You drive by your local shopping mall and you spot an urgent care clinic with the name of your hospital, the fictitious GoodHealth Hospital, on its sign.  Or, you get a letter from your physician stating that she is now affiliated with GoodHealth, on GoodHealth stationery.  A hospital is no longer a single campus designed around the delivery of inpatient services. GoodHealth Hospital may have expanded beyond its original campus to include a second campus offering inpatient services, or an off-site outpatient clinic providing professional services.

The expansion of a hospital, whether through the purchase of an existing facility or a physician practice or the creation of a new site, generates new branding and revenue opportunities for a hospital like GoodHealth.  Expansion projects raise unique legal issues as well, especially for those that are “provider-based.”

In building or purchasing another facility, a principal consideration is whether the hospital wants or can bill for the services at the site as a unit or a department of the hospital, known as provider-based billing.  Most hospitals will choose the provider-based arrangement if it is feasible because reimbursement is higher.  The thinking is that the hospital offers greater access to better clinical care and supervision of the care through its medical staff; better administrative services like integrated medical records; and safer facilities.  The higher level of care rendered in the hospital justifies the higher costs.  But the co-pays may be higher for the patient, and the higher quality of care is not always evident.  The private physician’s office that shuts its doors on Friday and opens again on Monday as a hospital-based clinic does not necessarily offer better services.  This is why provider-based facilities are under increased scrutiny.

To read the full text of this article, please visit the Wharton Healthcare Quarterly website.