From post-surgery services and rehabilitation to radiology, chemotherapy and infusion, hospitals here and across the country continue to migrate services out of brick and mortar to outpatient settings in the community.
But what happens to hospital units left vacant? Hospital executives here are repurposing wings and entire floors to maximize revenue and make sure patients are getting care in the best setting.
Services continue to move off campus but hospitals have been reusing and redeveloping space for decades. Catholic Health CFO James Garvey points to the transformation of the former OLV hospital into a center for senior services; and the conversion of the Sisters of Charity Hospital St. Joseph Campus into an outpatient ambulatory specialty center with inpatient addictions, bariatrics and orthopedic surgery.
“We’re still looking at other ways so we can take advantage of a site like that for further use for professional services or physician offices,” he said.
Another example: At Kenmore Mercy Hospital, an unused unit was converted into a medical rehab unit for stroke and orthopedics rehab patients. And at Mercy Hospital in South Buffalo, another space was repurposed as a discharge lounge, allowing the hospital to free up patient rooms while completing the discharge process.
“It’s another example of how to use space within a hospital,” he said. “With the cost of new, you want to try to utilize what you have. We’re trying to be creative and really smart with the resources we have and how we can do a better job in serving the patient.”
Outpatient services in community settings are expected to continue to grow, whether it’s orthopedics or gastroenterology or cardio and oncology, according to national consulting firm Kaufman Hall. That’s led to 50% or more of hospital revenue and nearly two thirds of margin coming from these ambulatory outpatient settings.
Erik Swanson, senior vice president for data and analytics, said the transition is driven by both clinical innovation and market economics as clinicians realize they can do procedures safely in a more cost-effective delivery setting.
“Whether it’s a for-profit or a nonprofit, it’s the piece generating the higher margin," he said.
So what does that mean for the main hospital campus? Swanson said hospitals must analyze what services are best provided inside those four walls. That could mean units for emergency services, serious surgeries or specialty services such as oncology or women’s health.
“I think hospitals need to decide what do you do with that space to make it effective and efficient,” he said. “They can absolutely be repurposed to be both inpatient and outpatient services inside those four walls.”
Taking services out of the hospital and repurposing space needs to make sense, however, said Andy Davis, COO at Erie County Medical Center. Though ECMC’s main campus on Grider Street remains the primary site, the hospital operates outpatient offices for primary care, bariatrics, gastroenterology and plastics at a Southtowns outpatient site, and a specialty psychiatric care site in Amherst.
“It’s a purposeful process,” he said. “When we look at our planning process, it’s to provide access, that’s the key. When you go off your campus, it’s to provide access to a network for patients who wouldn’t normally come to Grider Street.”
When the new expanded emergency department and lobby opened in 2020, it repurposed the old ED into an observation unit and an administrative unit was renovated into clinical space.
“As we move toward trying to create access for individuals, we’re going to continue to look at outpatient practices, but also telemedicine and other equipment happening in the industry that are being innovative,” Davis said.
Matt Drake, Kaleida Health’s executive vice president for strategy and partnerships, stressed off-campus growth doesn’t diminish the importance of the traditional hospital campus.
As hospitals transition from fee-based to value-based care, the goal is to reduce demand for emergency department visits and inpatient stays because the patient population will be healthier.
“What you will see is hospitals expanding ambulatory services, including primary care, while retaining the critical role of providing emergency access for those patients and those moments that it’s called for,” he said. “The services will be similar to what we are including in our ambulatory health hubs.”
Drake doesn’t expect a windfall of revenue from those services, but they do help reduce the cost of health care, which should lead to additional funds from government and commercial payers.
“We do better when we improve outcomes, quality, and bend the health care cost curve,” Drake said.