Clinics: a better, faster way for care? Outpatient facilities turn traditional health model on its head.

Turns out, starting your very own hospital isn't all that difficult.

All it takes these days is lots of money, knowledgeable and trustworthy doctors and someone who knows how to set up an outpatient clinic.

"Everybody can get in and compete directly with the acute care hospital," said Kerry Carmody, administrator for Providence Holy Cross Medical Center in Mission Hills and Providence St. Joseph Medical Center in Burbank.

And compete they have. Dozens of outpatient--or ancillary--clinics have opened in recent years in the San Fernando Valley area.

The proliferation is largely the result of low start-up costs and advancements in affordable and easy-to-use technology that allows simple or cosmetic surgical procedures to be done far from a traditional hospital room.

That may be good news for patients, but it's no surprise that medical institutions are feeling the pinch. And that's hurting their already painful bottom line.

"It hurts every hospital economically," quipped Dale A. Surowitz CEO of Encino-Tarzana Regional Medical Center, who called the new clinics a "phenomenon" in the San Fernando Valley over the past five or so years. "In one sense it's a concern, but in another it's just the way things are in today's world," he said.

Michael L. Wall, president of Northridge Hospital Medical Center, went so far as to say that the increased competition from outpatient surgery center hurts patients because it impinges on how traditional hospitals perform.

"The more you have siphoning off revenues that were in the community hospitals, the more pressure that puts on the institution," he said.

To those involved with creating new clinics, those concerns are nothing new.

"We're in 20 states; we hear it every time we go into a new city," said Hilary Hellman, one of the founders of Ancillary Care Solutions, an Arizona-based consulting firm that helps doctors' groups create outpatient clinics, including 12 in Southern California. "They don't want to lose money; they don't want to lose docs."

The benefits

For doctors, the clinics are attractive because they are usually vastly less expensive to construct (or, more commonly, add to an existing office building) than a hospital structure and can often bring quick returns.

In the late 1990s, for example, almost 40 doctors paid $25 million to create the 87,000-square-foot, ground-up Thousand Oaks Surgical Hospital. Compare that to the single patient care tower at Glendale Adventist Medical Center, which carries a price tag of more than $100 million.

The costs can also be kept low because the clinics are often highly specialized and usually offer only one category of procedure--radiology centers, dialysis centers, heart centers and cancer centers are among the most popular. Doctors can also keep supply costs low, since the same types of procedures are being done over and over again.

As a result, clinics don't need a large number of surgery or recovery rooms, since they are scheduling a certain number of procedures a day. And because the clinics usually don't offer overnight stays, weekend and night staffs are minimal or nonexistent.

"It's far less expensive to provide that care. There's no overhead. It's streamlined," Hellman said, adding later that it all adds up to a lucrative situation for doctors.

"It makes it effective financially because they're capturing what that patient is generating," she said. "If the patient doesn't have to spend a ton of time in the emergency room or the patient's not having to go to specialist to specialist or place to place, over time if it's managed well its going to cut down on delivering the service."

A colonoscopy performed in an outpatient center, for example, costs around $500. The same procedure at a hospital costs at least $6,000, according to the insurance company Blue Cross of California.

Not having extra services also streamlines the process for patients, who would prefer not to deal with navigating a massive hospital to have a simple procedure, Hellman said.

"If the therapist and the MRI are with the physician, the information exchange is real time. So you don't have this guessing or calling the doc or waiting four days to come back. You've got it immediately," she said. "There are efficiencies there that aren't available with a hospital system."

Taking cues

Of course, the logical thing would be for hospitals to take some of the clinic techniques and apply it at their facilities. In fact some hospitals have jumped on the outpatient clinic bandwagon.

Providence Holy Cross recently opened an outpatient clinic in Santa Clarita and similar clinics have opened at West Hills Medical Center, Glendale Adventist Memorial Hospital and Mission Community Hospital.

Wall said it makes good business sense.

"What you're seeing then is hospitals trying to partner with their physicians and share some of that revenue stream rather than losing it," he said.

But Hellman said that's not always possible because of institutional resistance to the clinics and they way they go about doing business.

"They could adopt them (but) it's not who they are," she said.

State regulations also limit how doctors profit from care. Essentially, the clinics have to be formally owned by a physician's group.

In the end, the development of outpatient and multi-doctor practice groups may be part of another trend changing how hospitals operate in the future.

Albert L. Greene, president and CEO of Valley Presbyterian Hospital in Van Nuys, said that an increasing number of medical residents who don't go on for fellowship training are turning to multi-specialty group practices, generally defined as having 25 or more doctors.

For them, the practices, like clinics, are more appealing than running their own office by themselves, he said.

"They don't want to have to manage a practice. They don't want to deal with insurance companies. They want someone else to manage the business of the practice," he said. "The day of the solo or small-group practitioner in the country is dying rapidly."

BY CHRIS COATES 

Staff Reporter

Most Common
Outpatient Clinic Procedures

Ophthalmology                            27 percent
Gastroenterology                         23 percent
Orthopedics                              10 percent
Other
  (podiatry, dental, neurology, etc.)     9 percent
Gynecology                                8 percent
Plastic Surgery                           6 percent
Ear, Nose and Throat                      5 percent
General                                   5 percent
Urology                                   4 percent
Pain Block                                3 percent

Source: Foundation for Ambulatory Surgery in America