The mid-August 2016 acquisition of Arizona-based Urgent Care Extra by Banner Health System nods to a nationwide trend driven by increasing pressures for health systems to manage costs in a value-based reimbursement environment, create new patient revenue streams and reduce overcrowded emergency rooms. Providers need a way to rein in costs without sacrificing the quality care their future federal reimbursements, under MACRA, will rely on, and urgent care is lighting the way—even at 7:45 p.m. on a Sunday.
Health systems will continue to build urgent care clinics from the ground up, but urgent care acquisitions are likely to increase as varying market forces intensify health systems’ need for rapid growth and clinical integration. The surge of consolidation in the nation’s largest markets like Atlanta and Chicago indicates players are looking for synergies through partnerships, mergers and acquisitions that strengthen clout and improve patient access.
By investing in urgent care facilities, health systems benefit from a pre-established consumer base they can then integrate with their hospital’s EMR system. As hospitals transition to value-based systems and risk-bearing contracts, patient records will be key in determining cost structures and establishing quality metrics. The more access points a health system has to its patients, the easier it will be to collect patient data and design effective population health management programs with a performance-based payer component.
Urgent care also works to attract patients who may otherwise go to an already crowded emergency room, reducing the overhead cost of the emergency room and the need for a costly expansion. Despite the efforts of the Affordable Care Act, the uninsured rate is still high in states like Texas and Florida, and many hospital-based emergency rooms are either at their maximum capacities or are collapsing under the weight of uncompensated care (as was the case with the now-shuttered emergency room at Baton Rouge General Hospital’s Mid-City campus in Louisiana).
Urgent care can help address this acute need for higher-acuity services at a lower cost than hospital-affiliated freestanding emergency rooms, which have also gained ground in recent years in markets like Dallas and Nashville. These freestanding ERs keep emergency medicine physicians on staff 24/7—resulting in higher overhead—and therefore charge patients higher costs than what they would pay at an urgent care facility. While hospital-owned urgent care centers may still be required by the Emergency Medical Treatment and Active Labor Act (EMTALA) to treat patients who cannot pay for their services, commercially paying patients are the target customer base.
In addition to funneling non-emergency patients from the hospital, urgent care works to attract patients who have no primary care physician or who are in need of ongoing, routine care to manage complex medical conditions. In this way, urgent care centers, like certain retail clinics, are widening gateways to collaborative physician-patient relationships.
Unlike retail clinics, however, hospital-owned urgent care clinics are staffed by physicians that can perform primary care and preventive procedures, rendering moot the concern that walk-in facilities are far from primary care substitutes. Urgent care clinics are instead seen as a natural extension of the primary care model and a way to localize physician talent at easily accessible and recognizable locations. Many payers even cover the cost of an urgent care visit on the same copay level as a primary care visit.
Above all, an urgent care acquisition is a money-saving strategy that can help build a health system’s revenue stream. Dignity Health’s acquisition of U.S. Healthworks in August 2012 is a prime example. At the time, U.S. Healthworks had 172 locations in 15 states; a year and a half later, the chain had 208 locations in 20 states and contributed $322 million in revenue to the system in FY 2013. Today, U.S. Healthworks is the second-largest operator of urgent care in the nation.
While it is too early to tell how the January 2016 acquisition of Tennessee-based CareSpot Express by Tenet Healthcare subsidiary United Surgical Partners International (USPI) will perform in the long-run, Tenet reported double-digit revenue growth for USPI in its 2016 second-quarter earnings statement. CareSpot and Tenet’s MedPost Urgent Care are now jointly managed, resulting in a comprehensive footprint of more than 80 clinics. The clinics advance USPI’s strategy to “create a full line of ambulatory solutions for its health system partners,” a model that is likely to replicate as health systems search for ways to offset the cost of costly inpatient stays and readmissions.
Author’s Note: Other recent acquisitions include Rochester Immediate Care by Rochester Regional Health in New York (July 2016), Integrity Urgent care by UC Health in Colorado (July 2016), and Urgent Care Extra by HCA in Nevada (November 2015).
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