Outpatient and rehabilitation services continued to see most of the post-acute action in 1996, while skilled-nursing centers remained a steady but less alluring business, according to MODERN HEALTHCARE's 1997 Multi-unit Providers Survey.
The number of outpatient-care facilities operated by responding healthcare systems rose 27% in 1996 to 6,650 from 5,230 in 1995, continuing the sector's double-digit growth of the past six years.
Off-campus facilities continued to multiply, increasing 30% to 5,162 from 3,981 in 1995, while on-campus facilities showed a more modest jump of 19% to 1,488 from 1,249.
Birmingham, Ala.-based HealthSouth Corp. remained the leader among systems that operate freestanding outpatient facilities.
HealthSouth increased its outpatient facilities by 89% in 1996, ending the year with a total of 1,000, compared with 530 in 1995. In one of its biggest moves during 1996, HealthSouth acquired Atlanta-based Health Images, a leading provider of diagnostic imaging services, in a stock swap valued at $270 million. The deal gave HealthSouth control of 49 imaging centers, primed to provide the company with a new source of patient referrals for its growing outpatient surgery and rehabilitation services business.
The U.S. Department of Veterans Affairs chalked up a modest 2% increase to 398 outpatient facilities in 1996.
Among the top 10 systems operating outpatient facilities, BJC Health System in St. Louis saw the greatest increase, operating 125, or 229% more than in 1995, when it operated only 38.
All the major categories of freestanding outpatient-care facilities grew in number last year.
The number of pain management centers increased the most, rising 69% to 314 in 1996 from 186 in 1995. Also showing more than a 40% growth in their numbers were ambulatory-care, cancer treatment, wellness and wound-care centers.
The most common outpatient facilities are those that provide ambulatory care, physical therapy and sports medicine, and rehabilitation, according to the survey.
Of the responding systems that said they operate freestanding rehabilitation hospitals, their number of facilities increased 66% to 197 from 119 in 1995.
For-profit companies led the growth in inpatient rehabilitation, increasing their number of facilities 89% to 153 from 81 in 1995.
The public, secular not-for-profit, not-for-profit voluntary, Roman Catholic and other religious systems increased the number of their rehabilitation hospitals by 18% to 79 from 67 in 1995.
HealthSouth again muscled out the competition with its total of 94 hospitals, a 40% increase from 67 in 1995.
Albuquerque-based Horizon/CMS Healthcare Corp. followed with 37 rehabilitation hospitals.
After that, holdings fell dramatically. The No. 3 provider, Santa Barbara, Calif.-based Tenet Healthcare Corp., operated 12 inpatient rehabilitation hospitals in 1996, and the holdings on the remainder of the list were four or fewer.
Next year, the spread between HealthSouth and the rest of the field is likely to be even wider: HealthSouth announced in February its intent to buy Horizon/CMS for more than $1.6 billion.
The number of skilled-nursing facilities operated by responding systems increased just 8% to 4,603 from 4,246 in 1995.
While investor-owned chains operated the majority of skilled-nursing facilities, they showed the least amount of growth last year. They increased their number of facilities only 6% to 3,687 from 3,479 in 1995.
Public operators showed the most growth, increasing their holdings 57% to 221 from 141 in the previous year.
A total of 53 Catholic and other religious systems increased the number of their skilled-nursing facilities by 11% to 501 from 452 in 1995. The number of their skilled-nursing beds increased 12% to 54,434 from 48,484 in 1995.
Secular and voluntary not-for-profit systems saw an 11% growth, ending 1996 with 889 skilled-nursing facilities compared with 800 in 1995.
In this year's survey, 32 systems that operate skilled-nursing facilities reported their total net patient revenues, total operating income and operating margins for both fiscal 1996 and 1995.
The systems said their total net patient revenues increased 15% to $11.5 billion from $10 billion in 1995. Their total operating income rose 36% to $1.6 billion from $1.2 billion in 1995. But the operating margins of respondents slipped 1.3 percentage points to 9.1% from 10.4% in 1995.
Fort Smith, Ark.-based Beverly Enterprises continues to control the most skilled-nursing beds, ending 1996 with a total of 71,204.
Although Beverly is by far the largest skilled-nursing provider, its bed count decreased 6% from 1995's total of 75,669. During the past two years, the company has divested more than 70 skilled-nursing facilities in an effort to focus on more profitable ventures in markets where it offers a range of complementary services, such as assisted living.
Other skilled-nursing providers have also been shedding facilities. Living Centers of America controlled 10% fewer skilled-nursing beds than in 1995, and the Evangelical Lutheran Good Samaritan Society offered about 1% fewer beds.