Hospitals and healthcare systems, scrambling to prepare for an expected influx of newly insured and a steady stream of changes to healthcare financing, have looked more closely at core operations since the 2010 health reform law was enacted. But a review of investor disclosures and tax records offers a glimpse at ancillary and alternative services—some more than others—run and owned to varying degrees by not-for-profit organizations.
Some operations are closely related to healthcare delivery, as are Aurora's retail pharmacies, convenient-care clinics and laboratory outsourcing services. Some are complementary. According to the American Hospital Association, slightly more than one in 10 acute-care hospitals owned a stake in HMOs in 2009, the most recent year for which figures are available. Roughly 14% reportedly own PPOs and another 5% fee-for-service health plans.
Other operations include more distantly related services, such as real estate management, fitness centers, even hotels and construction companies.
But if some have embraced such secondary operations, others have exited ancillary service lines. One recent survey suggests hospitals may be increasingly outsourcing pharmacies. Meanwhile, AHA data show a drop in hospital-owned health insurers.
Janice James, a managing director for Huron Consulting Group, says hospitals and health systems continue to weigh the strategic value of owning versus leasing medical office buildings.
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Hospitals looking to raise cash and investor appetite for healthcare real estate has prompted a recent wave of dealmaking (March 7, p. 6). Some have opted to “get out of the real estate business,” James says.
Aurora's diversified business model raises the health system's profile among potential patients, Buettner says. More important, the broader array of services means broader access to what patients need to manage their health. “It really is part of the whole mix of taking care of our patients,” she says.
Buettner, whose job includes hiring not only pharmacists but retail merchandisers, marketing and communication professionals, says the system's pharmacy strategy gives patients more convenience and insurers better value.
Aurora's drug stores have access to patients' medical records, and pharmacists can provide medication therapy management, which can help improve health and lower costs, she says. Pharmacists can recommend less-costly generic medicines; check to see if patients take their medications as prescribed and field questions about side effects. Better compliance with prescriptions can also help prevent unnecessary hospital visits and lower healthcare spending, she says.
Medication management is also a service for which insurers reimburse, she says.
Aurora's Quick Care, of which the system owns 10% and the Aurora Medical Group owns 90%, operates 10 primary-care clinics (including in Wal-Mart and grocery stores) with the “sole purpose” of expanding its primary-care services, not competing with its existing clinics, Buettner says. Quick Care clinics are open to the public and create access for those without established primary-care providers—patients who may become Aurora patients, she says. “We take all payers,” she says. “We take cash.”
Some operate at a loss, she says. The system reviews the Quick Care operations each year and evaluates their value not only on margins but on whether the clinics create potential new patients and help meet demand for those with limited access to care. For the year ended December 2009, Aurora reported a loss of $194,032 on its share of Quick Care. The system reported its share of the assets at $485,209.
Aurora also owns half of A2cl Services with Advocate Health Care, an Oak Brook, Ill.-based health system with 10 hospitals. The business sells laboratory services to independent doctors and hospitals, and provides testing services for its two owners, Buettner says. The large volume of tests gives the business an economy of scale and Aurora enjoys savings, she says.