As the healthcare industry enters a period of major change, hospital administrators must prepare for a number of major challenges — including reimbursement cuts, EMR implementation, stricter compliance measures, new models of care, an influx of insured patients and more — while trying to keep their hospitals financially viable. Here are five ways hospitals are expected to change over the next 10 years — and what hospitals can do to prepare to meet these changes successfully.
1. Hospitals will redesign their current processes rather than build new facilities. Andy Day, managing principle of the Hospital of the Future team in GE Healthcare's Performance Solutions business, says over the last eight years, hospitals have been planning to build new clinical facilities to deliver care. As budget cuts take their toll on hospital finances, however, health systems are realizing that a new — and equally financially troubled — hospital may not be the answer. "People are saying, 'Designing a new facility is great, but I don't have access to the capital I used to have, and I have to get more out of the assets I've got," Mr. Day says.
Mr. Day says instead of building new facilities, many health systems and third-party companies are reexamining their processes by using simulation modeling to examine how care is delivered. By simulating each step of an average hospital visit, hospitals can determine when the patient is waiting for care and how many providers are used for one patient.
Jim Champy, chairman emeritus of consulting for Dell Services and author of Reengineering Health Care: A Manifesto for Radically Rethinking Health Care Delivery, agrees that examining inefficiencies is essential to reducing cost and providing better care. "We found through research that in a four-day stay at a hospital, the patient sees 24 different clinicians and administrators," he says. "That's tremendous complexity. There are 17 steps in a hospital between the time a physician writes a prescription and when the medication gets delivered to the bedside. Healthcare professionals have to really look at the complexity, time and cost of everything they're doing."
2. Physicians, RNs and physician extenders will do the work that fits their credentialing. The role of the physician will change as physician extenders are used more and more to fill the roles that physicians are over-credentialed for, says Steve Ronstrom, president of the Western Wisconsin Division of Hospital Sisters Health System. "We need to do some work in getting people through school and certified to work as physician assistants and nurse practitioners," he says. Instead of assigning physicians to tasks that could be performed by someone with less schooling, hospitals will save money by appointing more physician extenders, which means demand for those positions will likely increase in the next ten years to match the physician shortage.
Mr. Day adds that in a typical hospital, registered nurses are particularly over-qualified for much of the work they do. "In many hospitals, nurses do the RN work plus most of the nursing assistant work and a little bit of the supply tech work," he says. "Since the clinical work was done by the RNs, the nursing assistants start doing support services work, and eventually you're wasting critical clinical resources on work that is below their credentialing." This means making sure RNs are spending the majority of their time on direct patient care and using physician extenders for roles that don't require the credentialing of an RN.
3. Some hospitals will inevitably fail. Hospitals across the country are struggling financially, and Mr. Ronstrom predicts those financial obstacles will mean the end of a good number of hospitals over the next 10 years. "In this major time of change we're entering into, there are going to be winners and losers," he says. "I think there will be a number of people who won't be able to meet quality standards no matter how hard they try." He says that while hospitals generally manage to survive a long time, the United States may be entering a period of frequent mergers, acquisitions, turnovers and general dysfunction as hospitals consider multiple methods to stay afloat. "We're going to see winners and losers, and the winners will keep getting better and bigger, and the losers will be forced out," he says.
Mr. Champy agrees that financially strapped hospitals will have to make significant changes to stay viable — and even that may not be enough. "Unless hospitals radically change the way they perform their work to reduce costs and improve quality, we're certainly going to see the financial failure of several hospitals that are right on the edge of profitability," Mr. Champy says. As payments decrease, he says, healthcare delivery organizations are going to have to look at inefficiencies and ineffectiveness and determine where the waste lies.
4. Hospitals will focus more energy on reducing readmissions. In 2009, one in five Medicare patients returned to the hospital within 30 days, according to a study published in the New England Journal of Medicine. According to experts, readmissions are one of the biggest avoidable costs for hospitals, and CMS currently lists readmission rates as one of the hospital performance measurements on its Hospital Compare website. Going forward, hospitals will be reimbursed less and less for hospital visits that result from an avoidable readmission. Mr. Day says readmission rates must be reduced if hospitals plan to improve patient care, cut costs and comply with healthcare reform measures, and that means communicating effectively with the patient pre-discharge. "A big part of the cause of readmissions is non-compliance with medical directives post-discharge," he says. "Some of that is lack of diligence on the patient's part, but a lot of it is not effectively communicating with the patient and their family. Hospitals should make sure patients can get in touch with a physician after discharge.
Mr. Champy says some readmissions can be reduced with relatively simple patient education techniques. He talks about a hospital that installed a program that prevented adverse medication reactions among elderly patients by having a trained pharmacist call the patient several days after the hospital visit. "They found elderly patients weren't listening. They just wanted to get out of the hospital, and when they got home, they would mix medications and wouldn't know what to do," he says. "Just by calling the patient a few days after and going through everything in the medicine cabinet, they reduced adverse advents from around 18 percent to 4 percent in the hospital."
5. Hospitals will have to focus more on disease prevention. Most physicians and healthcare experts agree that if hospitals are going to reduce cost of delivery and improve quality, they need to concentrate more time on illness prevention. "We need a massive, massive effort to promote good health," Mr. Champy says. "You don't see the same problems with obesity in other countries. We have a systemic problem with an unhealthy population, and it needs to be solved before we can get those costs down." He says prevention is a matter of educating citizens on a deeper level than before. "It's certainly a matter of education, but it's also a matter of process," he says.
Mr. Champy mentions a program that brought physicians into a city's police department and worked to improve the health of police officers through regular check-ups, classroom visits and one-on-one discussions. By promoting good health in the workplace, hospitals and clinics can ensure workers receive treatment they might otherwise avoid. "In hard economic times, people who are not feeling well don't go to the doctor because they don't have sufficient coverage or they're afraid to take time off work," Mr. Ronstrom says. "One possibility is to put more physicians into the workplace and try to manage the continuum of care there."
1. Hospitals will redesign their current processes rather than build new facilities. Andy Day, managing principle of the Hospital of the Future team in GE Healthcare's Performance Solutions business, says over the last eight years, hospitals have been planning to build new clinical facilities to deliver care. As budget cuts take their toll on hospital finances, however, health systems are realizing that a new — and equally financially troubled — hospital may not be the answer. "People are saying, 'Designing a new facility is great, but I don't have access to the capital I used to have, and I have to get more out of the assets I've got," Mr. Day says.
Mr. Day says instead of building new facilities, many health systems and third-party companies are reexamining their processes by using simulation modeling to examine how care is delivered. By simulating each step of an average hospital visit, hospitals can determine when the patient is waiting for care and how many providers are used for one patient.
Jim Champy, chairman emeritus of consulting for Dell Services and author of Reengineering Health Care: A Manifesto for Radically Rethinking Health Care Delivery, agrees that examining inefficiencies is essential to reducing cost and providing better care. "We found through research that in a four-day stay at a hospital, the patient sees 24 different clinicians and administrators," he says. "That's tremendous complexity. There are 17 steps in a hospital between the time a physician writes a prescription and when the medication gets delivered to the bedside. Healthcare professionals have to really look at the complexity, time and cost of everything they're doing."
2. Physicians, RNs and physician extenders will do the work that fits their credentialing. The role of the physician will change as physician extenders are used more and more to fill the roles that physicians are over-credentialed for, says Steve Ronstrom, president of the Western Wisconsin Division of Hospital Sisters Health System. "We need to do some work in getting people through school and certified to work as physician assistants and nurse practitioners," he says. Instead of assigning physicians to tasks that could be performed by someone with less schooling, hospitals will save money by appointing more physician extenders, which means demand for those positions will likely increase in the next ten years to match the physician shortage.
Mr. Day adds that in a typical hospital, registered nurses are particularly over-qualified for much of the work they do. "In many hospitals, nurses do the RN work plus most of the nursing assistant work and a little bit of the supply tech work," he says. "Since the clinical work was done by the RNs, the nursing assistants start doing support services work, and eventually you're wasting critical clinical resources on work that is below their credentialing." This means making sure RNs are spending the majority of their time on direct patient care and using physician extenders for roles that don't require the credentialing of an RN.
3. Some hospitals will inevitably fail. Hospitals across the country are struggling financially, and Mr. Ronstrom predicts those financial obstacles will mean the end of a good number of hospitals over the next 10 years. "In this major time of change we're entering into, there are going to be winners and losers," he says. "I think there will be a number of people who won't be able to meet quality standards no matter how hard they try." He says that while hospitals generally manage to survive a long time, the United States may be entering a period of frequent mergers, acquisitions, turnovers and general dysfunction as hospitals consider multiple methods to stay afloat. "We're going to see winners and losers, and the winners will keep getting better and bigger, and the losers will be forced out," he says.
Mr. Champy agrees that financially strapped hospitals will have to make significant changes to stay viable — and even that may not be enough. "Unless hospitals radically change the way they perform their work to reduce costs and improve quality, we're certainly going to see the financial failure of several hospitals that are right on the edge of profitability," Mr. Champy says. As payments decrease, he says, healthcare delivery organizations are going to have to look at inefficiencies and ineffectiveness and determine where the waste lies.
4. Hospitals will focus more energy on reducing readmissions. In 2009, one in five Medicare patients returned to the hospital within 30 days, according to a study published in the New England Journal of Medicine. According to experts, readmissions are one of the biggest avoidable costs for hospitals, and CMS currently lists readmission rates as one of the hospital performance measurements on its Hospital Compare website. Going forward, hospitals will be reimbursed less and less for hospital visits that result from an avoidable readmission. Mr. Day says readmission rates must be reduced if hospitals plan to improve patient care, cut costs and comply with healthcare reform measures, and that means communicating effectively with the patient pre-discharge. "A big part of the cause of readmissions is non-compliance with medical directives post-discharge," he says. "Some of that is lack of diligence on the patient's part, but a lot of it is not effectively communicating with the patient and their family. Hospitals should make sure patients can get in touch with a physician after discharge.
Mr. Champy says some readmissions can be reduced with relatively simple patient education techniques. He talks about a hospital that installed a program that prevented adverse medication reactions among elderly patients by having a trained pharmacist call the patient several days after the hospital visit. "They found elderly patients weren't listening. They just wanted to get out of the hospital, and when they got home, they would mix medications and wouldn't know what to do," he says. "Just by calling the patient a few days after and going through everything in the medicine cabinet, they reduced adverse advents from around 18 percent to 4 percent in the hospital."
5. Hospitals will have to focus more on disease prevention. Most physicians and healthcare experts agree that if hospitals are going to reduce cost of delivery and improve quality, they need to concentrate more time on illness prevention. "We need a massive, massive effort to promote good health," Mr. Champy says. "You don't see the same problems with obesity in other countries. We have a systemic problem with an unhealthy population, and it needs to be solved before we can get those costs down." He says prevention is a matter of educating citizens on a deeper level than before. "It's certainly a matter of education, but it's also a matter of process," he says.
Mr. Champy mentions a program that brought physicians into a city's police department and worked to improve the health of police officers through regular check-ups, classroom visits and one-on-one discussions. By promoting good health in the workplace, hospitals and clinics can ensure workers receive treatment they might otherwise avoid. "In hard economic times, people who are not feeling well don't go to the doctor because they don't have sufficient coverage or they're afraid to take time off work," Mr. Ronstrom says. "One possibility is to put more physicians into the workplace and try to manage the continuum of care there."