The Patient Protection and Affordable Care Act is a daily topic of conversation. Couple the PPACA with an aging population living longer with chronic conditions, increased health system consolidation, rapid technological advances and the ever-evolving delivery of care model, and there is an unprecedented perfect storm of issues. If one thing is certain, it is that the future is uncertain and that uncertainty has healthcare leaders nervous about what the future holds.
These variables are reshaping the way patients receive care. With an increased focus on wellness and chronic care versus episodic and sick care, the shape of facilities is fluid. One plausible future is that healthcare providers’ core assets, hospitals, will be leaner health centers — that just happen to have inpatient beds — and are a point on the continuum of care, not the sole focus. The industry will see a continued evolution to a more diversified capital and real estate portfolio that includes a large percentage of assets in medical office buildings, ambulatory care centers, specialty care centers and home care delivery. A new reality is emerging.
Envisioning a new reality
Bolstering for a world that encourages population health management and the access to care through an integrated delivery system, healthcare organizations are changing. According to the AHA, in 2011, there were 4,973 community hospitals in the United States. Sixty percent (or 3,007) of these hospitals were in a multi-hospital or diversified single-hospital system, a trend that will continue into 2013. In many markets, it is hard to find a hospital that is not part of a system.
This system trend is occurring in order to develop ACO or ACO-like structures, gain purchasing power, align with high-quality care and obtain access to capital. Being part of a system allows for a rationalization and deployment of assets across both a continuum of care and geography.
It used to be that “satellites” were smaller versions of the system flagship and services were duplicated in a hospital-centric model. This model is changing and providers are beginning to re-think the role of the community hospital, while taking advantage of system synergies to reduce operating costs and increase quality.
Integrated delivery systems are beginning to transform into wellness systems with distributed networks that focus less on episodic care and more on how best to manage the health of populations. The incentives will be fewer high-cost hospital stays and improved population health.
Hospital administrators, trained to capture market share by gaining inpatient hospital admissions, are struggling with this new reality — one where the inpatient bed is no longer the center of the universe. Those that have already adjusted delivery models, or are in the process, are ahead of the curve.
Growth in inpatient demand and additional inpatient capacity is not the reason hospitals are spending money. In fact, some pundits posit that inpatient use rates will decline by 5-15 percent over the next decade. Therefore, a capital improvement on a hospital campus will only be made if at least one of the following conditions exists:
- It meets a changing strategic, service or clinical need that has to be provided in an inpatient hospital setting
- It addresses critical infrastructure issues and/or upgrades
- It addresses standard of care issues that need to be addressed to ensure high quality of care
The focus on “bedded care,” except for the most critical patients, will be appropriate observation and shorter stays of less than three days. There will be an emphasis on managing emergency department workloads and throughputs with an increasing attempt to develop high-performing and easily accessible primary care and urgent care networks to alleviate emergency department congestion.
Integrated delivery system providers are beginning to “skinny down” new/replacement hospitals to include space only absolutely necessary with little or no extra shell space for growth. However, plans allow for future flexibility, as necessary. Non-core assets, such as indirect administrative functions, reference labs, IT and supply chain functions are being consolidated in remote, lower-cost centralized centers. These centers serve multiple system operating units to ensure that as much care as possible is being pushed to lower-cost, easier-to-access settings.
There will always be the need for large, complex, regional and academic tertiary care medical centers, but the majority of the hospitals that consumers utilize in the future will be smaller community facilities. Now that more hospitals are partnered with larger systems, they have the impetus and capital to re-invent themselves in a synergistic way with other elements of the system. For these reasons, community hospitals are right-sizing and surrounding themselves with ancillary and complementary services, either on or off-campus. The core hospital chassis is changing.
More flexible, easier-to-access, less confusing, “outpatient-like” facilities are the mantra of the day. Smaller is not necessarily the focus, but a byproduct of building only what is needed, in order to manage both first and lifecycle costs. Master planners are smartly planning facilities to quickly grow horizontally, and vertically, should the need arise.
While there are many metrics when evaluating how efficiently a hospital is built, from a space-perspective, one metric commonly used is building gross square feet per bed. Several years ago, for small to midsize community hospitals (~150 beds), a common target was about 2,500 – 3,000 BGSF per bed. However, this target is at odds with the new reality of pushing core non-inpatient and non-direct care elements out of the hospital. Today, it is not uncommon to see a target BGSF per bed in the core hospital of 2,250 – 2,500 BGSF per bed, and sometimes even lower. Elements being built and planned in these facilities include:
Redefined public spaces: Lobby spaces in smaller community hospitals have evolved from oversized waiting and respite areas, to being appropriately sized multi-functional areas for public, staff and community functions. Instead of having many larger, but underutilized spaces, this new lobby can be planned as an efficient use of space, creating a sense of place, while being an inviting staff and community resource.
Leaner nursing units and right-sized rooms: Building on a 30-by-30 structural grid gives maximum flexibility; it makes for large bed rooms and nursing units. Private patient room sizes, with toilet room, approach 315 square feet. Not extravagant, but certainly large enough for med/surg patients and potential retrofit later for ICU rooms. Reducing the structural grid to 28-by-28 bays allows for a room size, with toilet, of around 260 square feet. This is sufficient for med/surg, but limits future flexibility. Also, there is ample support space available in either model when planning for a range of 550-700 departmental gross square feet per bed.
Observation beds: The proportion of patients remaining in the hospital for observation stays has increased. These patients, while needing much of the same support as an inpatient, do not require the same inpatient rooms. The result is an ability to care for patients efficaciously in a smaller, more efficient and less costly environment.
Support, ancillary and administrative spaces: Hospitals part of an integrated delivery system have, or are planning, many support, ancillary and administrative services to be centrally housed offsite requiring only a satellite function at the main hospital. The result is a hospital that includes only the core functions to run the day-to-day operations and eliminates duplication of effort and costly resources.
Ambulatory space out of the hospital and placed in other on-campus and off-campus buildings: Organizations are either planning for or have outpatient and specialty physician offices in on/off campus space at lower cost in easier to access buildings for both the patient and caregiver.
Over the last several decades, healthcare providers have been incentivized by caring for the sick. The focus on episodic healthcare delivery is changing to one of managing the health of populations. In response, healthcare facilities and the deployment of assets must change.
While there will always be a need for investment in core hospital assets, successful organizations are building more efficient hospitals and shifting focus to the community. Outpatient care in lower-cost, more easily accessible ambulatory settings will become the norm. Hospitals must begin deploying financial, clinical and caregiver resources to these non-hospital assets.