Navigating the Conflict Between Cost-Effective Care and Aging Facilities

October 28, 2014  |  Mark Furgeson

As the healthcare industry continues to evolve, many organizations struggle with the inherent conflict between cost-effective care and aging/overbuilt acute care facilities. Will reform improve patient care? Absolutely, but only if it creates a well-coordinated delivery system with facilities that are efficient and competitive. In this series, we discuss principles to guide investment in inpatient environments.

The logic is simple. According to an ASHE analysis performed by TME Engineers, it costs nearly $49/year to maintain one square foot of I2 hospital space, less than half that to maintain a business occupancy MOB, and a fraction to maintain the corner pharmacy where retail clinics operate.

The reality of choosing the most cost-effective location for caregiving is complex. American healthcare is stuck in the middle ground between fee-for-service sick care and capitated managed wellness, causing perplexing market and motivational dynamics. The Two Midnight Rule testifies to the complexity of categorizing inpatient and outpatients inside the hospital. But change is coming. As reimbursement metrics mature, it could arrive more quickly than one might expect.

The safe bet is to size new facilities conservatively (in terms of delivery units and room sizes) and create allowances for a strong, flexible growth plan in the eventuality of increased patient volumes.

FreemanWhite also recommends combining multiple building occupancies under one roof or in connected facilities that allow inpatient and outpatient volumes to grow and fluctuate independently.

At a 71-bed hospital in the Midwest, 80% of patients who come to the hospital campus do so as an outpatient, a trend that is expected to continue with healthcare reform. FreemanWhite right-sized the hospital based upon appropriate, future inpatient volumes and expansion/relocation of outpatient services to manage the health of newly insured patients as they join the system.

Differing substantially from the typical “Large Hospital/Small MOB” model seen on many hospital campuses, FreemanWhite proposed a disease-based “Small Hospital/Large MOB” solution to capture and manage patients with commonly treated conditions prevalent in the service area.

In the proposed solution, new and existing inpatient and outpatient buildings connect to one another through a retail concourse, enabling patients to treat the facility as a one-stop-shop rather than driving and parking to see multiple specialists on campus. An urgent care “instacare” is designed to supplement the emergency department by siphoning vertical patients to less costly treatment space.

A disease-based model promises economies of scale. Instead of individual clinics for each provider, each with their own exam rooms, support, and waiting, one large clinic is designed to house multiple providers with shared spaces. The clinic can accordion up or down depending upon volumes.


outcome_Mark Furgeson

Mark is an adjunct professor at Cornell University co-teaching a course on the intersection of policy and design in the School of Design and Environmental Analysis. The course investigates Evidence Based Design (EBD) with the intention of clarifying the uncertainty regarding scientific evidence and the investment in facilities. This experience provides FreemanWhite access to world class research and a unique perspective regarding the components of EBD that are most beneficial to healthcare.

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