Micro hospitals: Poised for Continued Growth

Micro hospitals are exactly what they sound like: fully licensed, small-scale hospital facilities with between eight and 10 inpatient beds. Staffed with both primary and specialty care physicians and staff, they include emergency treatment and triage rooms as well as diagnostic and outpatient clinic services. 

Their footprints are much smaller than the typical community hospital, which might have the capacity to accommodate hundreds of patients. New Jersey, for example, has 113 total hospitals, including specialty hospitals and 72 acute care hospitals. As the largest private sector employer in the state (second only to the government), the state’s hospitals employ over 150,000 people caring for over 15 million patients annually.

Why micro-hospitals? 

Open 24/7/365, these hospitals fill an expanding niche for patients needing observation or shorter stays. Developed to more efficiently and cost-effectively assess and treat lower-acuity conditions, these hospitals have smaller footprints and, by necessity, don’t offer the full complement of services found in a typical hospital.

Micro-hospitals do, however, meet an important need. Through these facilities, larger healthcare networks can expand into new markets without investing hundreds of millions of dollars in building full-scale inpatient facilities. These micro-hospitals offer a great opportunity to increase market presence, grow brand awareness, and generate new patients but at much lower cost.

Filling a void

Too many areas of the country lack enough hospitals to meet demand. Whether it’s rural, urban, or suburban settings, a greater number of people struggle to access the care they need. Micro-hospitals fill that void, enabling healthcare networks to offer services in markets that either don’t have high enough demand for full-sized hospitals but still need more support than what’s covered by freestanding emergency departments and urgent care centers — especially since neither facility type offers inpatient services. 

Another challenge plaguing today’s healthcare systems? Older hospitals in need of renovations requiring substantial capital investment. Those buildings may have reached the end of their useful lives or sit in less geographically optimal areas. Consider of a hospital in an area where the general population has moved away, or a neighborhood has become distressed — or gentrified — or it’s sitting too far from easy public transportation or highway systems, for example.

Pending on the population’s needs, a micro-hospital offers a cost-effective alternative to renovating antiquated facilities. It requires a much lower investment to bring a micro-hospital, with its modern technology and capabilities, to a community that otherwise might have no close resources at all.

Another added benefit to micro-hospitals? They’re often build in the communities where the patients — and staff — live and work. Their convenience, and being embedded in these communities, makes it much easier for their leadership to pivot and tailor services to meet their patient population’s evolving needs. Some facilities might include specific chronic disease management programs whereas others might include certain types of procedure rooms or surgical suites. 

Micro-hospitals benefit their patients

Micro-hospitals aren’t just a convenience. When located in underserved communities, they effectively extend patient access to critical comprehensive care services. These hospitals can work with skilled-nursing or other post-acute facilities, providing tailored services for very niche patient populations.

It also becomes easier — according to micro-hospital supporters — for these facilities to focus on patient-centered care. After all, they’re serving a much smaller number of patients, and thus each patient receives optimal care for the best possible outcome.

And because they’re typically connected to a larger network, micro-hospitals’ patients can still access all care sites and the provider network should they require additional services or treatment. 

Advantages for healthcare systems

Micro-hospitals require far less capital investment than their full-scale, full-service hospital “cousins.” In areas where lower acuity patients are relegated to depending on hospital ERs or acute care centers, health systems (and health plans) may find themselves facing increased costs and higher capacities — as the country experienced during the recent pandemic, for example. Micro-hospitals can relieve those economic and space stressors. 

It’s also easier to arrange transport for patients requiring additional care or a longer stay than a micro-hospital can reasonably provide, as these facilities are usually located within a reasonable distance from their “home” full-scale hospital.

When healthcare system leaders consider building a micro-hospital facility, they should first create a care model informed by insights gleaned from gaps in delivery of care and current pain points to assess level of need.

Ultimately, these micro-hospitals also act as ambassadors for the overall healthcare network — and by delivering exceptional care, patient loyalty increases.

Growth in the micro-hospital market

The market is definitely growing. A recently released report, “Global Micro-Hospitals Market: Global Demand Analysis & Opportunity Outlook 2029,” offers a detailed overview of the global micro-hospitals market. Research Nester evaluated market segmentation by location, area of occupation, end-user, and region.

The report segmented the market into tier 1, 2 and 3 cities with tier 1 and 2 cities holding the highest share. They’re more densely populated, with hospitals more likely to struggle with accommodating higher patient influxes. Micro-hospitals have also begun expanding into tier 3 cities, however.

Area-wise, the report segmented the occupation market into 15K-40K square feet and 40K+ square feet. The smaller range holds the highest market share as it requires lower investment and less construction time. That said, the 40K+ square feet segment is increasing revenue in the market, too.

The report segmented the end-user market into individuals and corporate, with the corporate segment holding the highest share and seeing increases in joint ventures between companies to open more micro-hospitals.

Results suggest the North American market will occupy the largest share in terms of revenue because of:

  • More large hospitals adopting micro-hospitals
  • Additional joint ventures between companies to open micro-hospitals
  • Increasing per capita expenditure on healthcare spurring market growth

What does the future look like?

Between 2017 and 2022, the micro-hospital sector has seen significant growth, with its market registering at a CAGR of 7.00% until 2029. Experts anticipate it’s a sector offering lucrative opportunities for investment as these facilities address a growing need within the healthcare landscape.

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