From the April 2018 issue of HealthCare Business News magazine
By Thom Wellington
The demand for health care is not shrinking. It is growing faster than ever.
Consider that 10,000 Americans turn 65 every day. As demand for health care increases due to an aging population, health care delivery is at a tipping point. Smaller, more specialized facilities are already noticeable in most cities, and one substantial benefit of this new trend is a healthier environment for the patient. Health care associated infections (HAIs), which affect 1 in 25 hospital patients, are almost off the radar screen in smaller, more specialized medical facilities.
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An aging population base with longer life expectancy means an increase in overall utilization of health improvement services. With the increased demand, you would think hospitals would be getting larger to meet the growing demand. However, hospitals are increasingly losing patients to medical clinics and even home settings with virtual care. Hospitals operate with lower patient bed usage and are quickly adjusting their financial models to deal with this tipping point of care delivery. More hospitals closed in 2017 and early 2018 than in any similar previous 14-month period. The old model does not work, due to numerous reasons that put us at the precipice of necessary health care delivery change.
Hospital admissions and length of stay have been falling for years, and hospital capacity has not mirrored the decline. Some hospitals have entire wings with no patients, representing underutilized expensive space. Consequently, hospitals are incorporating more outpatient services where revenue is generally increasing at an average of 15 percent. The competition has recognized the trend and standalone outpatient facilities are going up everywhere. The outpatient clinic is less expensive to build and operating costs are significantly lower than what a hospital demands from its infrastructure. Staffing needs are substantially less at a clinic setting, and it’s not just medical staffing, as there is also a reduced need for food service, security, groundskeeping, maintenance and housekeeping.
Technology also is playing an important role in moving patients from hospitals to outpatient centers. Yesterday’s surgical procedures required a lengthy stay in the hospital while many procedures with equipment advances have patients leaving the facility the same day to recover at home. According to the Agency for Healthcare Research & Quality, the growth of outpatient surgeries has been stratospheric. Consider that only 16 percent of surgeries in 1980 did not require overnight hospital stays versus 63 percent in 2005.