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January 25, 2017 12:00 AM

Hospitals sprout cost-efficient urgent-care centers as demand grows

Dave Barkholz
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    GoHealth

    Hospital systems are using acquisitions and joint ventures with urgent-care chains to build out patient access points in their markets that are a lower-cost alternative to emergency rooms for cuts, sprains and flu.

    Tacoma Wash.-based MultiCare Health System, a five-hospital not-for-profit, added 14 urgent-care clinics to the 15 centers it already operated in the Puget Sound area when it bought Immediate Clinic Seattle in September.

    Northwell Health, based in New Hyde Park, N.Y., expects to have 45 urgent-care centers open around New York City by yearend from the 33 it started the year with, said Adam Boll, vice president of ventures for the 21-hospital not-for-profit system.

    Northwell owns and operates the centers through a 50/50 joint venture with for-profit GoHealth Urgent Care, Boll said. Having GoHealth as a partner allows Northwell to split the capital cost of the centers and GoHealth is an established operator with national experience, he said. The first Northwell urgent-care center with GoHealth opened in November 2014.

    Patient demand is driving the expansion, Boll said. Northwell, with revenue of about $11 billion, has been expanding geographically around metropolitan New York. And patients want the convenience of an urgent-care center that can take care of their bumps, bruises and colds without the time and expense of going to an emergency room, he said.

    An urgent-care visit typically costs between one-quarter and one-third what an emergency room visit would cost, said Christi McCarren, MultiCare senior vice president of retail health and community-based care.

    Employed physicians and clinicians at the Northwell GoHealth centers can take X-rays, administer stitches and splint breaks at a fraction of cost of an emergency room, he said.

    Numbers of urgent-care centers nationally range from 7,500 to 10,000, said Andrew Bab, partner and co-head of the healthcare practice for law firm Debevoise & Plimpton.

    He estimated hospitals operate about 20% of the centers, another 15% are in joint ventures like that of Northwell and the rest are free-standing.

    Bab said the push from fee-for-service to value-based reimbursement is fueling additional growth in the centers, in that they provide a cost-setting between a physician's office and the hospital emergency department.

    The centers relieve some of the stress on emergency departments so clinicians can take care of higher-acuity patients who really need to be there, Bab said.

    Urgent-care centers in a hospital's system also likely can immediately share patient records safely and securely, he said.

    San Francisco-based Dignity Health, which owns 39 hospitals in California, Arizona and Nevada, has opened 10 urgent-care centers in a joint venture with GoHealth since the partnership was created early in 2016, Dignity CEO Lloyd Dean said this month at the J.P. Morgan Healthcare Conference. The joint venture intends to open another seven this year, he said.

    MultiCare is making moves to become a statewide player so it can manage populations and prepare for value-based reimbursement that puts providers at risk for the cost and quality of care, McCarren said.

    MultiCare's urgent-care expansion and the acquisition of Immediate Clinic is part of a grand strategy that projects the system will grow unique patient visits from 294,000 in 2014 to 1.3 million by 2020, she said. MultiCare also has agreed to buy Community Health System's two hospitals and clinics in Spokane, Wash., for $425 million.

    She said if the system can touch patients through a gamut of entry points in the care continuum, then they will remain loyal. MultiCare calls the strategy “first touch.”

    The urgent-care expansion is already paying dividends. Seattle is experiencing a busy flu season this year and MultiCare has increased the hours at its urgent-care centers to handle the pressure on its emergency departments, McCarren said.

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