Here Come the Seniors
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The well-documented influx of baby boomer patients promises to increase the already high demand for senior services. But the prospect of expanding a service line that relies so heavily on Medicare has some hospital leaders jittery.
The silver tsunami. The age wave. The graying of America. Whatever cliché you want to use, the strain that the aging baby boomer population will place on the healthcare system in the near future has been well-documented and thoroughly discussed. Yet the industry as a whole remains surprisingly unprepared to care for a wave of new elderly patients who may fill as many as two-thirds of hospital beds in the next 30 years.
Demand for senior care services is already high in many markets, and it will only continue to grow as the first of the baby boomers begin turning 65 in 2011. The percentage of Americans who are elderly is expected to more than double by 2030, at which point they will make up 20% of the population, according to the Institute of Medicine.
A spike in demand in procedure-based service lines would typically be followed by greater investment and growth. But that hasn't happened with geriatrics. The prospect of relying on Medicare as the primary payer can make many providers uneasy in different markets, and as a result many hospitals have been reluctant to actively expand senior health programs, says David Reuben, MD, past-president of the American Geriatrics Society and chief of the division of geriatrics at UCLA's David Geffen School of Medicine in Los Angeles.
The financial struggles in geriatrics are a prime example of the wedge that has been driven between procedural and cognitive care. The former market is an inch wide but a mile deep—and a major revenue generator for hospitals and physicians that can capitalize on the right procedures (think hip and joint replacements). The latter, though the backbone of the healthcare system, is undervalued monetarily by private payers as well as Medicare.
The result is a less-than-stellar top line for a lot of senior health programs. But first glances can be deceiving.
Senior health may not be seen as a revenue engine, but it's the future of healthcare and is central to a lot of providers' community mission. Some hospitals and health systems consider it among their top areas of strategic focus, right up there with cardiovascular and orthopedics.
Of course, the decision is often based on demographics and the elderly population of their market. But there's also a tactical consideration to investing in a senior health service line. Hospitals are going to treat elderly patients whether operations are organized around a service line or not, and properly structured senior health services can be a boost to the overall bottom line, despite poor reimbursement.
Success Key No. 1: Look downstream
James W. Campbell, MD, admits that, if looked at in isolation, a senior health program, particularly on the outpatient side, might not always break even. But it's important to look at the benefit to the overall health system or hospital, he says.
"Because someone is in your system in a primary care relationship, they then bring their subspecialty business and their laboratory business and their imaging and inpatient business to your hospital. And that makes it very profitable," says Campbell, who is chairman of the department of family medicine and geriatrics at MetroHealth Medical Center, a 926-bed hospital in Cleveland.
The formula for capturing and holding that market hinges on casting a wide net with a comprehensive service line that covers every aspect of senior healthcare—and then keeping costs in check through quality improvement, he says. MetroHealth's Senior Health and Wellness Center, for example, is housed in an old community hospital bought from bankruptcy and includes long-term care, hospice care, outpatient primary care, outpatient specialty care, and fitness programs all under one roof.
Aspects of the umbrella senior health program are run through partnerships. The hospice care is provided through a regional nurse association, for instance. But the centralized structure allows patients to return to a single location—specialists such as neurologists and cardiologists come to the seniors, rather than the other way around. That, in turn, builds loyalty (often from a caregiver as much as the patient). "The financial strategy on the outpatient side is to give people an exciting, well-organized outpatient system so they'll say, ‘This is where I want to go. This is why I want to stay in this health system,'" Campbell says.
But that can be a tall order for a relatively weak revenue generator unless it is buffered by cost-avoidance measures.
Because the patient population often suffers from multiple chronic conditions, quality improvement is central to reining in costs related to senior health services, says Victor Hirth, MD, medical director of geriatric services at Palmetto Health, a 1,247-bed system based in Columbia, SC.
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