Microhospitals Spread To The Suburbs, Fueled By Growing Populations

Microhospitals are surging in popularity. Expanding urban centers and denser rural communities require more convenient access to healthcare. With national healthcare insurance still in flux, hospitals have begun looking for ways to expand care without overleveraging investments. 

After seeing the success of small-format healthcare facilities in metro areas, regional hospital systems are experimenting with these concepts in suburban communities and growing rural towns. These centers could replace larger regional hospitals where there is no longer a need for a high number of beds for overnight stays. 

“Primarily, we have seen microhospitals as infill in higher-density, higher-end urban areas,” Ridgemont Commercial Construction Director of Healthcare & Senior Living Services Richard Piersee said. “Now we are moving into developing communities and what we are going to see is that in smaller towns outside of the urban areas, microhospitals are filling a need. There are some traditionally underserved areas where microhospitals would seem to make more sense than regional hospitals.”

Microhospitals are a still somewhat new but growing trend in the U.S. healthcare market. Most are acute care hospitals that meet all federal and state licensing and regulatory requirements. They focus on treating low-acuity patients and provide ambulatory and emergency services, leaving more complex surgeries and service lines for their larger counterparts. They also have fewer beds, usually around eight to 12, and the facilities are typically only 15K to 50K SF. 

By providing 24/7 care that includes inpatient and surgical options, these microhospitals serve as a middle ground between free-standing emergency departments that may not offer all the required services and major hospitals that may offer more than the community needs.

As of April, 19 states had microhospitals, according to U.S. News & World Report. Emerus, the largest operator of microhospitals in the U.S., operates more than 20 of them across the country and recently expanded into North Texas. 

Emerus picks locations based on the need for additional emergency room beds. These smaller facilities can move into areas often far away from large regional hospitals, and the facilities can meet up to 90% of the healthcare needs of the communities they serve, according to healthcare consultant Advisory Board. Nearly all the patients who come to the microhospitals are treated and sent home in an average of 90 minutes, and 8% are admitted overnight for care. 

Overnight stays have become a point of contention when defining small-format facilities as hospitals to receive adequate Medicare reimbursement. The Centers for Medicare and Medicaid Services issued guidance late last year that a facility must have an average daily overnight census of at least two patients to be considered a hospital.

But building beyond that capacity might not be financially sustainable in certain communities, which have less of a demand for overnight stays. 

The sprawl of the Dallas-Fort Worth metro area lends itself to microhospitals, Piersee said. There are many bedroom communities outlying smaller towns that lack conveniently located ambulatory or emergency care services. The demand for these centers contradicts a recommendation from the American Hospital Association, which maintains that microhospitals should be within 20 to 25 miles of a regional hospital, for seamless access to more advanced care. 

“The developers and operators are having a change of heart about that,” Piersee said. “In a similar vein, if your house is 20 miles away from a fire station, it doesn’t mean you are not going to put fire extinguishers in it.”

Many of these more affluent suburban communities also offer a larger demographic with private insurance, giving health systems a financial incentive to operate smaller facilities farther out in these communities. Microhospitals offer a way to expand care without overinvesting in major capital projects. Microhospitals typically cost between $7M and $30M, compared to the 532-bed University of Texas Southwestern regional hospital, for instance, which cost $800M.

Certain health systems take a more data-centric approach to how they bring new healthcare models to these communities. Some experiment with multiple versions of microfacilities, depending on neighborhood demographics. Facilities can act like mini-campuses for regional hospitals, providing a mix of urgent care, radiology and small medical office buildings.

Smart healthcare development is about delivering quality healthcare to the individuals in the communities that the nonprofit serves. Using a combination of patient surveys and demographic studies, strategists can determine which services best suit a community. A younger population might require more orthopedic services to deal with broken bones, while a more senior community would want a cardiologist nearby. 

Tracking multifamily development in an area is also a sign that a community might need more healthcare services in the future. 

“It’s always about the opportunity,” he said. “Is it in the right community? Do we have a need expressed by patients and families? If we do, we begin to research that and see what is currently available and the appropriate model to deliver to them. While some areas are slow to change, others can develop rather quickly. We are trying to find those locations and be that healthcare provider that responds to those changes in living.”

This feature was produced in collaboration between Bisnow Branded Content and Ridgemont Commercial Construction. Bisnow news staff was not involved in the production of this content.