New Strategy for Hospital Profitability: Urgent Care Clinics

According to an investment analysis published July 6 by The Motley Fool (link below), urgent care clinics are a rapidly growing profit center for hospitals. Not only are the clinics profitable, but they’re also a key source of future referrals to hospitals. Additionally, the analysis notes, “10,000 baby boomers are turning 65 every day and they’re going to need more care.”

In the past three years alone, HCA has spent more than $5.5 billion to open 200 new urgent care centers (stand-alone ERs, provider clinics and surgery centers). In an example of how HCA is implementing its strategy in the Nashville area, they’re operating 11 urgent care centers to complement their 10 hospitals and 40 provider locations. Additionally HCA is planning to spend over $2.0 billion this year on new growth projects, which include urgent care centers.

Other examples of hospitals getting into the business of stand-alone clinics include Dignity Health System, the fifth largest hospital operator in the nation. In 2012, Dignity acquired a chain of 172 clinics under the brand name “HealthWorks” and they now operate more than 200 clinics.

In May, Tenet Healthcare launched a branded chain of urgent care centers named “MedPost,” which currently includes 23 clinics in eight states; Tenet plans to double their number of clinics before the end of this year.

The report also notes that hospitals are under pressure from insurers to get into the business of stand-alone urgent care. Humana acquired 300 Concentra urgent care centers in 2010 and, as a result, the insurer can now offer its members a less expensive option than going to a hospital.

Humana’s entrance into the urgent care market also further blurs the line between payers and providers. From Humana’s point of view, their foray into clinics “transforms care from an expense that it has to pay into a profitable business.”

To learn more, see the article, “How Urgency Will Save Hospitals” at: http://www.fool.com/investing/general/2014/07/06/how-urgency-will-save-hospitals.aspx