Leaders at the critical-access hospital, which is supported by a hospital tax district that covers the rural western Grand County, hoped an upgrade of the facility could help grow volumes and revenue. What the hospital ended up opening in January 2012 was much different than it had initially planned, but proved to be a boon for outpatient volume at the system, according to Michael Curtis, vice president of healthcare for The Neenan Company, a real estate developer that worked on the project.
A better opportunity
Middle Park Medical Center partnered The Neenan Company to help develop the facility, which in turn engaged Stroudwater Associates to perform a strategic and market analysis. The analysis uncovered a great opportunity for Middle Park, but one it hadn’t yet seized because of the boundaries of the taxing district.
Just east of the district lies Granby, Colo., a remote ski and summer resort destination with seasonal, affluent tourists. The town didn’t have a hospital, though the state’s largest health system, Centura Health, did operate a small emergency facility there. More comprehensive care, such as surgical, outpatient and inpatient services, weren’t available. The market analysis showed that 92 percent of residents in Granby drove nearly two-and-a-half hours to receive this kind of care, even though it was available in nearby Kremmling. The analysts saw an opportunity: expand services to Granby and hold off on replacing the Kremmling facility.
What followed was a multi-year negotiation between Centura Health and the district board as well as with county commissioners that would allow Middle Park to expand beyond its taxing district to provide services to the underserved Granby area. Eventually, Centura closed its facility in Granby and joined as a management partner in Middle Park’s new facility.
The licensing of the facility was another hurdle. Middle Park opened the second facility under its existing license but was careful to ensure doing so would not jeopardize its status as a critical access hospital, which allows it to receive cost-based Medicare reimbursement.
Roadblocks
Financing proved to be a challenge for the facility. Initially, the hospital planned to fund the new facility using HUD Section 242 mortgage insurance, but a relatively unknown state law for hospital districts gives utility providers the first lien on a mortgage, explains Mr. Curtis. As a result, the hospital couldn’t qualify for HUD’s Hospital Mortgage Insurance Program. The team then explored USDA funds for the facility, but ruled the process too lengthy for their desired timeline for facility construction. Instead, Stroudwater and financing firm Doughtery & Company put together packages that went to the unenhanced market, said Mr. Curtis. A large institutional investor signed on, and construction began.
Open for service
The Granby location of Middle Park Medical Center opened in January 2012. The facility features a Level IV trauma center, provider-based clinic and surgical unit, two inpatient observation beds and a physical and cardiovascular rehabilitation suite in addition to laboratory, imaging and other diagnostic services. In an attempt to make the facility more efficient, inpatient and surgical beds are managed from a single nurses unit, which allows for flexible staffing.
“Many times the costs of staffing far exceed the costs of facility,” explains Mr. Curtis. Instead of requiring a nurse for each station — inpatient, surgical and ER — a single nursing unit can manage all patients, significantly reducing staffing costs on low census days, says Mr. Curtis.
Cole White, CFO and interim CEO for MiddlePark, says that although the project took considerable time to gain approval, it has proven a worthy endeavor for the health system. “Persistence over these past eight years has paid tremendous dividends for the residents, second home owners and visitors to East Grand County. Those enjoying the [area recreation activities] now have readily available urgent, emergent, primary and specialty, diagnostic, surgery, rehabilitative and inpatient care. Living and playing big now comes with the added comfort of knowing competent and accessible healthcare is readily available. The Middle Park Medical Center’s utilization is far exceeding forecasts, demonstrating the value it brings the regions active and playful residents and visitors.”
Results
By thinking outside its traditionally geographic boundaries, Middle Park Medical Center has improved access to care for an underserved community and expanded its market as a result. The hospital experienced 100 percent growth in outpatient visits and 20 percent growth in clinical physician visits since the Granby hospital opened last year.
The success of the Granby facility will help now Middle Park undertake what was once its original plan: update the Kremmling facility. Middle Park plans to upgrade this facility within the next couple of years.
