Why Healthcare Delivery Must Go Last-Mile
Bringing essential healthcare services directly to communities is vital for healthier populations and a stronger bottom line.
Traditional healthcare infrastructure, built largely around acute care delivered in hospital settings, is ill-suited to manage the needs of a rapidly expanding patient population. To address escalating costs effectively, healthcare providers must shift their focus to delivering care within the last mile, where people live.
Chronic diseases (e.g., heart disease, diabetes, arthritis, etc.) pose a formidable healthcare challenge while accounting for an overwhelming 80% of the $4.3 trillion annual healthcare spending in the United States [1]. Among older adults, the situation is especially concerning, with 95% of Americans aged 65 and above experiencing at least one chronic disease, and 80% managing two or more [2].
In other words, chronic disease is what matters most to U.S. healthcare spending.
Last-Mile Healthcare Delivery: Saving Money Where Money is Being Spent the Most
As patient mobility decreases with age, there is an increasing demand for convenient, affordable outpatient care options closer to patients’ homes. The shift to the last-mile is crucial for lowering costs associated with chronic diseases, especially in preventing chronic conditions from developing into acute care episodes.
Frequent healthcare visits become impractical for older patients if each appointment involves a costly and inconvenient journey to a distant hospital campus. Providing the same service just five minutes away significantly enhances accessibility, improving adherence to treatment plans and ultimately reducing overall costs [3].
Patient Satisfaction: The Key to Better Healthcare Profitability and Outcomes
Traditional healthcare infrastructure, built largely around acute care delivered in hospital settings, is ill-suited to manage the needs of a rapidly expanding patient population. To address escalating costs effectively, healthcare providers must shift their focus to delivering care within the last mile, where people live.
Chronic diseases (e.g., heart disease, diabetes, arthritis, etc.) pose a formidable healthcare challenge while accounting for an overwhelming 80% of the $4.3 trillion annual healthcare spending in the United States [1]. Among older adults, the situation is especially concerning, with 95% of Americans aged 65 and above experiencing at least one chronic disease, and 80% managing two or more [2].
In other words, chronic disease is what matters most to U.S. healthcare spending.
Healthcare is transitioning away from fee-for-service to prospective payment models, in which health systems are given a fixed period of payment to manage a patient’s entire care needs. In these models, preventing hospital admissions is critical to controlling costs, which means that health systems are incentivized to manage chronic conditions outside of the hospital setting, primarily in these consumer-centric, last-mile healthcare centers.
For Medicare (predominantly age 65+ patients), health system revenue is partly driven by patient satisfaction. Because healthcare is such a low-margin endeavor, the differences in revenue between high and low satisfaction scores can mean the difference between profit and loss for health systems.
Patient satisfaction is largely driven by ease of access and convenience of care which greatly favor last-mile locations. Providers are also more satisfied in environments where they can work efficiently with few interruptions.
Healthcare Providers Compete in the Last Mile
Healthcare is competitive, and health systems compete to attract patients. Convenient last-mile locations attract patients for routine care and serve as a source of internal referrals for higher-margin specialty care and procedures.
Investing in convenient outpatient locations strategically positioned within communities drives patient preference, leading to better reimbursement rates and overall profitability. The ongoing competition to deliver high-quality last-mile care emphasizes this shift in patient preferences and its connection to health system success [4].
Forging a Path to a Better Tomorrow
The imperative for last-mile healthcare delivery is pivotal in addressing escalating challenges posed by chronic diseases. As we confront an aging population and its associated burden, transitioning to community-centric care becomes increasingly vital. This paradigm shift emphasizes accessibility, affordability, and patient satisfaction, reshaping healthcare outcomes.
By focusing on consumer-centric care and situating outpatient facilities within communities, we can redefine healthcare delivery in America.
About the Author
Clare Duan is Founder and CEO of CD Healthcare Infrastructure Manager LLC, the investment manager of all the funds and joint ventures of the CD Healthcare Infrastructure Partners series. Clare has over a decade of experience in healthcare, real estate, and investment banking. Prior to founding CD Healthcare, she was a VP of Special Situations Group at Colony Capital, managing $40 billion in assets, and Senior Resource Group ($3.5 billion in luxury senior living facilities). Clare’s transaction experience spans multi-billion dollar real asset and M&A deals in healthcare and net lease real estate. Clare started her career at UBS Healthcare and Morgan Stanley Real Estate Investment Banking. She graduated Boston College, holds an MBA from MIT, and is a candidate of Harvard Medical School’s Global Healthcare Leaders Program.
Martin Fine (MD/MBA) is a neuroradiologist with extensive clinical and leadership experience in medicine. He is the former President of the Mount Sinai Elmhurst Faculty Practice Plan, a 500-physician multispecialty group, where his efforts resulted in a sustained increase in profitability of more than 60%. He is also the former Department Chair of Radiology at NYC Health + Hospitals/ Elmhurst.
Oscar Benavidez (MD/MPP/MBA) is the Chief of the Department of Pediatric/Congenital Cardiology, Executive Director of the Congenital Cardiac Surgical and Catheterization Program within the Mass General Brigham Health System (aka Mass General Hospital). He oversees the acquisition and integration of practices including infrastructure improvement, capital purchases, clinical and administrative restructuring.
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[1] Centers for Disease Control and Prevention (CDC). “Chronic Diseases in America.”
[2] Kaiser Family Foundation. “Multiple Chronic Conditions Among Medicare Beneficiaries.”
[3] Heider, D., Matschinger, H., Müller, T. et al. (2021). “Influence of travel time on patient satisfaction in ambulatory care.” BMC Health Serv Res 21, 588.
[4] AARP. “5 Ways to Improve Health Care for Older Adults.”