Populations Demographics
Our population is getting older, but aging baby boomers will account for only about a 10% increase in healthcare spending. The bigger problem is that as the population ages a greater proportion of healthcare spending shifts from private to public (i.e., from the Blues to Medicare). There is already a problem in cost shifting as I mentioned above with Medicare and Medicaid paying <95% of healthcare costs. You can’t make up those losses with volume. It’s predicted that more than 65% of hospital funding will come from the government by 2025. How can a hospital survive with those dynamics?
There are only three options. Faced with decreasing revenues, hospitals can further reduce expenses. With much of the fat already trimmed this is a daunting proposition. Second, the hospital can cost shift and ask a greater percentage from the private insurer. This will be difficult with price transparency and a greater portion of the bill being paid by the patient. Third, we can all pray that the government will increase its reimbursement; unlikely, when it’s such a fight just to not be cut each year.
Need to Add Capacity
With the aging population and the increasing acuity of hospitalized patients, changes need to occur in the hospital’s physical plant. Recent surveys have shown that more than 85% of hospitals plan to add or change their capacity. While this is significant in Florida, Arizona, Nevada, and other places faced with population migrations, in other places this is driven by the need to expand the emergency department, add telemetry beds, and expand the ICU.
This is further complicated by the movement of well-heeled (and well-insured) populations to the suburbs with the hospitals following them and leaving disturbing realities for the older inner city in their wake.
Technology Is Your Friend
New advances are more than gadgetry gone wild. When best deployed these 21st-century advances can lead to better outcomes, safer hospitals, and actually make economic sense. The problem: Where can hospitals go to find out just which technology to use? At many hospitals these decisions are made by committees with less than perfect knowledge in a rapidly evolving market. Once the technology is chosen, the implementation can be disruptive more than helpful, especially in the short run, and the processes of care can be thrown off course. Sometimes this can have convulsive results such as in the failed implementation of CPOE at Cedars Sinai Hospital in Los Angeles.
And whether it is new technology or the adding of capacity, just where will the hospitals get the capital to pay for all this investment in the future? Not from Medicare and Medicaid, not from big business, and not from the out-of-pocket dollars of their patients.
This is the reality of today flavored with best guesses for the future. From this vantage point will arise the ideas of how to shape the hospital of the future. This is the world tomorrow’s hospitalists will inhabit. We need to understand how this will shape resource availability, hospital design, the commitment to quality improvement and accountability, and the environment in which hospitalists will work and our patients will receive care.
Once we understand what will shape the hospital of the future, hospitalists can be better prepared to be active partners in the shaping the new reality. TH
Dr. Wellikson has been CEO of SHM since 2000.