Pure-play’ facility focuses for profit

Is a niche care facility in your area’s future?

There’s a nationwide move toward innovative attempts on the part of nonprofit hospitals to find new sources of capital now that managed care has caused a drop in inpatient stays and reimbursement rates. This often takes the form of partnering with clinics focused on specific diseases. Critics of the trend say it leaves cash-starved hospitals in its wake and undermines the money-making services hospitals need to support costly research and less remunerative departments, such as emergency medicine.

Following are examples of the trend:

• Montefiore Medical Center in New York City has teamed up with Bentley Health Care of Beverly Hills, CA, to open a string of 24-hour clinics devoted to cancer care and treatment of HIV and AIDS in the New York area.

• Columbia-Presbyterian Medical Center, also in New York City, has opened a center for women’s health.

• Winthrop University Hospital in Mineola, NY, has opened a heart institute and in five years has tripled its volume of open-heart surgery.

• Renaissance, a unit of Universal Health Services in King of Prussia, PA, is launching specialty hospitals for women and children.

In addition, facilities such as Charlotte, NC-based MedCath look for markets with no certificate-of-need regulation and provide cardiovascular services in "boutique" heart hospitals across the country. MedCath owns heart-specialty hospitals in Little Rock, AR, Tucson, AZ, and McAllen, TX, each with about 60 beds. At least 80% of their services are cardiovascular, and one-third of procedures are outpatient. MedCath plans to open five similar facilities elsewhere in the United States. MedCath also manages medical practices and fixed-site cardiac diagnostic and therapeutic centers, and operates mobile cath labs. MedCath’s revenues rose from about $26 million in 1994 to $111 million last year.

Other so-called "focused factories" or "pure-play companies" are HealthSouth of Birmingham, AL, Intensiva of St. Louis, and Pediatrix of Fort Lauderdale, FL.