By Ed Martinez – February 16, 2018
Historically, American hospitals have assumed key roles in organizing and providing community-based, institutional medical services. These include providing a clinical practice environment for affiliated physicians treating hospitalized patients and assuming a leadership role in building trust between hospitals and underserved communities.
While pursuing these traditional goals, hospital executives have also identified certain market trends that undermine their respective organization’s logic in pursuing traditional business strategies, i.e., debt-financing expansion projects, or acquisition of high-tech diagnostic equipment.
The market trends that cause hospital executives to lose the most sleep include the continuing decline of hospital admissions, unfavorable reimbursement, demographics and consumer expectations.
Hospital (inpatient) admissions have declined steadily since 2009. The downward trend of inpatient admissions is primarily due to advances in minimally invasive surgical procedures and advanced anesthesia techniques that allow patients to recover more quickly.
Meanwhile, reductions in Medicare reimbursements, cutbacks in state Medicaid programs and an increased volume of unfunded patients reflect the deteriorating reimbursement environment hospitals currently experience. Going forward, there are no indications that the reimbursement situation will improve.
The implications for hospitals: On short-term basis, focus on reducing/eliminating operating costs. Long-term strategy is to increase (higher) revenue-producing services.
Hospitals are also dealing with the demographics of an aging population:
- In 2006, the over 65 population totaled 37 million Americans. By 2050, the over 65 population is estimated to total 86.7 million
- Between 2000 and 2030, the 85 and older population is estimated to increase from 4.3 million to 8.9 million
The implications for hospitals: The aging population experiences an increased burden of chronic conditions requiring integrated disease management and care coordination support services.
In the meantime, consumer expectations have changed. Historically, hospitalized patients generally acted as advised by their family physician. Today, things are very different as patients have been encouraged to act and talk like assertive patient-consumers. Why the change in attitude? Because, little by little, the increasing financial burden of health insurance (i.e., higher premiums, higher deductibles, and additional co-pays) has shifted from employers to working people with fixed, limited incomes.
The implications for hospitals: Patient-consumer demands for greater accountability and transparency will increase in volume and frequency.
Although hospitals and community coalitions have experienced difficult working relations based on their different goals and organizational differences, now is an ideal time to consider a collaborative relationship regarding one or more of the following “best practice” initiatives:
Hospital at Home: This an innovative care model that provides hospital-level care in a patient’s home as a full substitute for acute hospital care. The program is offered to patients who require hospital admission for certain diseases, such as community-acquired pneumonia, congestive heart failure, and COPD. “Hospital at Home” was developed by the John Hopkins School of Medicine and Public Health. Initial funding was provided by a challenge grant from the CMS Innovation Center.
Micro-hospitals: Micro-hospitals are 24/7, small-scale inpatient facilities that offer emergency medical care, inpatient care (eight to 10 beds for observation and short stay use), surgery, laboratory and radiology services. The primary rationale for this facility concept is based on patient feedback that traditional ambulatory care centers don’t offer a complete breath of services as hospitals do. The concept of micro-hospitals, therefore, is emerging as a middle-ground option for consideration.
Enhanced Primary Care System: This CVS-Aetna venture represents a “marriage” of financing systems (Aetna Insurance) and service delivery enterprises (CVS Minute Clinics). This care system is similar in concept to the Kaiser Permanente HMO, which consists of a health insurance division, a multi-specialty medical group and a hospital care system.
These three “best practices” represent a few examples of promising practices to stimulate strategic planning discussions between hospitals and community leaders. Two key points to keep in mind:
1) The process is non-prescriptive and places a priority on listening and building trust.
2) the primary goal is to initiate collaborative discussions and share mutual concerns regarding the health of the community, and the viability of the hospital organization.