5 things to know about microhospitals

Large acute inpatient hospitals, traditionally the bedrock of healthcare, are facing lower admission rates amid a growing ambulatory market in the shift to value-based care. Many health systems, as part of their efforts to adapt to this pressure and remain competitive, have begun investing in microhospitals.


Healthcare consultancy Sg2 calls microhospitals an "innovative solution to enabling clinically appropriate care in a low-cost, highly efficient setting," according to a CannonDesign whitepaper called "Microhospitals: Inpatient Services with Outpatient Convenience."

For many healthcare organizations, microhospitals can be promising investments that can help steer patients toward more appropriate care settings, which in turn lower costs for both patient and provider.

Here are five things to know about microhospitals, according to the whitepaper.

1. Characteristics of a microhospital. Since they are acute care facilities, microhospitals are subject to the same rules and regulations imposed on full-service hospitals in the state in which they are built. Microhospitals differ from traditional hospitals in the range of services available to patients. The core services of a microhospital typically include an emergency department, pharmacy, lab and imaging. Other services vary between communities, but can include primary care, telehealth, dietary services, women's services and low-acuity surgeries, according to the report.

2. Benefits of microhospitals over freestanding EDs. Freestanding EDs have cropped up over the years as health systems sought ways to broaden their service area among typically affluent populations. However, the continued shift to value-based care and efforts to reduce costs may negatively affect utilization of high-cost FSEDs. In comparison, microhospitals offer increased cost transparency and convenience for patients while allowing health systems to expand or protect their ambulatory presence in their markets, according to the report.

3. Locations and costs of building a microhospital. Microhospitals tend to be built on expensive real estate, such as in retail centers, with costs varying depending on the types and number of ancillary services offered, according to the report.

4. Addressing service gaps. Microhospitals will not thrive in all healthcare markets. When determining the best location for a microhospital, industry experts recommend first identifying service gaps and adequate demand for healthcare services to ensure the facility will have sufficient volume, according to the report. The microhospital should also be built within 20 miles of a full-service hospital so a high-acuity patient can be quickly transferred to the appropriate setting.

5. Addressing state regulations. The process of building a microhospital includes the same steps required for constructing a full-service inpatient hospital, which can significantly increase the timeline for design and construction. States with Certificate of Need regulations do not have any microhospitals so far, according to the report.

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