The sprawling institutions we know are radically changing—becoming smaller, more digital, or disappearing completely. The result should be cheaper and better care.
The days of the hospital as we know it may be numbered.
In a shift away from their traditional inpatient facilities, health-care providers are investing in outpatient clinics, same-day surgery centers, free-standing emergency rooms and microhospitals, which offer as few as eight beds for overnight stays. They are setting up programs that monitor people 24/7 in their own homes. And they are turning to digital technology to treat and keep tabs on patients remotely from a high-tech hub.
For the most part, the investments in outside treatment are driven by simple economics: Traditional hospital care is too costly and inefficient for many medical issues. Inpatient pneumonia treatment, for example, can cost 15 to 25 times more, yet many low-risk patients who could be safely treated as outpatients are hospitalized, studies have shown.
And being hospitalized carries its own risks: With the rise in antibiotic-resistant bacteria, at any given time one in 25 patients in the U.S. is battling an infection acquired in the hospital, according to the Centers for Disease Control and Prevention—at a cost of $10 billion annually for the five most common infections.
But patient preferences for how they get care and a national focus on more prevention and wellness are also driving the new models.
“We should be investing in people and processes, not hospitals,” says David Feinberg, president and chief executive of Geisinger Health System, which is based in Danville, Pa., and has 13 hospitals in New Jersey and Pennsylvania and a health-insurance plan. His goal: to put his own hospitals “out of business” by keeping patients healthier and engaging them in improving their own well-being.
Already, the U.S. has more hospital beds than it needs in most markets, suggests a March 2017 report by Medpac, an independent analysis group reporting to Congress. The average hospital-occupancy rate was just 62% in 2015. There were also more hospital closings than openings over the four years ending in 2015, with nearly half of those converting to outpatient-only facilities. Hospitals have continued to close their doors, especially in rural areas, and a spate of mergers will speed consolidation.
“If technological and reimbursement trends continue—including large cuts to Medicare—it is likely that the country would need fewer hospitals,” says Ken Kaufman, chairman of health-care advisory firm Kaufman Hall.
Hospitals could also be squeezed as large employers band together to reduce health-care costs, such as the recent announcement that Amazon.com Inc., Berkshire Hathaway Inc. and JP Morgan Chase & Co. are forming a company to provide less-expensive heath care for their employees.
To be sure, there will always be a need for modern full-service hospitals to care for the sickest patients, perform complex and risky procedures and deal with trauma cases.
“Hospitals aren’t going away anytime soon, nor should they,” says Jennifer Wiler, executive director of the Care Innovation Center at UCHealth, a Colorado-based health-care system, and vice chairwoman of emergency medicine at the University of Colorado School of Medicine. “But the traditional model of a hospital as the hub of care with a single facility providing every facet of treatment is changing.”
Bruce Leff, a geriatrician and professor at Johns Hopkins University School of Medicine predicts, “Hospitals will start to evolve into large intensive-care units, where you go to get highly specialized, highly technical or serious critical care.”
Payment models for shifting care out of hospitals are being worked out, but Medicare and private insurers are weighing various reimbursement approaches such as bundled payments, which provide a single sum for 30 days of services, regardless of where they are delivered.
Here’s a look at some of the changes coming to the traditional hospital model.
Help patients at home
Studies by Dr. Leff and others show hospital-level care at home for certain conditions can be provided for 30% to 50% less than inpatient care with fewer complications, lower mortality rates and higher patient satisfaction.
New York’s Mount Sinai Hospital has developed a hospital-at-home program, HaH-plus, for some patients who show up at the emergency department or are referred by their primary-care doctors. A mobile acute-care team provides staffing, medical equipment, medications and lab tests at home, and is on call 24/7 if a condition worsens.
“For some admissions, we can avoid the emergency department, but for most admissions like pneumonia or dehydration or a skin infection, we evaluate them in the ED and then send them home in an ambulance with an IV in place,” says Linda DeCherrie, clinical director of Mount Sinai at Home. The HaH-plus program provides 30 days of care, including referring patients back to primary-care doctors and connecting them to services they need to avoid readmission.
Mount Sinai estimates that nationally, 575,000 cases each year could qualify for such a program, and treating just 20% of those could save Medicare $45 million annually. Mount Sinai is working with Contessa Health, which manages bundled-payment arrangements for hospital-at-home services, and plans to expand the home program to other areas, such as patients recovering from surgeries that would typically require an inpatient stay.
Richard Rakowski, chief executive of hospital-at-home provider Medically Home, estimates that eventually as much as 30% of care once provided in a hospital may be delivered at home.
One patient who saw a benefit from hospital-at-home care was Phyllis Camaratta, a heart-failure patient living in Malden, Mass. After three years in and out of the hospital, the 93-year-old says she didn’t want to go back after she became ill again last fall. When a nurse practitioner suggested a Medically Home program offered through her health-care provider Atrius Health, Ms. Camaratta agreed to try it.
At first, she says, she was a little overwhelmed by how many people showed up to provide care, check her condition, set up equipment and perform tests on portable machines. But she was impressed by the care, including a daily video consult via iPad so a doctor could see if her legs had too much swelling from fluid buildup.
At the end of a month, she was discharged from the program and referred to a new primary-care doctor. “We were so impressed that they could do all the same things they did in the hospital and have my mother be comfortable in her own bed and her own bathroom…with family and familiar surroundings,” says her daughter, Debbie Camaratta. “She was in a very fragile state, but The care really helped her bounce back to the best she can be at this age.”
Build smaller facilities
To offer services and expand in locales where it doesn’t make sense to build a new hospital, health systems are building free-standing emergency rooms and microhospitals, commonly called neighborhood hospitals. The scope of services varies, but microhospitals usually include emergency rooms and beds for short-stay recovery.
Houston-based Emerus Holdings Inc. partners with big health systems to open microhospitals. Commonly called neighborhood hospitals, they typically anchor a two- or three-story “healthplex” buildings with emergency care, labor and delivery, surgical procedures and lab and radiology services. For example, it has opened four in partnership with Dignity Health-St. Rose Dominican, which operates hospitals and other medical facilities in southern Nevada, allowing the system to expand services to a broader area around Las Vegas. And Emerus is joining with Highmark Health, which includes health plans and the Allegheny Health Network, operator of West Penn Hospital, to build multiple neighborhood hospitals in western Pennsylvania.
Typically, 92% of patients who come to the microhospitals are treated and sent home in an average of 90 minutes, and 8% are admitted overnight for care such as intravenous-medication administration, according to Chief Executive Craig Goguen. If need be, patients can be transferred to higher-level care, such as a hospital cardiac-catheterization lab, sometimes in less time than it takes in a hospital’s own emergency room, Mr. Goguen says.
Michigan Medicine, the academic medical center of the University of Michigan, is completing a nearly 300,000-square-foot center in Brighton, Mich., which will house more than 40 specialty services for adults and children, cancer treatment, operating rooms and a short-stay unit. Eventually, most patients who aren’t acutely ill “will be getting care in an outpatient center that can do everything short of admitting you, and maybe just watch you overnight,” says David A. Spahlinger, president of the University of Michigan health system.
Ochsner Health System, Louisiana’s largest nonprofit academic health system, has 30 owned, managed or affiliated hospitals. President and Chief Executive Warner Thomas says 80% of its capital expenditures are going to outpatient clinics, and “I don’t see us building new hospitals.”
In the Baton Rouge area, for example, in addition to a recently opened outpatient cancer center, it is developing a medical office building with more primary-care and diagnostic and specialty clinics. Attached to the building will be a 10-bed inpatient hospital and surgical center, which Mr. Thomas says will offer procedures such as knee replacements requiring stays of 24 hours or less.
Find new uses for old hospitals
In some cases, health systems are taking existing hospitals and turning them into specialized facilities.
To be Continued