I can remember when hospitals were clearly in the hospital business, and other HCOs declared their core business as part of their name.  But in recent decades, the generic “healthcare” has become used more often, even for organizations that are clearly hospitals, as well as for publications aimed at managers and other professionals working therein.  The one advantage of “healthcare” was that by making two words into one, the former initials of associations and other organizations that basically served hospitals could retain the same initials.

But there have been many times in the past, and more times coming in the future, when hospitals might choose to really get into the health care business, rather than the almost exclusively “sickness care” business they are in now.  In the 1980s, with the end of cost-based “reimbursement” and the switch to increasingly stingy “payment”, many hospitals tried “diversification” into lines of business, from laundry to food services, in order to supplement their core business revenue.

More recently, many hospitals have invested in “retail”, offering goods and services to patients and visitors far beyond the traditional gift shop items.  Many host fast food outlets, though the bloom is off that rose as hospitals recognize how unhealthy is the food such outlets serve.  Others offer goods related to maternity, such as breast pumps, or wigs for cancer patients who have lost hair.  Travel services for people adventuring overseas, even full service “spas” are offered  as well.

One of the more obvious and clearly “healthcare” possibilities has always been in wellness, health promotion, risk and disease management.  Of course, the drawback to this business is that it tends to reduce the incidence and prevalence of disease and injury, with the exception of possibly increasing exercise-related injury and long-term joint damage.  Since hospitals depend so completely on sickness care volume and revenue, the wellness business is not only not their core business, but a threat to “cannibalize” that core business.

Despite this obvious conflict of interests, most hospitals have ventured into the wellness arena, at least in a modest way.  Most engage in “community benefit” free immunizations or screenings, to protect their tax-exemption if they have one, promote good PR, or perhaps find more sick patients.  Hundreds offer executive health programs aimed at improving the health of local business leaders, or fitness centers to the general public, both as revenue-generating as well as PR investments.

Recently, a few hospitals have created partnerships with the rapidly spreading “retail clinics”, though this may be mainly an effort aimed at promoting referrals of patients therefrom.  And another few have joined in the “concierge medicine” trend, by sponsoring their own retainer practices.  These usually serve “high-end” patients, and charge $2-3,000 per member, using the profits therefrom to subsidize money-losing service lines.

St. Luke’s Episcopal Health System (note the “health” in the name of this hospital system) recently announced: “…plans to launch a string of upscale concierge medical clinics.” in the Houston area. [A. Wollam “St. Luke’s Eyes Concierge Clinics” Houston Business Journal Apr 20, 2007 (houston.bizjournas.com)]  It would join at least one other hospital I know of, the Virginia Mason Medical Center in Seattle, as sponsor of multiple retainer practices, since VM began its venture in 2000, and already operates at a number of locations in the Seattle area.

One issue that St. Luke’s must face is the extent to which it will market and operate these clinics as sickness-focused or wellness-focused practices.  When Virginia Mason initiated its Dare Center practices, it cited personalized wellness assessments and plans for patients, with “customized lifestyle planning, preventive care and coaching”. [A. Neghabat “Private Matters” Marketing Health Services Winter 2002 pp. 25-27] As late as early 2004, its website marketed the fact that: “Your Dare Center physician has the time to work with you to design a personal health plan, enabling you to achieve and maintain a healthier life.” [(www.virginiamason.org/dbDareCenter/default.htm) Jan 2004]

But today, its website lacks any mention of preventive or lifestyle services, emphasizing entirely the 24/7 availability of its physicians, their ability to accompany patients on visits to specialists if requested, e-mail consults and prompt appointments for care, and fee parking.  It does offer an optional fitness evaluation, and invitations to health-related presentations by Dare Center physicians. [“Patient Benefits”]

Whether this indicates a decline of its interest in wellness, or merely a decision to reduce emphasis thereon, I do not know, but clearly the hospital and its sickness care business could suffer if a major wellness element reduced patients’ need for sickness care.  The MDVIP retainer practices, for example, proudly tout the fact that their 150 or so physicians have promoted patient wellness enough to reduce their use of inpatient and ER care by 50% or more in most cases.

Hospitals have, on occasion, ventured into the occupational health arena, as an added revenue source, plus a potential driver of new patients to their facilities when employees need sickness care.  But the number of hospitals in that business has also declined, perhaps because employers are expanding their view of occupational health to include proactive health management of employees, rather than merely onsite sickness care.

While “corporate clinics” have recently enjoyed a resurgence, as employers strive to both reduce their healthcare costs and improve employee productivity, hospitals have had opportunities to be operators of such clinics.    When Florida Power & Light initiated its first onsite clinic, it was operated by a local hospital, but later switched to a specialist supplier of occupational health services, hole Health Management (Cleveland, OH).  When it opened a second site, it approached four or five hospitals in the Miami area, but all felt that this was not their “core business”, so declined involvement.

By contrast, Wheaton Franciscan Healthcare (Milwaukee, WI) is involved in a joint venture with QuadMed and its owner Quad/Graphics, a local employer that not only had its own onsite clinic, but offers services to other employers.  WHF staffed a Quad/Graphics clinic when it opened in 1996, but QuadMed took over in 2000, and now managed eight clinics in the U.S.  WFH enjoys a position as “preferred hospital” for employees in its market that are served by the QuadMed clinics, and operates its own onsite centers for other employers. [D. Borfitz “Corporate Clinics: Grounds for Collaboration” Strategic Health Care Marketing 24:6 June 2007 1-5]

As employers and consumers are increasingly motivated by desires to maintain or improve health, rather than pay the ever-increasing costs of sickness care, hospitals that do not see wellness services as part of their core business may find themselves losing not merely the wellness revenue possible, but even the sickness care of patients who would prefer partnering with a hospital that helped them protect their health and wealth assets, rather than only treat expensive failures of such protection.

Some hospitals are happily in the wellness business.  The Pratt Diagnostic Center, part of the Tufts-New England Medical Center in Boston, operates its own MDVIP practice with a full complement of wellness care.  A number of hospitals operate disease management centers, with diabetes a particularly popular target for such operations, though most may not be making any money thereby.

Moreover, many hospitals operate their own employee health management programs, in order to gain the same reductions in sickness care costs and improvements in employee recruitment, performance and retention that their fellow employers are achieving.  Clearly, the question of what is the core business of hospitals, whether and how it includes wellness, risk and disease management, despite the built-in conflicts with sickness care business, will be faced by many, perhaps all hospitals in the near future.