Reduced inpatient admissions and readmissions are having a corresponding effect on hospital and health system revenues, with question marks over reimbursements. Hospitals are bracing for impact.
This article appears in the March 2014 issue of HealthLeaders magazine.
That rumbling sound you hear is the seismic shift of patient volumes for hospitals. Inpatient volumes and readmissions are shrinking. Newly insured are knocking at the door. A bundle of contradictions is at hand. Hospitals are bracing for the possibilities and the what-ifs.
At the Beaumont Health System, officials are working hard to anticipate shifting patient populations. Beaumont is a regional healthcare system with 1,728 licensed beds at three locations in the metropolitan Detroit area. Because it is an integrated system, Beaumont's leaders are confident they can move ahead effectively in the coming patient population environment, says Nick Vitale, executive vice president and CFO. Still, there are always wrinkles in the planning process.
Several months ago, Beaumont opened a 12-bed physical and occupational rehabilitation unit at its Troy Hospital because, without such a facility, Beaumont found itself sending patients to competing facilities.
What surprised hospital officials, Vitale says, was that "it filled up so quickly, in a couple of months." Essentially, "we look to see where there's a need and use our limited resources."
Across Detroit, Henry Ford Health System's top officials also were having plenty of meetings about the future and thinking about the flip side of their success in recent years of reducng readmissions and having fewer patients in their hospital beds. That effort worked. Now what? To improve its market share, Henry Ford is looking to collaborate with postacute care providers and planning on improved care for the aged and chronically ill.
Henry Ford is a comprehensive, integrated, nonprofit healthcare organization that includes six hospitals. Since early 2013, the number of admissions to Henry Ford hospitals has declined 6% and readmissions decreased about 19%. The overall admissions rate has hovered around 40,000 annually, according to William Conway, MD, the health system's executive vice president and chief quality officer, who also serves as CEO of the Henry Ford Medical Group.
Those figures are all good news; that's where healthcare is headed, toward value-based care, says Conway. But that success doesn't mean Conway or the other Henry Ford officials are resting easy.
"The scary part and the hardest thing is nobody really knows what consumers are going to do," says Conway. "Efficient patient management should suggest there would be less need for hospitalization and maybe fewer encounters for patients and the hospital. Yet with healthcare reform, these forces aren't perfectly aligned." Henry Ford is maintaining the course and is "not planning for a large influx of any ambulatory setting and not bulking it up," he says.
The shifting patient patterns and projections are giving healthcare leaders headaches. The reduced inpatient admissions and readmissions in some markets have a corresponding impact on hospital and health system revenues, with question marks over reimbursements. At the same time, healthcare organizations are bracing for an influx of new patients under the Patient Protection and Affordable Care Act.
Integrated systems and hospitals agree that they need to aim for comprehensive care that targets the shifting patient populations—especially the projected increase of chronically ill patients and the aging. And as organizations try to prevent readmissions and move toward preventive care in a population health model, they will be focusing on post-discharge care, ensuring prescriptions are filled, and making follow-up appointments.
To carry out their mission, leaders believe they must strengthen their provider base and make doctors more readily available via advanced technology or even simple phone call appointments. Ultimately, coordinated care with fully engaged communities is the best answer toward the shifting patient volumes, though not something easily accomplished.
Although predicting patient populations can be complicated and uncertain, hospital admission rates in the United States have been on a long-term decline, often due to better treatments. The reasons for many admissions today are different than they were 30 or 40 years ago because of improvements in care, says Lloyd Michener, MD, chairman of the department of community medicine at the 957-licensed-bed Duke University Medical Center in Durham, N.C. For example, while pneumonia was a key reason for admissions decades ago, that is no longer the case. Yet hospitals are predicting an increasing need for hospitalization from a growing aging and chronically ill population, he says.
Among the unresolved areas of shifting patient populations is the estimated 14 million people who are expected to join the ranks of the newly insured this year and the expansion of Medicaid eligibility. That got off to a complicated start last year when there were flaws in the computer systems at HealthCare.gov and state-based insurance exchanges.
Then, there is the question about the potential impact of the young population that is expected to go into the system, ostensibly to offset the costs of the elderly and the chronically ill. Is the potential dramatic or will it be a bust? These issues are bound to complicate hospital finances and will play a role in how leaders adjust to shifting patient populations.