`

The Dose - JK Wall

Welcome to The Dose, which tackles the finances behind local health care and life sciences and points to the most interesting national analysis. Your host is J.K. Wall.

Health Care & Life Sciences / Life Science & Biotech

IU Health's new sense of urgency

December 18, 2014

Indiana University Health officials told me this week that they will open a dozen urgent care clinics in the Indianapolis area in the next two years.
 
IU Health will partner with Louisiana-based Premier Health to operate the primary care centers, the first of which is scheduled to open in the fall of 2015.
 
This is significant for two reasons.
 
First, that number of urgent care facilities is nearly equal to the 15 urgent care centers the other four hospitals in Indianapolis already operate. And we’re likely to see even more in the future, as insurance coverage grows but high-deductible plans grow even faster, and as hospitals look for ways to catch patients before they hit the emergency room.
 
“These new urgent care facilities will provide Hoosiers with immediate, affordable access to expert treatment while helping them avoid unnecessary costs and trips to the emergency room,” said Ron Stiver, IU Health’s president of system clinical services. He added that IU Health will put its urgent care centers in high-traffic areas as well as areas that generate high numbers of ER visits to IU Health hospitals.
 
Second, IU Health’s move is a clear sign of how much things have changed.
 
When I first started covering health care in 2007, a couple of folks who did marketing for IU Health (then called Clarian) told me a trick for covering hospitals’ businesses: Nearly all the money is in just four areas, they said: heart surgery, orthopedic surgery, neurosurgery and cancer care.
 
By comparison, the money paid by patients to visit urgent care centers or doctors’ offices is ridiculously small.
 
But now, it’s those low-cost visits that are hugely important.
 
Why?
 
First of all, it’s because a small but growing portion of hospitals’ revenue now hinges on whether they reduce the cost of care for patients, compared with previous years. That’s the case for any patients IU Health signs up to its private insurance plans, to its Medicare Advantage plans for seniors, or to the accountable care organization it runs on contract with the federal Medicare program.
 
“IU Health has the great brand around tertiary and quaternary care”—that’s healthspeak for highly specialized surgeries and inpatient services, Stiver told me over coffee at a Starbucks on the north side of Indianapolis. “But if you’re going to manage [the health of] populations, you’re going to have to have a strong primary care network.”
 
IU Health has plenty of primary care doctors already, but it has very little weekend or after-hours access in central Indiana. It does operate immediate care clinics in Bloomington, Lafayette and northwest Indiana.
 
By contrast, Community Health Network has seven MedCheck urgent care clinics locally. Franciscan St. Francis Health has four immediate care clinics around the Indianapolis area, and St. Vincent Health has three in the northern suburbs of Indianapolis. Eskenazi Health also opened a huge primary care center last year on West 38th Street.
 
The other factor here is fear. The executives at IU Health—and the other local hospital systems, too—worry about losing control of patient referrals. And those referrals are hugely valuable.
 
The average primary care physician actually generates more revenue for a hospital system—more than $1.5 million per year, according to physician recruiting firm Merritt Hawkins—than the average specialist physician does. And those numbers have been trending up in recent years.
 
There used to be two doors into the medical system: visit a physician office that saw patients by appointment during workday hours, Monday through Friday, or a hospital emergency room.
 
Now, there are a plethora of doorways to medical care: employer clinics, medical clinics in drug stores and urgent care centers in strip malls.
 
Hospital systems worry about that new set of doors—because most of those clinics operate independently of hospital systems. That means they can refer patients for the really expensive medical care—MRIs, lab tests, surgeries, hospital stays—to any facility in the city.
 
But hospitals don’t want to let their financial futures be determined by the nurse practitioners Walgreens. That’s too risky.

That’s why they’re opening up urgent care centers all over town.

ADVERTISEMENT
Comments powered by Disqus