Reducing per-patient cost with modular building Hospitals are frequently looking for ways to cut costs and increase revenue while still providing the amenities patients have come to expect from a full-service healthcare facility. One way to mitigate these costs is with interim modular facilities that can be designed and constructed on a much faster timeframe and afford a hospital a low-cost space to perform high-cost procedures.
By Chris Gaerig, Online Editor
With the passage of healthcare reform and the ever-increasing competition for patients, hospitals are frequently looking for ways to cut costs and increase revenue while still providing the amenities patients have come to expect from a full-service healthcare facility. One way to mitigate these costs is with interim modular facilities that can be designed and constructed on a much faster timeframe and afford a hospital a low-cost space to perform high-cost procedures. Healthcare Building Ideas Online Editor Chris Gaerig recently sat down with Jim Gabriel, Director of Business Development for MedBuild, a modular building company.
Chris Gaerig: What is it that MedBuild does?
Jim Gabriel: We are a commercial modular building provider. In healthcare space, that means we provide an accelerated solution to providing application-based space, all within the patient care environment. We, along with our partners, will provide a comprehensive diagnostic imaging suite, for example. We do that on an accelerated basis. What it does for people is, in a number of ways, it provides an accelerated solution for increased capacity—the ability to see patients more quickly. That’s meaningful obviously to the healthcare provider who’s looking at it now and saying, “Our reimbursements are most certainly going to be cut. We’ve got to reduce costs and create the ability to see more patients and be more efficient when we see them.” It’s not just get-them-in/get-them-out. We have to have the ability to not just diagnose but treat. Having the ability to be flexible with space and create opportunities to turn projects around more quickly—particularly if you believe, which I certainly do, that there has been a significant lag in construction because of healthcare reform. We not only accommodate this financial aspect, but we also do it in a way that is patient friendly. It’s not just the quick, down-and-dirty, cheap alternative to construction. It’s conventional materials. We use modular to accelerate the process of getting those additions in place, whether it’s an addition or a free-standing structure, with the added benefit of being able to relocate that building at a future date.
Hospitals are trying to resolve their issues quickly without compromising their master plans. We get that a lot. The benefit of modular is that it gives you the space you need immediately but also gives you the ability to be flexible and relocate that space to another site.
A lot of clients are looking for interim solutions. Interim is always relative. Sometimes it means a couple of weeks, but in today’s world, it means having a five-year plan. We need a plan for the next five years because we’re not sure, in total, how healthcare reform is going to affect us. But, we do know that we need to be able to increase capacity and see more patients more quickly now.
Gaerig: You seem as interested in the construction of these spaces as you are redefining how healthcare is delivered in those spaces.
Gabriel: That’s a by-product and something we’re now looking at. It’s even more relative than it’s ever been. In the past, we went from a very functional method of delivering healthcare services to a very resort style—you don’t know the difference between our hospital and a Four Seasons. I’m not saying those days are gone, but there was a lot of money spent doing that. The money may not always be there but the need is certainly there. So hospitals, particularly community hospitals and rural hospitals, to be viable and functional, they’ve got to keep up capacity and increase the ability to expand, not just their buildings, but their service level and care delivery. This means generating more revenue. Even if it’s not a capacity issue, it’s increasing the per-patient revenue. The only way to do that is to increase the areas where that revenue is generated. And if you don’t have the needed services in-house, you may have to refer them elsewhere—and you may not get them back.
Gaerig: So you don’t advocate for the hospitality movement?
Gabriel: That’s not necessarily the case. We don’t have a product that’s off a shelf; everything we build is custom. We don’t match a need with a shelf solution. But our solutions tend to be more functional because that’s often when customers come to us. I’m not advocating that, but now we may have come back to the hybrid between hospitality and functional. I don’t think the hospitality movement is going away, but I think a lot of hospitals are looking at it now and saying, “We can’t wait five years for this project to get up and running. We need to be able to satisfy this functional piece of the overall puzzle right now.”
Gaerig: What solutions do you present to increase the per-patient revenue?
Gabriel: One of the things that makes the option of going more functional toward something we might provide is that added mobility factor. Most hospitals aren’t going to look at a temporary situation. They don’t say, “I need an ER for 12 months.” We get those kinds of calls but it’s not something that can be done that easily and it’s not cost effective. So what we try to do is guide customers toward longer-term solutions that are like conventional construction.
Another thing is making it more flexible on the financial side in terms of leasing and operating a lease. If a client can’t afford a $1 million addition to their hospital, we can provide that same space on a lease basis, so it comes out of operating capital and not out of cash. With the financial crisis, cash is on reserve. A lot of clients don’t have the capital to spend on these kinds of projects, so we bring in a viable solution that brings in the money from the operating side of the budget.
So those kinds of things, which we’ve done more of in the past several months than we have in the last two years because customers are coming and saying, “We not only need a space solution, we need a financial solution.” We know that we need to bring a comprehensive space. It’s not just a space but it’s an imaging space or a space to see patients. We try to come to the table with a complete solution because it helps us control the outcome and also because it’s a better way to manage and reduce the sales cycle.
Gaerig: How do you balance best practices versus next practices in these spaces?
Gabriel: One of the things that’s inherent in what we do is that it gives you that future flexibility. We look at it with regard to clients and their needs today, particularly because we’re almost always an interim plan. We have to look at it that way because sometimes for clients to justify these expenses it’s that our building has future value. In a project in Buffalo, we’re working on an expansion of a hospital ER. The reality of it is that they’re not going to be in this modular ER forever. We’re working with the client to give them options on how this space can be used in the future.
Our space, unlike conventional space, does not have to be used where it sits. Our spaces can be moved to a suburb or to an urgent care facility. And with healthcare reform, there will be more wellness centers and patient clinics. What we work with our clients on is to get them to understand what that space can be used for and that this is not a one-time expense. Although that’s been a part of our business forever, it’s only now becoming more valuable to clients because they want to know what the next use will be.
And modular also offers some level of inherent sustainability. If they build a building that they’re going to have to tear down in five years because it doesn’t match the master plan, it gets torn down and put in a landfill somewhere. Our buildings can be relocated or donated—we’ve offered a million dollars worth of buildings to the Red Cross to aid in their Haitian relief efforts rather than have them sit idle in one of our branch locations.
But the modular space inherently answers the question, What are we going to do next? If we know that there’s a future use, we can build in the flexibility.
Gaerig: So you think that healthcare facilities/delivery will change with the passage of healthcare reform?
Gabriel: I think with hospitals, one of the things they’ll have to do in reducing their costs is reducing the patients that they process in a high-cost environment. Hospitals have become more specialty, surgery, high-revenue procedure areas. The non-acute, outpatient services are going to get out into the community to get a higher volume of patients through in a greater geographical reach. There’s also the idea that in those outpatient facilities, it costs them less to process patients. It increases revenue on a low-cost basis, thereby increasing the per-patient margin, so to speak.
I think you’re going to see more wellness and prevention centers. I think you’re going to see more hospitals taking advantage of the idea that you may have—and of course, nothing is settled, it’s still unsettled—more emphasis on wellness. You’re going to see more individuals having to pay out-of-pocket for certain things. The hope with healthcare reform is forcing people to focus on wellness and prevention. In other words, if you don’t want to have to pay for some medical procedure, keep yourself healthy.
What all of this means is more emphasis on wellness and a focus on healthcare as opposed to sick care. But if you’re going to process more patients, you need to process them in a low-cost environment. You want to get those facilities out into the mall, shopping center, the areas where people are, as opposed to in the past where they wanted people to just come to the hospital. It doesn’t make a lot of sense now because it costs too much to process those patients
Gabriel: 
