Physicians should take a measured approach to the future of their practice, keeping in mind that patients define value as appointment access and availability.
With the changes and incentives (often misaligned incentives) in play as a result of healthcare reform, many hospitals and provider groups are hedging their bets that bigger is better. To that extent, some are attempting to leverage their brand outside of their catchment area in an attempt to secure more patients. The pitch to those communities receiving the new facility is often the same: “we bring an unparalleled level of expertise”, “extending the benefits of an academic institution”, “to better serve the residents”. The problem is that the community often becomes confused and questions what sort of care they have been receiving for decades before this new entity decided to ride in on their white horse and save us all. Equally important, the entire medical community is often upset for the same reasons, with physicians stating “So, I have been providing substandard care to my patients?”
Although this has not stopped hospitals and provider groups from expanding their arena in the past, it was not as widespread as it has been in the past few years. This is due to the Affordable Care Act’s push to have fewer players in the healthcare sector, which can pressure solo and small group medical practices that have longstanding roots in their communities.
A university physician’s group in Florida, for example, entered a market nearly two hours away to offer specialty care such as cardiology, gynecology, and orthopedics. In just 6 months, they walked away from their $4 million investment. The center was tracking to be $2 million in the red during its first year, but the university is conflicted. On one hand, they are not happy about the loss, to which they acknowledged “due diligence could have been better.” On the other hand, they are still eager to jump into that remote community due to the population health initiatives being driven by healthcare reform.
In Indiana, a proton therapy center closed after being in operation for 10 years. This Indiana center, which had a $3.5 million operating loss its last year, cited several reasons for closing including changes in new payment models like bundled payments. The point here is not this center is closing but rather the plethora of other proton centers still being built and planned for around the country. There are 13 such centers in operation, but 12 more are currently being developed. Perhaps there is going to be a demand to justify doubling the number of proton therapy centers in the U.S. And perhaps, clinical studies and payment reforms will be in favor of all this growth. Time will tell.
On the other hand, patients do prefer hospitality design elements (certainly much more than they like seeing “narrow networks” and lack of access to providers). To this end, medical offices and hotels share the challenge of designing facilities that are cost-effective, are functional, and promote their organizations’ missions. Research shows that facility design influences customer behaviors and brand perceptions in a variety of industries. Customers make decisions about a company’s capabilities and quality based on their perceptions of the physical setting.
Such consumer decisions are very important in healthcare since clinical outcomes are often intangible and difficult to measure for non-clinicians. Research has shown that a patient’s perception of quality can be influenced by facilities design. Several studies found that patients surveyed in physically attractive waiting areas gave higher ratings on quality of care and patient-staff interactions. These patients also were more willing to recommend the facility to others than those surveyed in comparatively unattractive waiting rooms.
A recent study of hospitals demonstrated that patients value hotel-like features twice as much as they value the clinical reputation! Examples such as these must be heeded in this era where patients are increasingly doing more choosing of their place of service.
There is no crystal ball as to how U.S. healthcare reform will shake out. I believe that our entrepreneurial society which includes outstanding physicians and great business leaders will prevail and patients will be the benefactors . . . providing all continue to put the patient first.
Contact ABISA, a consultancy specializing in solo and small group practice management. Visit us at ABISALLC.com.