Emerus CEO on growth of micro hospitals

In just over a decade, Emerus has emerged as a significant player in the healthcare industry.

Emerus partners with 12 health systems nationwide to operate micro hospitals, which offer emergency departments and typically have 10 inpatient beds. Since opening its first micro hospital in 2012, Emerus now runs 50 micro hospitals which have served over five million patients nationwide.

Vic Schmerbeck, CEO of Emerus, says the company has found a niche in helping health systems expand care to more communities while treating patients closer to home.

“We bring a unique expertise as it relates to where there are access gaps from a data analytic standpoint,” Schmerbeck tells Chief Healthcare Executive®. “But more importantly, we bring operational and clinical efficiency to a small format location.”

Schmerbeck says that the small hospitals are helping health systems expand care to more communities.

“Our goal is to provide access in communities at a lower cost at the end of the day, and many of them are very good at operating big tertiary quaternary campuses. I think they would all tell you that they're probably not as good at trying to bring that into a smaller setting where you can have capital and clinical efficiency and operational efficiency,” he says.

More on the way

Emerus has partnered with Allegheny Health Network, Ascension Health, Baptist Health, Baylor Scott & White Health, Dignity Health, and MultiCare, among other systems.

The company has opened four new hospitals this year, including three new micro hospitals operated by WellSpan Health in central Pennsylvania. Emerus has also partnered with ChristianaCare to open a new micro hospital in the Philadelphia suburbs. Several more hospitals are in the works over the next year. Most of Emerus’ partners are adding locations, he says.

“It makes me proud for our teams at large …. 70-plus percent of our partnerships today in markets we exist in, we're expanding the number of locations,” Schmerbeck says.

Emerus’ partnership with Baptist Health System in San Antonio, Texas began with three micro hospitals, and now there are 10. Similarly, Emerus’ collaboration with MultiCare in the Pacific Northwest has grown from three to eight micro hospitals.

The hospitals all operate under the brands of the health systems, and Schmerbeck says that’s important because those are names patients recognize and trust.

The micro hospitals provide fully equipped emergency departments, along with 10 inpatient beds. They don’t have operating rooms or intensive care units, so patients needing surgery or more intensive care are transferred to other facilities.

The Emerus hospitals are staffed with nurses and patients who are admitted connect with physicians virtually, including specialists.

“We like to say we want to keep 90-plus percent of the care that people need in their community,” Schmerbeck says. “If they need longer systemic treatments, we can get them to the right place on a direct admission. They don't go through another ER. They get directly admitted, they know they're going to room 801.”

Patients in micro hospitals can be seen quickly, Schmerbeck says. The typical patient in Emerus’ hospitals only travels about 10 minutes to get to the facility. Patients being treated in emergency rooms are typically seen by physicians in less than 15 minutes, as opposed to waiting for hours in a larger hospital, Schmerbeck says.

He says the short time to see patients can help contribute to better outcomes.

“The patient in need of care doesn't decompensate before they're treated,” he says.

Emerus’ hospitals have recorded a 90-day readmission rate of less than 2 percent, Schmerbeck says. The average hospital readmission rate is nearly 15%, according to Definitive Healthcare. He also says the rate of hospital-based infections at Emerus’ facilities is “virtually zero.”

In addition, the micro hospitals are also connecting patients with specialists for follow-up appointments, Schmerbeck says.

The right communities

In terms of eyeing locations, Schmerbeck says that Emerus looks at how far patients are having to travel to get to the nearest hospital and the needs of individual markets. With the new hospitals WellSpan and Emerus have opened this year, two of the facilities are within 20-25 minutes of WellSpan York Hospital, a facility with nearly 600 beds. WellSpan’s new hospital in Carlisle, Pennsylvania, sits in fast-growing Cumberland County and is 25 miles from Harrisburg.

In June, ChristianaCare opened a micro hospital in Aston, Pennsylvania, just outside Philadelphia. The Delaware-based health system also opened a micro hospital last year in West Grove, Chester County, Pennsylvania, at the site of the former Jennersville Hospital, which closed more than four years ago.

Schmerbeck says there is a place for micro hospitals in communities that aren’t as close to a hospital.

“So many of these outlying communities have just been disadvantaged from an access standpoint,” he says. “I think we can help solve that.”

The right size

When asked if he sees the possibility of adjusting the micro hospital to potentially add a few more beds, Schmerbeck says he feels the current model is the right size.

“Our general belief, at least today, is we know how to be really efficient in a facility that has 10 ED treatment beds and 10 inpatient beds, and we think we can drive immense efficiency for both our physicians, our allied staff, patients, and families,” Schmerbeck says. “And so our general sentiment is we start with what we know from a core competency standpoint. If demand in the community exceeds our ability to supply, then we generally go look at where are those people coming from.”

If demand is surging in a given area, Schmerbeck says the right answer may be building another micro hospital, as opposed to making a facility bigger.

“There's inherent inefficiencies the bigger you get, so you've got to be careful that you're not building something just because you feel like it's the right thing to do,” he says. “You've really got to look at what's the patient flow dynamic and make sure that you're not over-building.”