This story on Corewell Health's new Endoscopy Center in Caledonia Township mentions all the usual motivations for satellite facilities, but is mute on perhaps the most important: the recent repeal of Right-To-Work in Michigan workplaces.  These small satellite facilities are all separate legal entities which will be a challenge for health care worker unions to organize:

https://www.crainsgrandrapids.com/news/health-care/corewell-healths-outpatient-center-building-spree-tops-260m/

Corewell Health’s outpatient center building spree tops $260M
By Mark Sanchez - February 15, 2024

Corewell Health’s plan to build a new surgical center south of Grand Rapids is part of the health system’s broader investments in outpatient facilities totaling well into the hundreds of millions of dollars in West Michigan.

The $15.2 million facility for endoscopy procedures, proposed for acreage in Caledonia Township at 4910 60th Street SE, between Patterson Avenue and Broadmoor Avenue near the Gerald R. Ford International Airport, would become the latest in a string of new outpatient care centers for Corewell Health.

Building on a major ongoing industry trend, the health system has been pursuing major upgrades to outpatient capacity over the last several years, investing more than $260 million in the process. It also has several ongoing projects for rehabilitation, orthopedic surgery, cardiology, in addition to the proposed facility for endoscopy.

Those are the medical services that health systems generally have been moving to lower-cost outpatient settings that are specially designed for those procedures and patients, said Mike LaPenna, a longtime health care consultant and principal of the LaPenna Group Inc. in Grand Rapids.

Drivers of the “huge” trend include the growing pressures on reimbursement payments by health insurers, the need to provide greater access and convenience for consumers, and a push for greater cost transparency to allow consumers to shop for the best price for care, LaPenna said.

Outpatient environments “are really the most efficient environment in which to deliver care” that can adapt quickly to needs, he said.

Developing the proposed Corewell Health Endoscopy Center in southeast Kent County also would give the health system another location in a fast-growing area in metro Grand Rapids “where the houses are going to pop up, and the rooftops and the people with insurance are going to be living,” he said.

“These are purpose-built to do one thing and do it well, and also to escape the hospital cost structure,” LaPenna said. “An outpatient setting that’s purpose-driven, managed to that type of procedure, and localized or located within a nice payer category set of neighborhoods, that’s where you want to be.”

Following patients — and the money

The trend for more outpatient-based care and procedures has been occurring locally and nationally. In BDO’s annual survey of health care CFOs, nearly half said their health system intended to increase investment in 2024 in ambulatory or outpatient projects that include surgical centers, urgent care, and medical clinics. Another 15% said they would look at partnering with a capital provider or operator on an outpatient investment.

Investing in outpatient care centers ranked third in investment plans for 2024 among the 11 priorities cited by the health care CFOs that BDO surveyed in October. Outpatient care ranked just behind home care and specialty medical services such as cardiology, oncology and orthopedics for 2024 investments, according to the BDO survey results.

Chicago-based JLL noted in a 2023 report that outpatient visits to care providers began surpassing inpatient admissions more than a decade ago, “driven by advances in technology, changes in reimbursement, and consumer preference for convenience.”

Medicare payments for outpatient care increased from 28.5% in 2016 to 33.3% in 2021, and “because of this, hospital systems are shifting their care model by developing or acquiring outpatient sites to not lose out on this revenue,” according to JLL.

“Surgeries that previously were inpatient only, such as hip replacements, are now done in ambulatory surgical centers (ASCs). Inpatient admissions have been declining over the past five years while outpatient admissions are up significantly led by increasing volume for spine, orthopedic and vascular care,” according to the JLL report on health care investing.

Responding to needs

Corewell Health filed an application with the Michigan Department of Health and Human Services on Feb. 1 that seeks regulatory approval for the proposed endoscopy center. The 12,813-square-foot center would have one endoscopy operating room, plus four procedure rooms.

Estimated project costs include $3.5 million for clinical areas and $1.5 million for non-clinical spaces, plus $2.6 million for equipment and $6.3 million for a 10-year lease with CHEC 1 LLC, the corporate entity formed in late December to develop the outpatient center, according to the filing to the state.

“As part of our ongoing plans to provide patients and our community with care in convenient settings, we are planning to provide outpatient endoscopy services in a newly constructed facility. The new facility would also include additional space that could be adapted to meet future patient needs,” Corewell Health said in a written statement to Crain’s Grand Rapids Business.

Physicians at Corewell Health Grand Rapids Hospitals Endoscopy on Lake Drive SE, off East Paris Avenue, performed 24,679 procedures in 2022, the highest number over a six-year period, according to state data.

The new Corewell Health Endoscopy Center would handle a projected 1,300 cases annually in each of its first two years of operation, according to the certificate-of-need application to the state.

Investments stack up

The endoscopy center is the most recent example of Corewell Health’s significant investment in building a network of outpatient facilities.

Construction continues on a 12-story, 240,000-square-foot outpatient center on Michigan Street, across the street from Butterworth Hospital, on the site of the former Cook Institute.

When opened this fall, the outpatient center will consolidate several primary and specialty medical practices now spread throughout the downtown Butterworth Hospital campus, including Corewell Health’s heart and lung transplant and neurosciences clinics. It will also house clinics now staffed by medical residents and a simulation center for medical training.

The Michigan Street center is part of $151 million in projects announced in 2022 that included new outpatient facilities in Lakeview and Big Rapids that each opened last summer.

Corewell Health also is continuing construction on a $23.2 million, 37,500-square-foot Cardiovascular Surgery Center at Bradford Street NE and East Beltline Avenue. The cardiovascular outpatient center will perform non-emergency diagnostic cardiac catheterization procedures, as well as elective procedures to open and implant stents in blocked arteries, known as percutaneous coronary intervention, or PCI, for low-risk heart patients.

Corewell Health expects to open the one-story Cardiovascular Surgery Center, which will have three cardiac catheterization labs, in early 2025.

There’s also a $37 million, 94,000-square-foot rehab and nursing center at 1226 Cedar St. NE that will open later this year and replace an aging continuing care facility on Fuller Avenue that’s owned by Kent County. The county is in the process of reimagining the location for a new administrative campus, a project that will move some 180 employees out of downtown Grand Rapids, as Crain’s Grand Rapids Business previously reported.

Targeted to open in late spring, Corewell Health’s rehab and nursing facility also will house a kidney dialysis center and acute hospice care.

Additionally, Corewell Health formed a joint venture with Arizona-based Atlas Healthcare Partners for an Orthopedic Health & Performance Center, a 117,000 square-foot-building on East Beltline Avenue that includes orthopedic urgent care, a $15.1 million ambulatory surgery center, physical and occupational therapy and training space. The center will open in the fall.

Other recent investments include the 80-bed, $19.5 million short-term rehabilitation facility on its Leffingwell Avenue NE campus, along I-96 and near Leonard Street and East Beltline Avenue, which opened in early 2023, and the $5.4 million Crane Haven Cancer Care Center that opened this January at Corewell Health Ludington Hospital.