Outpatient Investing

In a recent HealthLeaders Media Intelligence Report, healthcare leaders indicate that 64% of capital budget investment will go to ambulatory or outpatient care expansion, with just 36% dedicated to inpatient acute care expansion. HealthLeaders Media Council members discuss the outlook at their organizations.

This article first appeared in the June 2015 issue of HealthLeaders magazine.

Christian Pass
Interim CFO
John Muir Health
Walnut Creek, CA

We continue to build out our ambulatory strategy. We recently opened an outpatient care center with integrated physicians/specialists, other educational facilities, and ancillary services in the building. We're looking to expand outpatient care facilities in the Bay Area. Most of our new building capital investment is looking at the ambulatory strategy and then continuing to keep the inpatient facilities up to date with the latest equipment.

Healthcare is changing, with a significant shift toward the outpatient arena and trying to do things outside the hospital that we didn't do previously. Still, we will need that emergency uptime 24-hour care in the event of disasters. We have to be mindful of the capital and make sure we are planning appropriately, including, obviously, the pressures on payments and the movement to exchanges and things like that. It's a careful little chess game we are playing right now.

Another thing facing California in 2030 is the seismic regulations, so we are keeping that on the horizon as well. As we are looking at our capital outlook, even now into 2022 or longer, we need to start planning for either new construction or retro-fitting. Right now it's not directing a lot of funding. We have to be mindful of it in the future.

Ninfa Saunders
President and CEO
Navicent Health
Macon, GA

There is no question that ambulatory and outpatient care expansion is going to be where the preponderance of money will go. It's going into the world of retail, with some traditional outpatient, but tweaked to be more in the public space. The new retail product in the market space should be packaged in such a fashion that it is consumer-facing. The inpatient acute care expansion is not going to be bricks-and-mortar. It will go into the program as an inpatient product.

More important, the development in all areas—whether it is ambulatory or inpatient, the development of a comprehensive network or providers, whether we own them or not, it could be by partnership or some other arrangement—is designed so that the whole care continuum is populated to cover retail, hospital-based programs, and postacute. The only thing missing here is the postacute, unless you're looking at postacute as an inpatient expansion.

If we are serious about population health management, we have to start going from the mind-set of “build it and they will come” to going to the patients who might be using the care. Because, by the time they come to us, they're so very sick, and we're providing acute delivery as opposed to managing health. The management of illness through transactional care to the management of health is where the investment is going to go.

Jack Kolosky
Executive Vice President and COO
Moffitt Cancer Center
Tampa, FL

About 70% of our spending—and a growing rate—are outpatient revenues at Moffitt, which is consistent with what cancer care is becoming. The largest single capital investment that we have is a 206,000-square-foot outpatient building that we're building about 1 mile from the main campus to accommodate the sprawling activity.

Most of that is what I will call pure outpatient, with not a lot of crossover with inpatient. There is the breast program, the cutaneous skin cancer program, ambulatory surgery, and some chemotherapies. It will be those programs that will go over there initially. That is the majority of what our big investments are.

The only caution I'd have is that at some point we will need to address the inpatient hospital, which is coming up on 29 years old.

Capital investment at a cancer center is somewhat different from an acute care hospital in the sense that we don't have an emergency department or services such as obstetrics. But I would say we are not immune from the general trends in healthcare—that is, lesser inpatient, quicker stays, more use of ambulatory, and particularly in cancer there is consideration of oral chemotherapies, which the patient can take at home as opposed to coming in for IV therapy. That might be the single most important trend that could affect us down the road.

Bill Leaver
CEO
UnityPoint Health
West Des Moines, IA

On the shift toward ambulatory care: Our capital spend, which is in the neighborhood of $250 million a year, historically has been 55% facility, 20% ambulatory, and 25% technology/HIT. We have swapped out all of our IT platforms, inpatient, ambulatory, and are doing our enterprise resource-planning platform, as well. We have invested heavily in technology. Thinking about the next three to five years, I see that shifting to probably 50% ambulatory, 20% technology, 30% inpatient facility and technology. When I say inpatient facility I also mean replacing an MRI at a hospital, those types of things.

On the trends at hospitals: On the inpatient side, our board has had very good discussions. Some of our 17 hospitals needed some significant investments in terms of infrastructure, a new emergency department or critical care units and so forth. We have made those investments. Senior staff, the operators of these hospitals, sit in on these board meetings, so they are hearing our board members say we need to be looking at accelerating that shift to ambulatory.

On reexamining inpatient investments: A good example may be that some of our hospitals still have semiprivate rooms. It may be that three years ago the desire was to create all private rooms. Maybe that is something we don't
necessarily need to do, or won't be able to afford to do. It's not an unlimited capital budget. The ambulatory presence is a bigger priority.