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Cleveland Clinic Is Expanding Fast In Florida — But Not As Fast As Telehealth

Less than three years ago, Cleveland Clinic had one 155-bed hospital in Florida, plus eight outpatient sites. A year later, it grew to five hospitals, 1,080 beds and 40 outpatient sites, the nonprofit healthcare group’s Florida president and CEO said during a Bisnow webinar last week.

"We continue to be in growth mode," Dr. Wael Barsoum said. "The demand for Cleveland Clinic services in Southeast Florida is huge."

Dr. Wael Barsoum of Cleveland Clinic spoke in a webinar hosted by Bisnow.

Cleveland Clinic has been one of many systems that have fueled consolidation in the healthcare industry. In 2019, Cleveland Clinic acquired Florida's Indian River Medical Center and Martin Health System, helping the global company increase its operating income by 47% to $390M.

Barsoum, who was interviewed on the webinar by HealCo CEO Kirat Kharode said that the company believes in expanding primarily via partnerships, but also builds its own facilities where need be. It built two family health centers in Florida in the last two years, he said. 

"Most of Florida is over-bedded, other than when you get into very rural areas, so the idea of just dropping in a new hospital into an already over-bedded community, just for the sake of competing, probably doesn't make a lot of sense unless there's a true perception of a quality issue,” he said. “In which case, dropping Cleveland Clinic in there does actually a great favor to the entire community. Because as we bring higher-quality care, the rest of the community providers essentially step up their game to keep up." 

Around the country, there have been contentious fights for years over whether states should have certificate of need laws — about 35 states do — via which regulators determine whether there's enough demand for new hospitals to open in certain areas.

Some people argue that CON laws keep costs down and ensure that people at all income levels are served. Without such laws, for-profit hospitals have incentive to open mostly in affluent areas where people have high-paying private insurance plans, the argument goes. Because hospitals must stay open 24 hours and have certain equipment and staffing levels, hospitals that don't get enough patients then pass on their fixed costs to insurers and drive prices up. 

Others argue for a more market-based approach, saying that competition drives better service and efficiencies. CON laws often result in contentious, long-running, expensive lawsuits and appeals. In 2019, Florida repealed its CON laws.

Barsoum, a hip and knee replacement surgeon who still treats patients and performs surgeries in addition to his administrative duties (and also plays guitar in a rock band, Skin and Bones), said that Cleveland Clinic had been "very vocal" supporting the repeal of CON laws.

"We believe that, like in anything, competition is a good thing," he said. "If I have a hospital, and I really don't have to compete with anybody because no one can compete with me from a from a geographic perspective ... other than the motivation to do the right thing, there's really no incentive to lower costs and increase quality because it's essentially a little mini-monopoly."

Barsoum touched upon other topics, including telehealth, whose advantages have become evident during the coronavirus pandemic, when no one wants to sit in waiting rooms for fear of contracting the disease.

"The genie's out of the bottle," Barsoum said. In just four weeks, Cleveland Clinic's patients' use of telehealth had jumped by 600%, he said. 

"Very few things change at a pace like that in healthcare,” he added. "Very candidly, I can do almost everything just through this telephone screen. I can look at your legs and tell the arthritis, I can ask you to show me your range of motion right there, and I can schedule you for surgery. Making you take a day off work to come in and be seen probably doesn't make a lot of sense."

HealCo founder Kirat Kharode interviews Cleveland Clinic CEO Dr. Wael Barsoum during a Bisnow webinar May 7, 2020.

 He sees telehealth supplanting trips to doctors' offices, urgent care facilities and even hospitals. He predicts that hospitals will serve two functions: short stays for observation and treating the very sick.

"The hospitals that we're building today have a lot more critical care beds, ICU level beds, and more observation beds and fewer med surgery [beds]," Barsoum said. 

Telehealth might render obsolete many of the urgent care centers that have sprung up in recent years, he suggested.

"You may end up having a fair amount of real estate that's relatively vacant,” he said. “It certainly doesn't mean that urgent care centers aren't important or ERs aren't important. I don't think you need one on every corner."