Southeastern Pennsylvania is getting its first micro-hospitals

Southeastern Pennsylvania will get its first micro-hospitals — facilities with small emergency departments and 10 inpatient beds for people who are not seriously ill — as ChristianaCare and Lehigh Valley Health Network seize upon an efficient option for expanding into the Philadelphia market.

Also called neighborhood hospitals, the model is designed to fill coverage gaps in areas that can’t support a full-scale hospital, while allowing health systems to expand their reach into more distant communities. Micro-hospitals are also a way to draw more referrals to the larger health system’s flagship hospitals for advanced care.

ChristianaCare, Delaware’s largest health system, is planning to reopen the former Jennersville Hospital in Penn Township as a micro-hospital early next year. The model would use just one floor of the facility, allowing ChristianaCare to expand on business momentum it has been building for years through primary and specialty care clinics in southern Chester and Delaware Counties.

In northwestern Montgomery County, Lehigh Valley Health Network is building a new micro-hospital expected to open later this year. The single-story hospital along Route 100 near Gilbertsville in Douglass Township is in the middle of an area where Lehigh Valley hopes to compete with Tower Health, whose Phoenixville, Pottstown, and Reading Hospitals dominate the inpatient market share there.

The Gilbertsville micro-hospital and another that the nonprofit Lehigh Valley Health is building in Macungie, closer to its Allentown base, will test a model that Lehigh CEO Brian Nester has seen succeed in Texas and other parts of the country.

But he acknowledged it remains unproven in eastern Pennsylvania’s highly competitive health-care market.

“We know we have to get to a future where our cost of doing business is lower than anybody else,” Nester said in a December interview on Thomas Jefferson University’s preliminary agreement to acquire Lehigh Valley Health. “The last thing we need to do is build big box replacement hospitals and big box hospitals.”

Treatments and even surgeries increasingly are being moved to outpatient clinics, but hospitals with emergency departments are still where people go for care in times of crisis, such as a heart attack or a serious car accident.

The micro-hospital model allows health systems such as ChristianaCare and Lehigh Valley Health to offer low-level acute care services in a community at 20% to 25% of the cost of a full-scale hospital, Philadelphia health care lawyer Bill Rhodes said last year on a podcast about the micro-hospital trend.

Micro-hospitals typically don’t have operating rooms or teams of high-cost specialists, but the location gives the parent organization access to patients who need specialized care, according to Rhodes and other experts.

“It creates a stronger stream of referrals back to the flagship hospital and, hopefully, captures a greater percentage of the market in these outer service areas and strengthens the referral network,” said Rhodes of Ballard Spahr LLP.

The model is gaining momentum in Pennsylvania.

Allegheny Health Network in 2019 and 2020 opened four micro-hospitals in Western Pennsylvania in a partnership with Emerus Hospital Partners LLC, a company headquartered near Houston that specializes in the development and management of micro-hospitals.

The hospitals have been profitable and successful so far in that they “absorb lower-acuity patients and emergency volume, so that our larger hospitals can more efficiently serve higher-acuity patients,” Allegheny, which is owned by Highmark Health, said in a statement.

Emerus is also partnering with WellSpan Health, a nonprofit health system in central Pennsylvania, to open three micro-hospitals in Cumberland and York Counties.

The University of Pennsylvania Health System is also considering a micro-hospital as part of an expansion in western Chester County.

But in Bucks County, plans have stalled for a micro-hospital in Langhorne that had been proposed in 2022 by Capital Health, which has its main hospital in Hopewell Township, N.J.

“Capital Health is working on various options for their Langhorne site at this time, which include primarily ambulatory procedural, diagnostic, and testing services,” Capital said in a statement.

ChristianaCare bought the Jennersville Hospital campus for $8 million, seven months after Tower Health closed the financially struggling facility at the end of 2021, but didn’t say immediately what it would do it with it.

“We didn’t want to re-create Jennersville Hospital, because it wasn’t working,” Jennifer Schwartz, ChristianaCare’s chief strategy officer, said in an interview last month.

Before it closed, she said, the hospital with 63 licensed beds treated an average of 16 inpatients a day. Community members made it clear they still wanted a local emergency room.

But the Delaware-based system can’t open an outpatient emergency department because that would have to be tied to another hospital in Pennsylvania. ChristianaCare doesn’t have one.

A micro-hospital with 10 inpatient beds is expected to help serve the 25,000 primary care patients under the care of a dozen ChristianaCare primary care doctors in the area near Jennersville. “Our projections are that those will generally be at full occupancy,” Schwartz said.

The new hospital, still in the planning stages, would occupy 15,000 to 20,000 square feet of the Jennersville Hospital structure — all on one floor. ChristianaCare estimated the cost of renovations at $10 million to $15 million, including a $5 million grant from the state and county.

The goal is not to transfer as many patients as possible to ChristianaCare’s Delaware hospitals in Newark and Wilmington, although Schwartz said some referrals are expected. “I think some of that will happen, but the model is to keep the care in the communities, to keep it local.”

Keeping patients local will relieve pressure on emergency medical services in West Grove and Oxford, said Gary Vinnacombe, who manages ambulance crews in both communities.

Before Jennersville closed, ambulances on average traveled 10 to 14 miles to take patients for needed care. Now, ambulances are traveling 40 to 50 miles per patient, he said. Nearly half of patients are being taken to Chester County Hospital, and 36% end up at Christiana Hospital in Newark.

Reopening the emergency department at the former Jennersville hospital should also provide relief to other hospitals. “They’re so overwhelmed. When we can lighten some of their volume and distribute that better that’s going to make the whole system better,” he said.

Lehigh Valley is not the first health system to eye Gilbertsville for a new hospital.

Tower Health, before it expanded by acquiring five hospitals south and east of its home base in Berks County in 2017, had tentative plans to build small hospitals in Gilbertsville and Orwigsburg (where a joint venture of St. Luke’s University Health Network and Geisinger Heath have since built a hospital).

Nester, Lehigh Valley’s CEO, said Gilbertsville is promising for a micro-hospital because it has a concentration of “patients that have to travel to disparate places for their care.”

The $25 million Gilbertsville facility is expected to receive close to 30 emergency department visits a day, according to a bond prospectus for Lehigh’s two micro-hospitals. Lehigh’s partner is Houston-based Community Hospital Partners LLC.

Pottstown Hospital had an average of 90 emergency department visits a day in 2022, according to state data. Pottstown’s relatively low patient satisfaction scores could make it vulnerable to new competition, Lehigh Valley noted in its bond prospectus.

Tower said in a statement that Pottstown has a different approach than a micro-hospital, which is focused on “stabilizing patients before transferring them out of the community.”

With 216 beds and nearly 600 employees, Pottstown’s goal is to ensure that “our community has access to comprehensive care close to home, eliminating the need for long-distance travel to receive quality treatment,” the company’s statement said.

Sometimes patients choose to go farther, even in an emergency. That’s what Dallas Eltz, 81, did when he had a heart attack about a year ago, choosing Penn State Health St. Joseph Medical Center over Pottstown, even though Pottstown was closer to his home near Boyertown in Berks County, he said early this month.

Of the new Lehigh Valley Hospital, Eltz said with a laugh: “It’s great. It’ll be closer when I have my next heart attack.”