In a state with a glut of empty hospital beds, what health system would think of pitching yet another medical center?
Well, this one is tiny. It’s a micro-hospital, a concept that has taken off in other parts of the country but has yet to take hold in Illinois. A proposal by Mercyhealth to build a 13-bed hospital in far northwest suburban Crystal Lake would be a first for this concept in the state, and it’s drawing fierce blowback from neighboring rivals worried about losing patients.
Micro-hospitals can be alluring for health systems for a host of reasons. They expand a network’s footprint more quickly (and cheaply) into new communities compared to full-service hospitals. They’re shiny and new for patients and keep them within the system as insurers hold hospitals more financially accountable for the care they provide. These facilities can charge consumers more for visiting their emergency departments than at an urgent care center or doctor’s office.
But Illinois operators haven’t been biting. State law requires that licensed facilities have at least 100 patient beds, though Illinois regulators have a track record of approving controversial projects that don’t meet the state’s standards. (Mercyhealth acknowledges that its plan falls outside of requirements.) Plus, the market is saturated with medical centers—95 in the six counties in and around Chicago alone—already saddled with empty beds. With an eye toward prevention, health systems are wooing patients by adding more clinics and outpatient surgery centers, not extravagant new hospitals.
“I would imagine a lot of traditional hospital administrators would look at a (micro-hospital) and say, ‘We can’t run that efficiently,’ ” says Fred Bentley, a vice president at consultancy Avalere Health in Washington, D.C. “There are just basic operating costs that you have to have. You’re not going to bring enough patients in to pay for it.”
The cost of maintaining a 24-hour freestanding emergency department is a lot more than an urgent care center with extended hours, says Dr. Robert Pryor, a senior vice president at consultancy Kaufman Hall in Skokie. He’s a former Texas health system CEO who opened micro-hospitals there.
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Micro-hospitals have popped up in places where there’s a perceived gap in care, including Arizona, Nevada and Colorado. They look like general hospitals, but on a smaller scale: a dozen beds or so, an emergency department, a lab and a pharmacy. They take on patients who might need to stay overnight (think dehydration or chest pain short of a heart attack) but transfer more complex cases to bigger hospitals.
Experts say these small facilities started to crop up in the last decade or so as an outgrowth of freestanding emergency departments. Systems would open a stand-alone emergency department, then add a small hospital, then an outpatient building full of doctors’ offices. Ultimately, they…