August 24, 2015

Why your CFO may want you to build a wellness center

Daily Briefing

    Hospital-based wellness centers are getting more popular as the shift to value-based care encourages providers to embrace prevention and population health management, Kurt Ullman writes for Healthcare Finance News.

    Hospitals' wellness centers often provide services beyond those of a typical gym, with many having exercise physiologists and other medical specialists on staff. For example, at Cape Coral Hospital in Florida, the staff at the wellness center analyze patient health-risk factors, are trained to help mitigate those risks, and track changes in patients' wellbeing over time, explains Scott Kashman, the hospital's chief administrative officer.

    Many of the wellness centers are for-profit, and can contribute to hospitals' bottom lines.

    According to the Medical Fitness Association (MFA), wellness centers generally offer returns on investment of between 6% and 10%—depending on a specific hospital's operational decisions.

    From the HR Investment Center
    Achieving Return on Wellness Initiatives

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    Plus, under value-based payment systems, hospitals have a clear incentive to invest in prevention, says Robert Boone, MFA's president and CEO.

    "Hospitals and doctors are being told they have the responsibility to manage their patients' lifestyles," Boone says. "Helping people create accountable programs focusing on their healthcare risks and on prevention may be the only sustainable model out there from a cost perspective" under the shift to value-based payments.

    That is leading some larger hospitals to self-fund their own centers, while others are partnering with retail stories or private equity firms.

    Survey: 51% of hospital systems see positive ROI after switch to value-based models

    To Benjamin Spense, CFO of Lee Memorial Health System, wellness centers are an investment worth making. "We know we need to invest some dollars for our participants to play an active role in all aspects of their health, with exercise being one of many," he says.

    And healthier patients, Spense says, can help keep costs down, noting that every additional hospital bed requires an investment of more than $1 million. "To the extent we can lower the total demand for beds long-term, we can greatly decrease the capital expenditure needs of the organization," he says.

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    To further generate savings, some hospitals are integrating wellness centers with their own employee wellness program.

    Boone believes that hospitals that do not yet have a medically integrated fitness facility—or at least a relationship with one—will eventually need to incorporate such centers into their strategies. "Hospitals that understand the future are beginning to talk about the wellness center being the new front door to their health system," he says (Ullman, Healthcare Finance News, 8/17; Budryk, FierceHealthFinance, 8/18).

    Understand the wellness spectrum

    The term "wellness" includes a spectrum of different approaches to employee health. Each approach has different aims and, most importantly, different expected returns.

    Learn the different approaches to wellness and get six steps to apply population health strategies to your employees.

    Download the poster

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