Company plans 4 'micro-hospitals' in competitive local market

July 20, 2016

A Texas company that plans to build four “micro-hospitals” in central Indiana could face intense competition for patients, some hospital experts predict.

That’s because this region is already filled with scores of community hospitals, urgent care centers, retail walk-in clinics, outpatient clinics and other facilities that offer a wide variety of short-term and low-acuity care.

“Central Indiana doesn’t lack for patient coverage,” said Elizabeth Walker, chief strategy officer with Quorum Health Resources, a Tennessee-based consulting firm focused on hospitals. “I have a lot of questions about how successful they can be, given the dynamics of this market.”

The company, Embree Group of Georgetown, Texas, has filed applications to build tiny hospitals in Plainfield, Noblesville and the northeast and southeast sides of Indianapolis.

The company did not return calls Wednesday morning to IBJ to discuss its plans. But, according to applications submitted to the Indiana Office of Homeland Security, the company plans to construct new buildings measuring about 19,000 square feet.

That’s much smaller than a typical, full-service hospital, which can often span more than 100,000 square feet.

The permits describe each project as a “micro-hospital with inpatient, diagnostic imaging and emergency services.”

Micro-hospitals are small-scale inpatient facilities, often between eight and 10 beds for observation and short-stay use, according to the Advisory Board Co., a health care and educational consulting firm in Washington.

The average cost of a micro-hospital ranges from $7 million to $30 million, depending on the location and the types of services offered, the paper said. Typical core services of micro-hospitals include imaging, pharmacy, lab services and emergency services. Optional services include outpatient surgeries, dietary services and primary care.

“Micro-hospitals work best in markets that have service gaps, but do not have enough demand to support a full-service facility,” according to the Advisory Board’s white paper, called “To grow your hospital, think micro.”

Some hospital industry officials say it’s a new, small niche that has been active in Denver and Phoenix, but hasn’t popped up here yet. They are also seen as suitable for rural and under-served areas.

Micro-hospitals typically provide quick access to emergency care and might offer outpatient surgery and primary care.

Doug Leonard, president of the Indiana Hospital Association, predicted it would be a big challenge for that concept to work here.

“It’s not a slam dunk,” Leonard said.  “When you have a targeted business model like this, they probably will go after an array of services that are lucrative and won’t necessarily be burdened by offering trauma and other expensive services that a general hospital has to offer. We will see if it works.”

The closest thing to a micro-hospital in central Indiana might be Franciscan St. Francis Health’s six-bed hospital in Carmel that opened in 2012. It offers overnight care for non-acute services, such as hip and knee replacements, spokesman Joe Stuteville said. It does not offer emergency care or critical care.

“It’s a specialty, short-stay hospital, but we would not call it a micro-hospital,” he said.

According to Embree Group’s website, the company has built more than 2.5 million square feet of health care facilities and completed more than 200 health projects. It was not clear how many of them were micro-hospitals.

The company is better known for developing and building commercial and retail projects, with such tenants as restaurants, service stations, discount stores, bank branches and convenient marts.

The proposed names and locations for its Central Indiana projects:

– White River Hospital, 8602 Allisonville Road (19,196 square feet);

– Plainfield Hospital, 2412 E. Main St., Plainfield (18,534 square feet);

– Glenwood Springs Hospital, 8501 S. Emerson Ave. (18,657 square feet);

– Arbor Grove Hospital, 9410 E. 146th St., Noblesville (18,657 square feet).


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