"Not only did we have one patient in the daily census, but we also tried to keep an emergency department staffed with physicians, and the price was high," Dougherty says. "We decided we would be much better served and it would be much less expensive for us if we converted it to an ambulatory surgical center. In the 1980s and 1990s, these boutique hospitals worked for some and still work for some. But it wasn't a good match for us. It was really an outpatient center that was needed here."
In an unusual move, as far as Texas health officials saw it, JPS asked in 2010 to downgrade its facility from a general hospital to an outpatient facility. "They didn't see it before," Dougherty says. "But there will be more to come, I'm sure." Making the change to outpatient saved the hospital about $1.6 million each year, according to Dougherty. "For a tax-assisted hospital system, that was vitally important."
JPS Health Network is aligning some of its outpatient programs with primary care practices "because we want to start transforming our care to patient-centered medical homes as building blocks for ACOs," says Dougherty. "We have several primary care sites right now, four of them within Arlington. We are going to consolidate them into one site and combine that with an outpatient pharmacy. In that way, we bring savings and have economies of scale. We can save $1.1 million just by doing that."
"It is an incredible opportunity for us for more primary care visits for prenatal care and the right diagnostics for lifestyle enhancement," he adds. "We want to build medical homes as quickly and as substantially as we can to provide comprehensive care."
Consolidating outpatient services
Despite the push for outpatient care, there is some hesitation. Hospitals need to step back and consolidate some of their outpatient programs to make way for cost-savings reflecting needs of the local demographic area, according to David Bronson, MD, president of the Cleveland Clinic Regional Hospitals.
The 4,400-licensed-bed Cleveland Clinic has a main campus, eight community hospitals, and 18 family health centers in Northeast Ohio among its facilities. In 2011, Cleveland Clinic closed the 211-bed Huron Hospital in East Cleveland, citing dwindling volumes of patients. The health system's action outraged many in the community.
Bronson says the health system had little choice but to change its policies regarding Huron Hospital. He noted competition from nearby academic medical centers and that the population that Huron served had steadily decreased from 40,000 to 17,000 over three decades.
"It's really related to changes in population and the changes and shift toward ambulatory care," Bronson says of the Huron move. "There will be continued pressure to prevent utilization of hospitals by being more aggressive in having ambulatory services." Huron Hospital was replaced with a new outpatient Huron Community Health Center, which focuses on chronic disease and wellness services particularly suited for that community, Bronson says.
Bronson says Cleveland Clinic weighs its outpatient planning carefully. For example, as part of the shift toward an increased need for outpatient care, the health system is currently undertaking a consolidation of its adult inpatient psychiatric services from five hospitals to two hospitals, while simultaneously maintaining several outpatient psychiatric locations. "It's easier to staff from a physician standpoint and manage it better."
Without the need for round-the-clock coverage, outpatient settings offer more flexibility for physicians, increased access to private practices, and improved management because of a smaller setting, Bronson says.