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I’m working on a management test / quiz prep and need support to help me study.

you will be evaluating a new model of care – Micro-hospitals and assessing three different aspects for healthcare economics. Each section is 33.33%. Each section should be a minimum of a page long. The questions will be quite specific. Keep in mind there is no one correct answer. You will be graded based on the substantiated (citations and reference) review of the health care delivery model and your position on its economic impact.

Health Capital Topics Volume 11 Issue 5 May 2018

Previous issues of Health Capital Topics have discussed several strategies by which healthcare providers and stakeholders have attempted to remain financially viable while combating the rising costs of healthcare, e.g., vertical integration and horizontal consolidation,¹ and the market entry of non-traditional providers such as Amazon and Walmart.² Another, converse strategy – which involves the use of an increasing number of retail clinics and urgent care centers in an effort to provide better point-of-care access to consumers – can help avoid costly and unnecessary visits to a hospital emergency room for conditions such as upper respiratory conditions; ear infections; and, other non-acute conditions.³ Over the last few years, a new type of healthcare provider has entered the market to bridge the gap between these urgent care centers and full service hospitals: the micro-hospital.⁴ Despite the consolidation trends in the healthcare industry, micro-hospitals have emerged as a popular option for both patients (as they are typically conveniently located, and offer a shorter wait time than traditional hospitals), and providers (due to their relatively small overhead and the ability to bill at hospital rates, in contrast to the lower rates billed by urgent care centers).⁵

The term “micro-hospital” is still so new that it cannot be found in the dictionary or in any formal healthcare regulations. As such, the most commonly accepted definition for these entities has been broadly detailed by Emerus, creator of the first micro-hospital prototype, and current operator of more than 28 of these facilities across the U.S.⁶ The Emerus micro-hospital prototype has the following characteristics:

1. It is licensed as an independent hospital;
2. Its size is 30,000 to 60,000 square feet;
3. It contains 8 emergency beds and staffs board-certified emergency physicians;
4. It contains 8 to 10 inpatient beds;
5. It is staffed and open 24 hours per day, 7 days per week;
6. It maintains transfer agreements with partner hospitals; and,
7. It provides a core set of ancillary services (which can vary by location), e.g., imaging, surgery centers.⁷

Hospitals (with the exception of critical access hospitals [CAH])⁸ have not historically been subject to specific regulation with regard to size, and hence, a micro-hospital can vary considerably from Emerus’s prototype with regard to number of beds; specific services offered; and, structure. However, as with any newcomer to the healthcare market, micro-hospitals are subject to many of the same trends and market forces that impact other providers. As such, these small facilities may face financial challenges in a market that rewards facilities for taking advantage of economies of scale and scope.⁹

As noted above, Emerus is the premier operator of micro-hospitals in the U.S. with more than 28 currently in operation and more than 20 additional facilities in development.¹⁰ Notably, all of Emerus’ functioning micro-hospitals were established in partnership with larger health systems, e.g., Memorial Hermann, Baylor, SCL Health,¹¹ which may allow these systems to utilize new micro-hospitals to expand patient access; better coordinate care; and, promote branding in new communities.¹²

The Future for Micro-Hospitals in an Era of Reform

The rapidly shifting sands of healthcare reform over the past several decades, in concert with the continually rising costs of U.S. healthcare, have stimulated many of the trends currently occurring in the healthcare marketplace, e.g., consolidation, integration, and entry of innovative market providers and structures. Among these new innovations is the micro-hospital, which, while still relatively new, appears to be carving out a unique foothold in the marketplace by providing a balance between emergency and inpatient care and maintaining hospital services at the scale of an ambulatory surgical center. This new blended model of inpatient care, while successful in several markets thus far, has unproven longevity within the ever evolving healthcare marketplace. Investors and providers with an interest in pursuing micro-hospital ventures should be well-versed in general U.S. healthcare trends, as well as on the lookout for any new legislation, regulation, or reimbursement changes that may impact micro-hospital development and function.

Micro-hospitals are small scale in-patient facilities that offer a variety of services focused on treating low acuity patients. The can bridge the gap in care delivery and quality of healthcare. Due to its economic nature, intimate delivery model, micro hospitals differ from traditional hospitals in the range of operations done. They are also gaining importance to improve the healthcare system by reducing cost and encouraging patient compliance. Micro-hospitals must follow the same rules and regulations as large scale hospitals.

Drivers and Restraints: decreasing admissions rates of large-scale hospitals and increasing patient compliance will boost the growth of the micro hospital market that is gaining traction globally due to comparatively lower construction costs and higher reimbursement for services than large hospitals and ambulatory surgical centers (ASCs). Micro-hospitals are shifting the healthcare landscape as they become an integral component of healthcare systems. Increasing government support for healthcare development is encouraging private organizations to participate in funding and partnership. Micro-hospital cost is comparatively less than large-scale hospitals and more than urgent care units which act as a drive in the growth of the micro-hospital. Micro-hospitals enable fast treatment for emergency cases and also offer primary care services which are competitive advantage over ambulatory surgical centers. The future of the Micro-Hospital Market is anticipated with double CAGR (compound annual growth rate). From SBWIre

Micro-hospitals accept traditional health insurance. Operating costs are much lower than traditional hospitals.

Micro-hospitals need to comply with guidelines (including CON – certificate of need). They must be licensed and follow American Hospital Association regulations by offering: a minimum of 6 inpatient hospital beds, pharmacy services, continuous nursing, [and] fully licensed physicians who admit patients and provide care. Micro-hospitals can bill patients as the same rates bas large hospitals – a bonus for the provider because micro-hospitals have smaller overhead costs…but qualify as stand-alone licensed hospitals, so they qualify for higher hospital-level reimbursement rates… With the average cost per in-patient day at $1974, insurers will continue to focus on reducing hospital stay lengths, so new micro-hospitals will focus on providing care and transitioning patients into their network for follow-up outpatient services. The dynamic is changing from volume to value, and with proper planning and execution, health care networks can add micro-hospitals that result in benefits for insurers, providers, and patients.

Sarah Willett, SVP, Commercial Banking 3/30/2017

Typically, 92% of patients who come to the micro hospitals are treated and sent home in an overage of 90 minutes, and 8% are admitted overnight for care such as intravenous-medication administration.

Laura Landro, Wall Street Journal 2/25/2018

The idea [of micro-hospitals] is especially taking root as political uncertainty makes systems wary of major capital projects like building a traditional large hospital… contrary to competitor who cherry pick the richer parts of town with a better payer mix, they take the opposite approach and go for areas with the higher volume and where access is a challenge. That’s because driving volume is key…There’s a massive halo effect that the system benefits from. Just because someone is on Medicaid, doesn’t mean their whole family and all their friends are. And when you take someone in an area where they didn’t previously have healthcare and do a good job, they’re going to tell their friends and relatives…The lower patient count and smaller setting make micro-hospitals an attractive option for some doctors, too…more quality time with patients.. less waiting time for patients…. No tug of war that often occurs in larger systems between clinicians and administrators… From the micro standpoint, the cost to enter a market is a fraction of a fraction of what it would be to enter with a larger campus.

Berkeley Lovelace, Jr. 3/2/2018

Micro-hospitals are gaining traction nationwide because of comparatively lower construction costs and generally higher reimbursement for service that urgent care or ambulatory surgical centers… In addition to lower cost, overall report fewer facility-acquired infections and complications, shorter stays and ore convenience when compared to regular hospitals.

Kris Mamula 2/16//2017

For Questions 1, 2, 3 address the issue in minimum of one page (per question) with substantiation.

Question 1: (33.33%)

Consider potential patient use of micro-hospitals in view of behavioral economic theory using either the status qua bias or decision fatigue to determine if cost savings of these micro-hospitals will prove effective in controlling healthcare costs in the U.S. Refer to Chapter 4 and the readings.

Question 2: (33.33%)

If economic analysts believe managed care strategies offer the best hope for controlling U.S. health costs by changing what services are provided rather than changing consumer demand (Rice & Unruh, p. 121), would changing the place of service, using micro-hospitals, be useful to address supply-side policies?

Question 3: (33.33%)

If one of the main factors to determine healthcare labor demand is “healthcare delivery system design and financing (including efficiencies, reimbursement rates, and labor substitution),” how would the micro-hospital design impact healthcare labor demand? See Chapter 8