How Federal Policies Are Impacting Healthcare Facility Design and Construction

Hospitals have been moving healthcare services into outpatient and retail facilities to serve more patients, more cost effectively than in a hospital environment, but Section 603 of Congress’ Bipartisan Budget Act of 2015, signed into law by President Barack Obama on Nov. 2, could reverse this trend, suggested Hospital Association of Los Angeles SVP/COO Mark Gamble (left) at Bisnow’s 5th Annual Healthcare Forum: The Future of Hospital Expansion, MOB’s and Outpatient Facilities last week.

“This policy change could be a significant game changer and very disruptive, especially to people building outpatient facilities," he said, explaining that Section 603 eliminates the “outpatient prospective payment system” (OPPS). OPPS usually results in increased Medicare reimbursement for services provided at off-campus facilities, but the new Medicare policy applies to any “new” outpatient facilities breaking ground after that date.

Mark also pointed out another federal healthcare policy change will eliminate the managed-care organization taxes and fees paid by health insurance plans that serve Medicaid patients next year, which provide $1.2T in revenue to states for Medicaid programs. Noting Medi-Cal now pays hospitals just 64 cents on the dollar, he contended that the $1B hole this change blows in California's Medi-Cal budget will likely be passed through to healthcare providers.

The panel moderator, Arent Fox LLP partner Tom Jeffry Jr., noted that competitors in the healthcare industry are forming alliances and partnerships or looking at arrangements that would have been unlikely a few years ago, like Cedars and UCLA, which are partners in a rehab hospital, and in Arizona, Kaiser, Ascension Health and Dignity Health. "Big systems are getting bigger, and smaller hospitals will have to change, improve efficiency or consolidate to survive," he said.

Pacific Medical Buildings SVP James Rohan said projects are getting bigger too, with developers becoming partners with hospitals. As providers switch the focus to preventive care, new outpatient centers include wellness centers, in what’s being called “medical malls,” he explained, noting that "wellness" used to be a hippy byword, but has come full circle. "In the future, healthcare will be what happens when health fails,” James suggested. “These (wellness facilities) are not health clubs, they’re an adjunct to pre- and post-healthcare.”

Mark also noted hospitals are becoming more involved in providing post-acute care due to the Centers for Medicare & Medicaid’s requiring administration of the Hospital Consumer Assessment of Healthcare Providers and Systems survey and are even looking at operating assisted-living facilities. As a result of the HCAHPS, he said that facilities are becoming an important part of improving the patient experience. “New buildings today must provide an environment sensitive to a patient’s arrival, comfort and importance, not add to the patient’s trauma,” Mark added.

James concurred, saying it's imperative on everyone involved to simplify the patient experience. “The biggest challenge faced today is how to manage cultural change inside the physician suite, such that patients receive care in a more comfortable, accommodating environment than previously.” He noted that one medical event involves eight or nine stops—fill out forms, vitals checked, tests, schedule procedure, and so forth. “The patient no longer just feels bad when they come in,” Jake added, “they are also confused when they leave.”