More on Community Benefit

The accelerating growth of ambulatory care facilities

Do you know how high the difference can be for an insurance company covering to treat a patient with strep throat in a hospital emergency department versus an urgent care center? Around $530 according to Lori McLaughlin, a company spokeswoman for WellPoint.

Hospital emergency departments (EDs) are costly for everyone: hospital, insurer and patient alike, however outpatient centers such as urgent care and satellite EDs are a very popular alternative among health systems and physician groups.

While urgent care clinics and satellite EDs are different, especially in terms of state regulations, they are both of the ambulatory facility class, and as such, have seen the greatest growth over the last decade or so in terms of new medical real estate development. This is occurring for a variety of reasons, among them: convenience, cost effectiveness and competition.

Useful for patients:
Not only offering substantially lower co-pays, which make it easier for lower income patients to receive care, but these types of outpatient centers offer quick and convenient treatment. Should patients not be able to see their regular doctor, or are seeking treatment during nights and weekends, urgent care and satellite EDs are useful options.

According to recent statistics on the matter, a 2007 American Hospital Association report, only 47% of surgeries were performed in a hospital, down from around 90% in 1981. About 37% were conducted in an ambulatory center and 16% were performed in physician offices. As people continue to choose elective and preventative care measures related to their age, these facilities will be a focal point.

Useful for hospitals:
A 2010 RAND Corp study concluded that around 17% of patients seeking care in a hospital’s ED could be treated at an urgent care or retail clinic. That’s a substantial market that any hospital or physician group could help cater to. With urgent care facilities costing around $250-450 per square foot, compared to around $600 for the average price per square foot for hospital space, these centers are efficiently run and cost effective developments.

Competition for market share is fierce. As hospitals are spreading their reach to attract patients they are doing so right in the face of competing hospitals by constructing ambulatory facilities directly adjacent to a competitor’s main campus. By providing a full range of service lines, a competing hospital is hoping to acquire market share by going straight to the community.

As the trend is moving toward outpatient procedures, business savvy hospitals and physician groups looking toward the future need are analyzing their markets to see if these facilities are a right fit.


James Ellis, CEO, Health Care Realty Development Company, is a nationally recognized successful real estate investor and developer of medical office properties with a comprehensive knowledge of sophisticated real estate transactions, cost effective designs, and efficient property management.


Aaron Razavi is Associate Marketing Director at Health Care Realty Development.



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