More hospitals move to profitable locations

Apr 15, 2015 | Healthcare Industry News

To attract better-paying patients, hospitals are moving out of downtown areas and into more prosperous, suburban locations. While aging properties, landlocked facilities and cheaper building costs (compared to renovation) are just some of the reasons cited by hospital officials to justify relocation, financial pressures such as federal funding cuts and an increased focus on cost-containment from Affordable Care Act measures are forcing health care facilities to migrate to wealthier areas. 

According to a recent article published in Kaiser Health News, hospitals can reduce the percentage of uninsured and lower-paying Medicaid patients when they move to a more prosperous area. At the same time, they can also increase the share of privately insured patients, attracting a better "payer mix."

"That's also why they locate outpatient centers and medical offices in affluent suburbs,"health care journalist Phil Galewitz told Kaiser Health. "But relocations often spark anger from those left behind, who worry about loss of jobs and of access to care, particularly for the poor."

Nevertheless, Galewitz insists that hospitals have relocated to follow population migrations before, although relocations are now becoming more common. Indeed, this is due in part to aging facilities which were built in the 1950s and 1960s. In 2012, a study by Health Affairs found that geographic expansion strategies, specifically the building of new hospitals or the addition of freestanding emergency departments to "capture" well-insured patients, were used by hospitals in 12 separate markets.

Regardless of their location, health care facilities face a number of challenges regarding accounts receivable. Professional Medical Services' outsource receivables management can help protect cash flow and strengthen patient-provider relationships.