Moving programs off-site requires market knowledge

Question: It seems that a lot of occupational health programs are moving off-site, even if they remain closely affiliated with a parent hospital. I know some programs have had success with this tactic, but I’m wondering how you know when moving off-site might be a good idea. Are there any guidelines for making that decision?

Answer: The first thing to remember is that moving your program off-site may not be a good idea. It is true this strategy has gained in popularity over the past few years, but it is not appropriate for everyone.

Veterans advise caution

Even those who have done it successfully urge caution. Pat Stamas, RN, COHN, is president of Occupational Health and Safety Resources in Dover, NH. In a previous position, she helped orchestrate a move off-site for the occupational health program at HCA Portsmouth (NH) Regional Hospital. That move went well and proved to be a good decision, but it also illustrated some of the risks.

"One of the motivating factors in that move was to get ourselves into the employer’s community to improve accessibility for employers and exposure," she explains. "We also wanted to compete head-to-head with a freestanding provider in the area."

There are several reasons to consider moving away from the hospital. As with Stamas’ program, you may want to position yourself better geographically. If the hospital is not close enough to potential clients, you may have better luck with a freestanding facility inside an industrial park. Employers also may perceive you as a less expensive alternative to "hospital" care, even if you retain a strong relationship with the hospital.

Particularly with rehab patients, there may be a benefit to operating from a more businesslike clinical setting, rather than having patients go to the hospital. The freestanding center may help encourage rehab patients to feel that they are recovering, as opposed to still being under hospital care.

A separate facility also may allow you to design a working space that is large enough, modern enough, and specially suited to your needs. All of those improvements and differences can help you draw in more clients, and the increased revenue generally is the determining factor. If the move will result in significant revenue increases, it might be a good idea.

But a modest increase in revenues may not make up for the increased expenses and other possible drawbacks.

Needs like electricity are no longer just provided automatically for the occupational health program that has left the hospital, so there is more to worry about just in terms of keeping the doors open every day.

"Our overhead costs increased dramatically," Stamas recalls. "The cost of electricity was phenomenal. We had budgeted $2 a square foot, and it cost us $5 a square foot. You don’t have to worry about things like that in the hospital, and they make a huge difference in running your program."

Relocation may call for additional staff

Stamas’ program shared a medical director with the emergency department before moving, but she had to hire a medical full-time director when she moved off-site. That caused a huge increase in staff expenses.

"You become your own cost center when you move away," she explains. "Things get worse when the hospital expects a higher profit margin from you after moving. Sometimes they think that you’re more of a for-profit enterprise when you’re freestanding, whereas they may have been more content with you breaking even at the hospital."

If it seems you can handle the additional costs of being freestanding, Stamas says you should do a thorough market survey to see if employers would respond well to your move. Make sure there is enough business to support your increased costs.

"This is not a good idea just because it seems everyone is doing it," she says. "It’s a lot like renting an apartment vs. buying your first house. There may be lots of reasons to do it, but you’re also taking on a lot more responsibility and obligations."