Micro-hospitals could prove financial boon and salvation to healthcare systems

So-called “micro-hospitals”--acute care facilities with six to 10 beds--could actually prove to be big moneymakers for healthcare systems.

The Indianapolis Business Journal has reported that such hospitals can allow healthcare systems to bypass site neutrality rules that prohibit billing at inpatient rates if a facility is located more than 250 feet from an acute care facility. Moreover, their construction costs, at between $7 million and $30 million, are a fraction of what it costs to build a full-size hospital.

Most micro-hospitals are open around the clock like a typical acute care facility, but they tend to offer limited services, such as observation care and short stay inpatient admissions.

St. Vincent Health, located in the Indianapolis area, said it planned to build at least eight of the pint-sized facilities in the coming years. “There were a number of areas we felt did not have a physical presence and patients are asking for our services,” St. Vincent CEO Jonathan Nalli told the Indianapolis Business Journal. “So we’ve set out on a journey and a strategy of, ‘How do we best locate where those opportunistic areas are?’”

Micro-hospitals have also opened up in Arizona, Colorado and other western states, according to the article. Dignity Health has also announced plans to open some in Nevada in conjunction with its St. Rose Dominican Hospitals, FierceHealthcare has previously reported. However, they appear primarily targeted to urban areas where patients are seeking the level of convenience and access offered by urgent care centers. Micro-hospitals are also seen as a potential model to alleviate the financial woes of major hospital systems in some states, such as New York.

“I wouldn’t be surprised if we saw 20 to 30 over the next five years,” Ed Abel, director of the healthcare practice at the accounting firm Blue & Co., told the Indianapolis Business Journal.