The healthcare industry is rapidly changing and, in response, hospitals across the country are collaborating with others to continue to fulfill their missions – especially standalone, community medical centers like ours.
IRMC is working from a position of strength, and in order to respond to these changes in the industry we’re taking the future into our own hands so we can continue to help our friends and neighbors receive top-notch medical care, and manage their health and wellness right here in Indian River County.
We are fortunate to have the opportunity to be proactive about building a long-term strategy for success by identifying a partner that shares our values.
There are two national trends that are particularly challenging for standalone community hospitals, including IRMC:
The United States spends about 18% of its Gross Domestic Product on healthcare, a percentage that is forecast to rise. That is far higher than the rest of the world and is economically unsustainable. What’s more, the quality of healthcare we get for our spending, while good, lags a number of other countries.
To lower costs and increase quality, the basic model of U.S. healthcare is changing to what is called value-based healthcare.
Currently, the majority of insurance reimbursements to healthcare providers are based on a fee-for-service model – providers are reimbursed for individual services to individual patients with little regard for the quality of the treatment.
Under value-based healthcare, providers are reimbursed a lump sum for providing for care needs with adjustments to the payment based on quality. Although there are a number of variations on value-based healthcare, perhaps the most significant is what is known as population health.
In this model, providers assume responsibility for all the care needs of a large population. They are reimbursed a lump sum, with adjustments based on quality.
This can present a substantial financial risk for providers if many patients require extensive, expensive care. To spread that risk and make this model financially practical, a hospital must be responsible for caring for a very large population.
As a standalone provider, IRMC is not able to draw on a large enough pool. A larger partner is needed to address this challenge.
Large capital needs
IRMC, like many community hospitals, needs substantial investment to position ourselves to care for this community for decades to come. In our case, we need a new tower to replace our main building, which is about 40 years old.
The cost of a new building is estimated at $185 million, and even with substantial donations, IRMC does not have the financial resources for this project – and there are other large capital needs as well, totaling about $50 million.
A larger partner could provide the investment this community needs to continue receiving high-quality care.