Micro-Hospitals Could Become More Profitable Under New Rules

Written by: John Russell, Indianapolis Business Journal | September 3, 2016

They’re smaller and less expensive to build than traditional hospitals. But micro-hospitals, which are springing up in Indianapolis and other cities, could reap big money for their owners.

The tiny hospitals, with small overhead, can bill patients the same prices as traditional, acute-care hospitals for treating medical conditions that aren’t life-threatening, such as the flu or a twisted ankle.

At the same time, they can fetch higher reimbursements than urgent-care centers or medical clinics for a wide assortment of related services, such as diagnostics imaging and surgery, due to recent changes in rules by the Centers for Medicare & Medicaid Services.

So with lower costs and higher reimbursements, the tiny hospitals seem ready to rake in big profits. They make such an attractive financial package, in fact, that some health observers say they expect dozens to pop up in central Indiana.

“I wouldn’t be surprised if we saw 20 to 30 over the next five years,” said Ed Abel, director of the health care practice at Indianapolis-based Blue & Co., an accounting and consulting firm.

St. Vincent Health announced last month it would build eight micro-hospitals—or “emergency hospitals,” as the organization calls them. The first four are planned for Noblesville, Plainfield, Avon and the Castleton area of northeast Indianapolis.

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