Care in Community Settings: How Costs are Creating Shifts in Care

Care in Community Settings: How Costs are Creating Shifts in Care

Lowering healthcare costs has been a national objective for years. However, as payment transfers to value-based models, health systems have pursued lower-cost care settings much more creatively and aggressively. Some are actually relocating costs. One example is Lahey Hospital and Medical Center, which is a teaching hospital for Tufts University School of Medicine. The hospital moves patients with less serious illnesses to its community hospitals in its own health network. This has proven to work well in part because Lahey Hospital has excellent community hospitals with which it partners.

This works is a win-win for the health system. The primary hospital can open beds for sicker patients while improving upon its bottom line, the community hospital preserves its mission, and patients receive care nearer to home.

Other healthcare providers are pursuing similar changes. In the past two years, five out of the top 15 academic hospitals have partnered with community hospitals. Other systems have cut costs by eliminating inpatient care in new bedless hospitals.

These bedless hospitals avoid the higher fixed expenses of inpatient care. In addition, they improve the overall experience and reduce wait times. They remain a relatively new phenomenon. For example, Montefiore Medical Center launched its first one in 2014, and three other healthcare providers are expected to launch similar bedless hospitals this year and beyond.

Another such system is the Children’s Hospital of Michigan, an arm of the Detroit Medical Center. The hospital will have an observation unit, operating rooms, emergency room, and outpatient facilities for specialties such as oncology, neurology, and cardiology, yet it will have no inpatient beds.

The community-based outpatient facilities give patients critical access to sub-specialties closer to home. Those who cannot travel to a major center will find care nearby. Some healthcare providers are going further by constructing hospitals without patients. Mercy Virtual Care Center, located in Chesterfield, Missouri, is one of the first providers dedicated to offering healthcare virtually. The digital healthcare center uses video and audio technology to treat and monitor patients anywhere and anytime. Going virtual lets healthcare systems lower their costs while expanding their potential client base globally.


Hospitals will need to develop and implement a community extension program. The increasing pressures on gross margins will continue to require a shift away from inpatient care. Bedless hospitals, infrastructure for community hospitals, and virtual care centers need large capital investments. Hospitals will be required to analyze their revenue streams to determine if gains in revenue from the strategy will pay off in the long term.

In addition, hospitals may need to collaborate with retail clinics if investment capital is scarce. Collaborations with retail clinics can offer a less capital-intensive choice for moving patients into outpatient facilities. The percentage of people who have utilized a retail clinic grew to 36 percent in 2015 from 10 percent in 2007. Retail clinics have expanded their menu of services, and consumers are taking advantage of them. Out of the 36 percent who had used a retail clinic, 11 percent went for services tailored for chronic disease management.

In addition, healthcare systems may need to stay on top of the consumer experience as they extend and expand. More partnerships and collaborations may increase patient confusion and result in poorer experiences. According to one survey, 52 percent of consumers said that it is very important to have only one physician coordinating care. If healthcare systems partner with post-acute care providers such as nursing homes and home health providers, that should reduce the perception of fragmentation.

In another development, some outpatient centers want to offer an expanded menu of services such as surgery, imaging, short-term observation care, and telehealth. These facilities allow the providers to shift care into lower-cost outpatient facilities and deliver the convenience many patients seek.

In fact, some outpatient centers are seeking ways to offer surgery that requires an overnight stay. These facilities are smaller, and more flexible and efficient. Moreover, they allow healthcare systems to bypass large construction projects.

This shift in paradigm indicates a different approach to healthcare that deemphasizes the central hospital. A focus on convenience and technology are accelerating the rate of change. For instance, Kaiser Permanente is increasingly putting a priority on ambulatory facilities and telehealth located nearer to the jobs and homes of patients.

In addition, some experts suggest that shifting lower-risk surgeries into outpatient facilities can lower wait times. For instance, Montefiore Medical Center in New York is implementing that strategy with its new $152 million bedless hospital.

This reflects a change in perspective. No longer do major hospitals want a healthy person who requires a small, non-emergency procedure in a bed next to a patient who needs major surgery, and this may benefit both sides: the patient who wants easier access to care and the provider looking to contain costs.


Wendy Hoke is a successful writer with a background in the health and medical industry. She is deeply interested in staying abreast of and reporting on the latest issues and regulations surrounding healthcare.

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