Virtual Hospital – How the Medically Home Group virtual hospital model helps most hospitals. Richard Rakowski, CEO of Medically Home Group shares his views on the Medically Home Program and the ways the virtual hospital model intersects with American hospitals, “There are three kinds of hospital leaders, and they’re no different in terms of how they break up than any other very large sector of the economy. One is they’re innovative, and they’re always going to define what the future looks like. And mostly the academic medical centers, the Giesons of the world, the UPMCs of the world, the Johns Hopkins of the world, they’re going to continue to innovate. And they don’t view [Medically Home Group Inc.] as a threat; they’re going to develop more and more ways to care for patients at home, or in the workplace, or in schools. They recognize, to be relevant and to be a leader—and there aren’t that many really, really high-profile academic medical centers—they’re going to continue to innovate. So we’re not a threat to them. In fact, every one of them has a program that’s trying to do advanced medical care at home. Then there’s the next group, which we now know the number, it’s about 240. There’s 240 hospitals in the United States that are full, meaning they’re busting at the seams. They’re typically in large cities, like Boston. There’s no more room, there’s no more beds, their halls are filled with gurneys waiting for a bed, sometimes patients are waiting 24,48, 72 hours in the hallway of the emergency department waiting for a bed. Their cost to build new beds is about two million dollars a bed, so if you wanted to build a small 50-bed wing, that’s 100 million dollars. Hospitals don’t see a large growth future for hospitalization anymore. So they’re not building those beds. So those 240 hospitals, I would consider them friends of Medically Home, because we can create virtual capacity. We can take those 50 beds they would have built in the hospital and actually use 50 beds in patients’ homes, they’re now the hospital’s beds. The could now grow in the patients’ homes. That’s the 240 households. Then the next chunk, which is 3000 of the 5400 hospitals that are left. They’re not full, they’re still trying to get as many patients into their hospital as possible, but those patients who are in their hospital reliably leave about four and a half days. The patients who leave in four and a half days, a lot of them, a significant percentage of them, about 40% with medicare are not done. They’re not recovered from acute illness, so those patients then reliably leave the hospital after four and a half days and go to a skilled nursing home facility for 15 days. And the revenue that’s going to those skilled nursing facilities, and then the revenue again afterwards, when those patients have to go back to the hospital, that’s an opportunity for those 3000 hospitals to replace the care that’s currently provided in the skilled nursing home, and maybe another hospital afterwards. So instead of thinking about four and a half days, 15 days, four and a half days… if the hospital thought about one day in the hospital, and then 29 days at home and the hospital gets the economics for whole 30 days, those 3000 hospitals, we believe, will be becoming friends of Medically Home, and their process has already begun. The spores of those 3000 hospitals are beginning to be set. And the rest of the hospitals, they’re very, very small, they’re struggling for revenue, those hospitals will probably never really line up with Medically Home. So of the 5417 hospitals, about 3240 are going to become aligned with Medically Home in our view.”


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