Nontraditional Disrupters Are Changing The Competitive Playing Field For DFW Hospitals

Dallas-Fort Worth’s healthcare industry is strong, but that doesn't mean it's not challenged. With nontraditional providers infiltrating the market, medical systems are being prompted to up their game or risk losing business.

The last couple of years have seen a number of players enter the space, with Amazon, Apple, Alphabet and Microsoft all ramping up healthcare acquisitions. The shift comes as hospitals are bogged down by labor shortages, shrinking margins and expansion constraints, all of which are prompting innovative ideas on how to provide care.

“One out of every $5 in our GDP goes toward healthcare,” UT Southwestern Medical Center Assistant Vice President Alan Kramer said at a June 23 Bisnow event held at Pegasus Park. “It’s impossible for groups like Amazon not to get super-interested.”

CVS and UnitedHealth’s Optum — a company that works with local medical groups and ambulatory care systems to offer care — are already proving to be steep competition for local hospitals, Kramer said. Both companies have been on acquisition sprees of late, picking up firms that provide services both in clinics and at home.

“That does affect us at UT Southwestern a little bit more because we count on referrals from those doctors to really get our sick patients in, and that’s what drives an organization like us,” he said. “Optum has specialists within their group, so all of the sudden, those [referrals] are not coming to us.”

Increased competition is driving hospitals to meet more patients where they are.

Texas Health recently invested $300M into an expansion of its Fort Worth campus to address changing demographics and the high level of demand brought on by Tarrant County’s rapid population growth.

“We’ve got to adjust some of the services and the ways we create access points to the system because navigating healthcare is an incredible challenge,” said Joseph DeLeon, president of Texas Health Fort Worth. “We have to be part of creating solutions and making it easy to go from one level [of care] to another.”

From a design perspective, curating an enjoyable experience from the moment a prospective client visits the website to their first visit to the hospital is huge, which is why many hospitals are now looking at care delivery through a hospitality lens, said Jason Schroer, global director of the health practice at HKS. 

“The great thing about Texas is we have great competition,” Schroer said. “There’s a lot of options for consumers, which also creates that elevated level of service.”

The adoption of new technologies is another way hospitals can compete with tech-driven disrupters. Many hospitals are now using robots for back-office work, delivery or cleaning, which Schroer said throws an additional monkey wrench into the design process.

“Designing for robots is very different than designing for humans,” he said. “You have to really think about how you integrate that in [your] planning.”

Robots have helped alleviate labor issues at UT Southwestern and beyond. Hospitals have struggled to retain and recruit staff since the pandemic began, with a projected shortage of more than 3 million low-wage healthcare workers by 2027, according to a survey by the Health and Human Services Advisory.

More than 1 million new registered nurses are also needed to backfill positions left open by the more than 500,000 nurses who were expected to retire by the end of 2022, per the U.S. Bureau of Labor Statistics.

“[Robots] saved us thousands of hours of nursing time,” Kramer said. “It is an effective tool in being able to augment the amount of time we have clinical staff not doing clinical work.”

There will always be a strong human element to providing care, especially in pediatrics, which is why Children’s Health took a close look at its compensation package after a large contingent of nurses left the hospital for travel positions.

The result of that analysis prompted the health system to change its benefit structure and adjust its leave policy, which has helped keep employees in place.

“Our retention has increased and our turnover has gone to about 4% as a system,” said Vanessa Walls, president of Children Health’s northern market.

The prevalence of virtual care has also helped with staffing shortages, DeLeon said. In some cases, more tenured nurses who may have otherwise retired can staff centralized command centers, remotely monitoring bed occupancy and helping train newer nurses who are still active on the floor.

“These command centers are becoming more and more robust in terms of their capabilities to monitor from home or in the hospital,” he said. “They can have physicians and caregivers on-site, who can quickly address any issues that pop up.”

The public health emergency implemented by the federal government during the pandemic ended in May, and many of its provisions are no longer needed. But medical professionals are hopeful some of its benefits, such as flexibilities around administering virtual care, will be reinstated.

“We just hope some of the silver linings of the pandemic don’t disappear because of regulatory reasons and that Congress acts to codify,” Kramer said.