Annexing the neighbor's backyard increasing service area: Doylestown Hospital in Doylestown, Pa., developed a large-scale, innovative ambulatory care center on the southern fringe of its service area

Healthcare Financial Management, April, 2005 by Alan M. Zuckerman

Saint Raphael Health System in New Haven, Conn., reached beyond its immediate neighborhood to operate two school-based health centers, eight community-based clinics for the poor and elderly, a mobile clinic with prenatal and primary care, a mobile dental clinic, a parish nurse program in more that 20 area churches, and a home care network.

Establishing New Delivery Sites

In fast-growing markets, such as the Denver metropolitan area, expanding a hospital's or system's geographic reach by developing new acute care facilities is an attractive option. A more reasonable approach for many healthcare organizations is to develop an ambulatory care site with a mix of services tailored for the surrounding population.

The benefits of this approach are numerous: It increases access to services for communities whose residents would be unlikely to travel to the hospital for outpatient services, promotes community awareness of the hospital or system and its services, provides opportunities to partner with a new pool of physicians, and protects or enhances the organization's inpatient market share in communities surrounding the ambulatory care site. Baylor Health Care System has used multiple delivery sites to strengthen its position in the Dallas-Fort Worth market. The system has 38 primary care centers, 18 specialty centers, 14 day surgery centers, eight senior care centers, and three fitness centers.

Reaching out to new patient populations and expanding the service area can lead to vast opportunities to increase service levels and revenue streams for hospitals and systems that have the vision, courage, and resources to move into new territory. Better access and improved health status of the community can also be achieved with service area expansion.

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Laurel Health System, headquartered in Wellsboro, Pc., is recognized as one of the nation's strongest rural health and human services networks and an exceptional example of community health integration. Although Laurel is considered a role model today, health care in this rural, agricultural area looked anything but ideal 20 years ago.

Wellsboro was home to the county's only hospital, Soldiers Sailors Memorial Hospital, which was experiencing dramatic decreases in its admission rates and occupancy rates, and competitors from nearby counties were eyeing the hospital's service area. Blossburg, 18 miles away from the hospital, was the headquarters of North Penn Comprehensive Health Services, a network of health clinics and human service programs plagued by financial instability and an unstable physician base.

Despite a 15-year history of aloof and unfriendly relationships, the two organizations discovered that they shared compatible organizational cultures and many common goals. If the two became affiliated, North Penn health centers would serve as a feeder system for the hospital over a five-county area. Affiliation would also help both organizations maintain local control and prevent competitors from enclosing on their service areas--high-priority goals for both organizations. North Penn and Soldiers Sailors also realized that, rather than maintaining the status quo, affiliation would create the opportunity to build a stronger and more effective healthcare network for the region.