Healthcare is costly, especially on an inpatient basis, which is why it is not surprising that an established and growing trend has been the development of outpatient centers. According to a Healthcare Financial Management Association article, community hospitals gross outpatient revenues grew from 19% of all revenues to 38% of all revenues from 1987-2007.
As outpatient procedures encompass a majority of hospitals’ margins, up significantly from years past according to a 2007 HealthLeaders report, outpatient clinics and care is likely to continue growing.
6 Reasons Why Outpatient Centers are Growing
Reduced Costs:Not only is an outpatient clinic less expensive to build than a hospital, but operating costs associated with over night stays, mechanical, electrical systems and more are reduced as well.
Reimbursement:Due to the nature of reimbursement, hospitals make more money from patients who don’t need to stay overnight. Additionally, many outpatient surgery procedures are optional and paid for by private insurance.
Access to Care:Outpatient centers are conveniently located in areas easily accessible to patients and physicians alike. They provide a full range of services with some services at a lowered cost due to operational efficiencies.
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Staffing: Since outpatient clinics are not typically opened nights and weekends, multiple shifts of staff are not needed. In some scenarios, outpatient centers even allow greater liberties for doctors with a share in the ownership such as scheduling, hiring, and purchasing. This is an enticing incentive for attracting quality physicians.
Outpatient Surgery:As the aging population drives demands for outpatient clinics, the number of outpatient procedures is also expected to increase, with estimates close to 47% by 2020 according to the Health Industry Distribution Association 2006-2007 Ambulatory Surgery Center Market Report. Increased Competition: For marketing purposes, hospitals are always looking for ways to promote themselves and the differentiation of their services. Developing strategically located multidimensional outpatient centers is a creative opportunistic solution.
Due to their reduced operating costs, stable cash flow and lower-risk tenant base compared to other healthcare facilities, I foresee a prominent future for outpatient facilities.
James Ellis, CEO, Health Care Realty Development Company, is a nationally recognized successful real estate investor and developer of medical office properties with a comprehensive knowledge of sophisticated real estate transactions, cost effective designs, and efficient property management.
