, for both physical and regulatory reasons.”26
While commercial payers have come on board, the ambulatory surgery-hotel care model is hardly a routine approach to care. The biggest barriers are
CMS’s payment rules that only reimburse knee or hip replacements performed in inpatient settings.27 As shown in Figure 4, we estimate that CMS
would save almost $220 million annually if they change their reimbursement rules for these two procedures alone.28
Figure 4
HCUPnet estimates Annual Savings for Knee & Hip Joint Replacements with Hotel-Recovery (2011)
666,604 Hip & Knee Replacements
Total Cost: $10.97 Billion
Assume 10% Conversion
66,660 Hip & Knee Replacements
Hospital Recovery
Total Cost: $1.10 Billion
Hotel Recovery
Total Cost: $.88 Billion
Annual Savings: $219 Million
Source: HCUPnet28
In Scandinavian countries, privately run patient hotels are situated on hospital grounds and staffed by nurses
with quick access to specialist consultants. The Innovation Unit think tank reports that patient hotels in Norway
and Denmark save up to 60% on the cost of accommodating a patient in the hospital.29
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HOSPITALS WITHOUT BEDS: THE NEXT GENERATION OF HOSPITAL REAL ESTATE
A new mindset is evident among hospital executives engaged in building
respondents indicating they have an ambulatory care construction project
new or expanded facilities. Construction projects are skewed toward
under way or planned in the next three years, up from 15% the prior year.
facilities for outpatient services and ambulatory surgery, as these are
However, rather than expanding their on-campus footprint, hospitals are
more likely to generate a stronger return on investment than inpatient
building their new ambulatory facilities in satellite locations, sometimes
care facilities in future years.
in their competitor’s backyard. This hub and spoke model is designed
to drive complex cases back to the hospital hub and reflects the fierce
On average, 47% of hospitals’ inpatient revenue
comes from caring for Medicare beneficiaries.30
Unless CMS (and other public payers) reforms
reimbursement rules, hospitals will not be able to
afford adopting these alternative care approaches.
However, hospital administrators are feeling the
competitive pressure and slowly shedding the idea of
using the number of beds to size their hospitals and
inpatient census as their path to profitability.
competition for market share.31
This strategy is evident in urban and suburban settings. Montefiore
Medical Center, the University Hospital for Albert Einstein College of
Medicine in the Bronx, is building a $142 million, 11-story facility at the
Hutchinson Metro Center, a 42-acre office campus (Montefiore’s fourth
campus) complete with diagnostic services and dedicated surgical
services including operating and procedure rooms. Remaining floors
will be dedicated to primary care; gastrointestinal, urology, cardiology,
otolaryngology, cosmetic surgery, and dermatology. There is also a pain
center floor with anesthesiology, physical rehabilitation, neurology and a
headache clinic.31 Montefiore’s President and CEO Dr. Steven Safyer said,
According to the 2014 Health Facilities Management/American Society
“We are reshaping outpatient care and establishing leading practices that
for Healthcare Engineering (HFM/ASHE) Construction Survey, there
provide Montefiore’s world-class treatments through multidisciplinary
is a bigger focus on developing ambulatory care settings with 22% of
teams at a hospital without beds.”33
VIEWPOINT / 2014
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Ridgeview Medical Center is an independent 109-bed hospital in
including an influx from one adjacent community whose inpatient volume
suburban Minneapolis. In 2011, Ridgeview completed the first phase of
grew from 1%-15% in two years.34
construction for Two Twelve Medical Center located 11 miles east of their
main hospital. The 180,000 square foot facility has signage that reads
Why is Stevens making investments and big bets in cost-efficiency
HOSPITAL, and is equipped with three ambulance bays, a heli-pad and
approaches such that revenues could go down?
is a full-fledged but free-standing emergency room without any inpatient
beds. In addition, the multi-tenant building houses a comprehensive
Consider the following:
array of primary care and subspecialty private practices along with
• Ridgeview patients seeking emergency room services are evaluated
advanced imaging, laboratory and pharmacy services. The second
and, if appropriately stable, triaged to the adjacent, less costly urgent
phase of the project is nearly finished and boasts a 45,000 square foot
care area. This also translates into office visit/clinic-level benefits
expansion and ambulatory surgery center complete with four care suites,
versus emergency room/hospital outpatient benefits, thus resulting
their terminology for hotel-beds.
in lower overall costs for payers and less out-of-pocket costs for
patients.
Robert Stevens, Ridgeview’s President and CEO, envisioned the Two
• The care suites offer an alternative care setting for patients having
Twelve Medical Center expansion as a way to penetrate more of the
procedures that have traditionally required an overnight stay. Besides
outpatient care market, and steer potential inpatient care to its main
a 20-30% decrease in cost, hotel care may result in fewer hospital-
hospital and away from competitors. Early indications are that his plan
acquired infections and readmissions.
worked. Outpatient visits in the Ridgeview system have nearly tripled,
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• Ridgeview is partnering with Intergenerational Living and Health Care (ILHC) to co-develop a 125-unit senior living complex in a neighboring
community. The new facility will offer assisted living, memory care and other healthcare services for residents and will integrate the use of
telehealth services to connect residents with Ridgeview’s medical facilities.35
Care delivery strategies that decrease the total cost of care will strategically position Ridgeview to be successful in bundled payment programs,
accountable care arrangements and other value-based reimbursement designs. Ridgeview’s willingness to break with traditional norms about how and
where care is delivered is a bold example of a hospital betting on a future healthcare system that rewards well-care instead of sick-care.
“Healthcare experience is still the priority when doing an executive search for a hospital.
However, we’ve seen a shift among larger integrated health systems who are asking us to
find candidates with a hybrid of healthcare and hospitality experience.”
— Mark Madden, SVP Executive Search, B.E. Smith
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LOOKING AHEAD
We’re in the early innings of change in healthcare real estate. In 2012,
be admitted for conditions such as heart failure, pneumonia, urinary and
44% of hospitals’ revenue came from outpatient services.36 Between now
skin infections.
and 2019, the demand for outpatient services will increase by nearly 22%
while demand for inpatient services will remain flat or decrease.37
Over 60 randomized trials boast results showing that home-based
versus hospital-based care decreases delirium by 75%, mortality by
In our view, while the term hospital may still be used to describe the
25%, and costs by 20-40%.38 Companies like Clinically Home of America
5000+ care facilities in the U.S., hospitals will eventually be more akin to
have begun commercializing the Hopkins’ Hospital at Home model as a
ambulatory care businesses as greater than 50% of their revenue comes
centralized approach to telemedicine-based care.
from outpatient services.
Over the long term, remote monitoring, virtual reality and robotics will
Looking even further ahead, the hospital of the future will be your home.
enable care at home for all except the most acutely ill patients. The
One of the most innovative models we’ve identified was the Johns
market leaders in healthcare are already demonstrating innovation,
Hopkins Hospital at Home® model, where protocols for setting up
leadership and the financial commitment to establish the strategies,
and performing services in the home (intravenous antibiotics, oxygen,
infrastructure and culture to redefine their role in the continuum of care.
diagnostic tests) have been established for patients who would typically
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END NOTES
1
AHA.org: http://www.aha.org/research/rc/stat-studies/fast-facts.shtml#community
2
Avalere Health analysis of American Hospital Association Annual Survey Data, 2011, for community hospitals. U.S. Census Bureau:
National and State Population Estimates, July 1, 2011.
3
HHS, Vital and Health Statistics Trends in Hospital Utilization:1965-1986
4
Guterman, S, Putting Medicare In Context: How Does The Balanced Budget Act Affect Hospitals? Health Policy Center, The Urban Institute July 2000
5
ASC Association: http://www.ascassociation.org/AboutUs/WhatisanASC/History
6
BMC Health Service: Weinick, et al. Urgent care centers in the U.S.: Findings from a national survey; BMC Health Serv Res. 2009; 9: 79.
7
Ibid.
8
Urgent Care Association of America, Urgent Care Industry Information Kit, 2013
9
Anals of Internal Medicine: Mehrotra, Ateev, et al, “Comparing Costs and Quality of Care at Retail Clinics with that of Other Medical
Settings for 3 Common Illnesses.” Annals of Internal Medicine.151 no. 5 (2009):321‐328
10
AAP Principles Concerning Retail-Based Clinics; originally published online February 24, 2014; Accessed 2/25/14
11
http://www.aafp.org/about/policies/all/retail-clinics.html; Accessed 2/25/2014
12
Price Waterhouse Coopers Health Research Institute Consumer Survey, 2013
13
Ritz Carlton: http://corporate.ritzcarlton.com/en/About/GoldStandards.htm
14
FierceHealthcare: http://www.fiercehealthcare.com/story/hospital-or-hospitality-ritz-carlton-provides-hospitals-customer-service-le/2011-08-26
15
Disney: http://disneyinstitute.com
16
Cornell Hospitality Proceedings Vol. 4 No. 2, March 2012
17
2013 Global Wellness Tourism Economy Report, Global Wellness Institute and SRI International
18
Greenbriar: http://legacy.greenbrier.com/greenbrier-health.aspx
VIEWPOINT / 2014
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19
Dr. Bucky: http://www.drbucky.com/media/dr-buckys-ritz-carlton-concierge-program/
20
PR Web: http://www.prweb.com/releases/2013/1/prweb10363396.htm
21
KAAL TV: http://www.kaaltv.com/article/stories/s3154282.shtml
22
Kahler Hotels: http://www.kahlerinroomcare.com/nursing-services/nursing-services.html
23
National Research Council: Sleep Disorders and Sleep Deprivation: An Unmet Public Health Problem. Washington, DC: The National Academies Press, 2006.
24
TripleTree interview with Dr. Mark Swiontkowski on 11/13/2013
25
TripleTree interview with Dr. David Fischer on 2/26/2014
26
Press Release: “Six Healthcare Real Estate Trends to Watch in 2013.” Duke Realty Corporation, January 24, 2013
27
Ambulatory Surgery Center Association: Analysis of Medicare’s 2013 Payment Rule, Ambulatory Surgery Center Association, November 2, 2012.
28
29
30
31
HCUPNet data. Accessed March 15, 2014
TripleTree interview with Steve Brown, Cushman & Wakefield | Northmarq, January 24, 2014.
HCUPNet data. Accessed March 17, 2014
HFM Magazine: http://www.hfmmagazine.com/display/HFM-news-article.dhtml?dcrPath=/templatedata/HF_Common/NewsArticle
/data/HFM/Magazine/2014/Feb/0214HFM_FEA_CoverStory
32
Modern Healthcare: http://www.modernhealthcare.com/article/20130126/MAGAZINE/301269979
33
Montefiore Medical Center: “Montefiore Medical Center Announces Plans to Build the Hospital of the Future”, News Release dated October 22, 2012.
34
TripleTree interview with Robert Stevens, President and CEO, Ridgeview Medical Center, January 31, 2014
35
Twin Cities Business Journal: http://www.bizjournals.com/twincities/blog/real_estate/2013/03/ridgeview-medical-chaska-senior-housing.html?page=all
36
American Hospital Association Hospital Statistics, 2014 edition
37
News-Medical.Net: http://www.news-medical.net/news/20100106/Sg2-Demand-for-outpatient-services-to-increase-by-nearly-2225-over-the-next-decade.aspx
38
TripleTree interview with Dr. Bruce Leff, February 4, 2014.
18
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