Ambulatory and post-acute services delivered by healthcare systems grew at a steady-but not spectacular-pace in 1995, according to this year's MODERN HEALTHCARE Multi-unit Providers Survey.
Systems continued to boost their delivery of outpatient care, adding more facilities as well as more services.
In the rehabilitation sector, a single for-profit chain, HealthSouth Corp., aggressively added facilities. Meanwhile, hospital systems checked the growth of their inpatient rehabilitation hospitals.
For-profit nursing home chains accounted for almost all the top 10 long-term-care providers. However, religious systems added the most long-term-care beds.
More than ever, respondents to the ambulatory and post-acute sections of the survey indicated they are aiming to become well-rounded healthcare systems. Whether their post-acute focus lies in skilled-nursing, subacute, rehabilitation or outpatient services, companies and systems are striving to meet the demands of payers. As managed-care penetration increases from market to market, providers are becoming centers of one-stop shopping for post-acute and outpatient services.
Outpatient services. The number of outpatient-care facilities operated by healthcare systems in 1995 rose 36% to 4,876 from 3,573 in 1994.
That marks the fifth consecutive year of double-digit increases in outpatient facilities, according to survey data dating to 1991. Between 1993 and 1994, the number of facilities rose 24%.
The number of off-campus facilities soared 46% to 3,796 from 2,608 in 1994. Meanwhile, the number of on-campus facilities increased 12% to 1,080 in 1995 from 965 in the previous year.
The delivery sites of some outpatient services increased significantly. For example, the number of centers offering rehabilitation services increased 75% to 1,047 from 600 the previous year.
In addition, outpatient clinics that provide services in chest pain, physical therapy/sports medicine, occupational health and pain management all increased by more than a third, the survey shows.
Only mobile imaging services showed a decline, dropping 7% to 100 facilities from 107 in 1994.
Leading the pack in development of outpatient facilities was HealthSouth.
The Birmingham, Ala.-based company surpassed the U.S. Department of Veterans Affairs in the number of outpatient facilities operated, amassing 48% more sites than it reported in 1994-growing to 530 from 358.
Including acquisitions completed and announced since the beginning of 1995, the company now operates about 900 locations in 45 states, counting both inpatient and outpatient surgery and rehabilitation centers.
HealthSouth serves as a clear example of a post-acute services company making acquisitions that complement existing operations. Within the past year, it entered the ambulatory surgery market by acquiring Sutter Surgery Centers, Surgical Health Corp. and Surgical Care Affiliates, the largest independent operator of outpatient surgery centers.
Meanwhile, it boosted its rehabilitation presence in the Northeast by acquiring Advantage Health's network of 150 rehabilitation hospitals and clinics in a deal finalized in March. In addition, the company recently bought the rehabilitation centers of Caremark Orthopedic Services and NovaCare.
The cross-treatment opportunities between HealthSouth's rehabilitation clinics and its new surgery centers should develop further in upcoming years as the company integrates its recent acquisitions. It already has pitched its cost-effectiveness to managed-care organizations, according to Richard Scrushy, the company's chairman and chief executive officer.
HealthSouth currently holds about 1,350 contracts with managed-care organizations, he said, many of which are multistate agreements.
Rehabilitation. HealthSouth took a solid lead in the rehabilitation hospital sector. The company increased its own network through a series of acquisitions in 1995, bringing its total of inpatient rehabilitation hospitals to 78.
Overall, among the responding systems, there was an 8% increase in rehabilitation facilities to 168, compared with 155 in 1994. The number of beds increased 8% to 11,658 from 10,812 in the previous year.
The for-profit sector showed the strongest growth, with a 15% increase in facilities and a 16% increase in beds, among the seven responding systems since 1994.
As in previous years, two investor-owned providers dominated growth in the rehabilitation sector: HealthSouth with a 16% growth rate and Horizon/CMS Healthcare Corp. with a 3% growth rate to 37 hospitals.
Besides Tenet Healthcare Corp., which operated six rehabilitation hospitals in 1995, and Sun Healthcare Group, which operated four, the remaining respondents operated just one or two facilities. Among those systems, the number of beds usually remained static.
Horizon/CMS, the second-largest owner of rehabilitation hospitals, was formed last July through the merger of long-term-care company Horizon Healthcare Corp. and Continental Medical Systems. CMS also was the second-largest rehabilitation hospital chain in last year's Multi-unit Providers Survey.
Six Roman Catholic-owned systems operated four facilities in 1995, compared with six in 1994. The number of staffed rehabilitation beds decreased in those facilities by 21% to 492.
Some 18 secular not-for-profit systems operated 22 facilities with 1,500 beds, compared with 20 facilities with 1,354 beds in 1994.
Nursing home chains. Long-term skilled-nursing care continued to grow last year, especially in the investor-owned sector, according to the survey.
However, the industry giant, Beverly Enterprises, had many industry observers questioning whether bigger is indeed better.
Although it reported an 8% increase in net patient revenues to $3.2 billion, Beverly had a tough year in 1995, when it put on hold plans to spin off its Pharmacy Corporation of America subsidiary and reported a fourth-quarter net loss of $63.8 million.
The Fort Smith, Ark.-based company said net operating income rose 9% to $276.1 million in 1995, compared with a 15% increase the previous year.
Beverly's latest strategy for controlling costs has been to bring therapists in-house instead of using contract therapy providers. This year, the company is expected to employ about 80% of its therapists.
It trimmed the number of nursing facilities by 3% to 703 from 727 in 1994 and the number of beds by 3% to 75,669.
Yet it still operated more than twice as many facilities as the No. 2 long-term-care provider, Vencor, which had 311 facilities and 39,480 beds in 1995.
In this year's survey, 34 nursing home chains reported their total operating income, total net income and total net patient revenues for both fiscal 1995 and 1994. Those systems said their total net income increased 16.4% to $361.6 million, compared with $310.6 million in 1994. Total operating income rose 26.6% to $1.17 billion.
In addition, total net patient revenues rose 22% to $10.2 billion from $8.4 billion in 1994.
Respondents reported a bottom-line margin of 3.5% on total patient revenues, compared with 3.7% in 1994. The overall margin before taxes was 11.4% last year, compared with 11% in 1994.
While the top 10 nursing home chains were almost all investor-owned, with the exception of Evangelical Lutheran Good Samaritan Society, religious healthcare systems led the way in adding facilities and beds.
A total of 59 Catholic and other religious systems increased the number of facilities they operate by 15% in 1995 to 494, compared with 430 in the previous year. The number of skilled-nursing beds increased 16% to 53,072 from 45,811 in 1994.
Yet religious systems operated just 12% of all skilled-nursing facilities in 1995. Investor-owned chains ran 81% of all facilities, while public and secular not-for-profit entities operated the remaining 7%.
Overall, 178 responding systems said they increased the number of skilled-nursing facilities by 7% to 4,256, compared with 3,978 in 1994. The number of beds increased 7% to 507,097, compared with 474,827 the previous year.