The sprawling institutions we know are radically changing—becoming smaller, more digital, or disappearing completely. The result should be cheaper and better care.
Feb. 25, 2018 10:11 p.m. ET
The days of the hospital as we know it may be numbered.
In a shift away from their traditional inpatient facilities, health-care providers are investing inoutpatient clinics, same-day surgery centers, free-standing emergency rooms andmicrohospitals, which offer as few as eight beds for overnight stays. They are setting upprograms that monitor people 24/7 in their own homes. And they are turning to digitaltechnology to treat and keep tabs on patients remotely from a high-tech hub.
For the most part, the investments in outside treatmentare driven by simple economics: Traditional hospital careis too costly and inefficient for many medical issues.Inpatient pneumonia treatment, for example, can cost 15to 25 times more, yet many low-risk patients who could besafely treated as outpatients are hospitalized, studies haveshown.
And being hospitalized carries its own risks: With the risein antibiotic-resistant bacteria, at any given time one in 25patients in the U.S. is battling an infection acquired in thehospital, according to the Centers for Disease Control andPrevention—at a cost of $10 billion annually for the fivemost common infections.
But patient preferences for how they get care and a national focus on more prevention andwellness are also driving the new models.“We should be investing in people and processes, not hospitals,” says David Feinberg, presidentand chief executive of Geisinger Health System, which is based in Danville, Pa., and has 13hospitals in New Jersey and Pennsylvania and a health-insurance plan. His goal: to put his ownhospitals “out of business” by keeping patients healthier and engaging them in improving theirown well-being.
Already, the U.S. has more hospital beds than it needs in most markets, suggests a March 2017report by Medpac, an independent analysis group reporting to Congress. The average hospitaloccupancyrate was just 62% in 2015. There were also more hospital closings than openings overthe four years ending in 2015, with nearly half of those converting to outpatient-only facilities.Hospitals have continued to close their doors, especially in rural areas, and a spate of mergerswill speed consolidation.
“If technological and reimbursement trends continue—including large cuts to Medicare—it islikely that the country would need fewer hospitals,” says Ken Kaufman, chairman of health-careadvisory firm Kaufman Hall.
Hospitals could also be squeezed as large employers band together to reduce health-carecosts, such as the recent announcement that Amazon.com Inc., Berkshire Hathaway Inc.and JP Morgan Chase & Co. are forming a company to provide less-expensive heath care fortheir employees.
To be sure, there will always be a need for modern full-service hospitals to care for thesickest patients, perform complex and risky procedures and deal with trauma cases.
“Hospitals aren’t going away anytime soon, nor should they,” says Jennifer Wiler,executive director of the Care Innovation Center at UCHealth, a Colorado-based healthcaresystem, and vice chairwoman of emergency medicine at the University of ColoradoSchool of Medicine. “But the traditional model of a hospital as the hub of care with a singlefacility providing every facet of treatment is changing.”
Bruce Leff, a geriatrician and professor at Johns Hopkins University School of Medicinepredicts, “Hospitals will start to evolve into large intensive-care units, where you go to gethighly specialized, highly technical or serious critical care.”
Payment models for shifting care out of hospitals are being worked out, but Medicare andprivate insurers are weighing various reimbursement approaches such as bundledpayments, which provide a single sum for 30 days of services, regardless of where they aredelivered.
Here’s a look at some of the changes coming to the traditional hospital model.
Help patients at home
Studies by Dr. Leff and others show hospital-level care at home for certain conditions canbe provided for 30% to 50% less than inpatient care with fewer complications, lowermortality rates and higher patient satisfaction.
New York’s Mount Sinai Hospital has developed a hospital-at-home program, HaH-plus, forsome patients who show up at the emergency department or are referred by their primary-caredoctors. A mobile acute-care team provides staffing, medical equipment, medications and labtests at home, and is on call 24/7 if a condition worsens.
“For some admissions, we can avoid the emergency department, but for most admissions likepneumonia or dehydration or a skin infection, we evaluate them in the ED and then send themhome in an ambulance with an IV in place,” says Linda DeCherrie, clinical director of MountSinai at Home. The HaH-plus program provides 30 days of care, including referring patientsback to primary-care doctors and connecting them to services they need to avoid readmission.
Mount Sinai estimates that nationally, 575,000 cases each year could qualify for such aprogram, and treating just 20% of those could save Medicare $45 million annually. Mount Sinaiis working with Contessa Health, which manages bundled-payment arrangements for hospitalat-home services, and plans to expand the home program to other areas, such as patientsrecovering from surgeries that would typically require an inpatient stay.
Richard Rakowski, chief executive of hospital-at-home provider Medically Home, estimatesthat eventually as much as 30% of care once provided in a hospital may be delivered at home.
One patient who saw a benefit from hospital-at-home care was Phyllis Camaratta, a heartfailurepatient living in Malden, Mass. After three years in and out of the hospital, the 93-yearoldsays she didn’t want to go back after she became ill again last fall. When a nursepractitioner suggested a Medically Home program offered through her health-care providerAtrius Health, Ms. Camaratta agreed to try it.
At first, she says, she was a little overwhelmed by how many people showed up to provide care,check her condition, set up equipment and perform tests on portable machines. But she wasimpressed by the care, including a daily video consult via iPad so a doctor could see if her legshad too much swelling from fluid buildup.
At the end of a month, she was discharged from the program and referred to a new primarycaredoctor. “We were so impressed that they could do all the same things they did in thehospital and have my mother be comfortable in her own bed and her own bathroom…withfamily and familiar surroundings,” says her daughter, Debbie Camaratta. “She was in a veryfragile state, but The care really helped her bounce back to the best she can be at this age.”
Build smaller facilities
To offer services and expand in locales where it doesn’t make sense to build a new hospital,health systems are building free-standing emergency rooms and microhospitals, commonlycalled neighborhood hospitals. The scope of services varies, but microhospitals usually includeemergency rooms and beds for short-stay recovery.
Houston-based Emerus Holdings Inc. partners with big health systems to open microhospitals.Commonly called neighborhood hospitals, they typically anchor a two- or three-story“healthplex” buildings with emergency care, labor and delivery, surgical procedures and laband radiology services. For example, it has opened four in partnership with Dignity Health-St.Rose Dominican, which operates hospitals and other medical facilities in southern Nevada,allowing the system to expand services to a broader area around Las Vegas. And Emerus isjoining with Highmark Health, which includes health plans and the Allegheny Health Network,operator of West Penn Hospital, to build multiple neighborhood hospitals in westernPennsylvania.
Typically, 92% of patients who come to the microhospitals are treated and sent home in anaverage of 90 minutes, and 8% are admitted overnight for care such as intravenous-medicationadministration, according to Chief Executive Craig Goguen. If need be, patients can betransferred to higher-level care, such as a hospital cardiac-catheterization lab, sometimes inless time than it takes in a hospital’s own emergency room, Mr. Goguen says.
Michigan Medicine, the academic medical center of the University of Michigan, iscompleting a nearly 300,000-square-foot center in Brighton, Mich., which will house morethan 40 specialty services for adults and children, cancer treatment, operating rooms anda short-stay unit. Eventually, most patients who aren’t acutely ill “will be getting care in anoutpatient center that can do everything short of admitting you, and maybe just watch youovernight,” says David A. Spahlinger, president of the University of Michigan health system.Ochsner Health System, Louisiana’s largest nonprofit academic health system, has 30 owned,managed or affiliated hospitals. President and Chief Executive Warner Thomas says 80% of itscapital expenditures are going to outpatient clinics, and “I don’t see us building new hospitals.”
In the Baton Rouge area, for example, in addition to a recently opened outpatient cancer center,it is developing a medical office building with more primary-care and diagnostic and specialtyclinics. Attached to the building will be a 10-bed inpatient hospital and surgical center, whichMr. Thomas says will offer procedures such as knee replacements requiring stays of 24 hours orless.
Find new uses for old hospitals
In some cases, health systems are taking existing hospitals and turning them into specializedfacilities.
After buying the River Parishes Hospital in LaPlace, La., three years ago, Ochsner joined with aprovider of psychiatric and addiction treatment to convert the hospital to an inpatientpsychiatric facility to provide services for mental-health disorders. Emergency care onceprovided at River
Parishes is now offered at a new medical complex including 24/7 emergencyservices with 13 beds and on-site lab and radiology.
In New York, after Mount Sinai Health System’s 2013 acquisition of Continuum, a network ofcommunity hospitals, it no longer made sense to operate all of them as full-service hospitals,says Kenneth L. Davis, Mount Sinai’s president and chief executive.
The focus now has been on converting the facilities to centers for specialty care, whilecontinuing to ensure that each hospital can handle emergencies and other communityneeds, Dr. Davis says. The former Roosevelt Hospital, on Manhattan’s West Side, for example,has been rebranded as Mount Sinai West, specializing in orthopedics, neurosurgery andcomplex ear, nose and throat cases, as well as mother-and-child services.
St. Luke’s Hospital in West Harlem is specializing in cardiac interventions, circulationrestoration, weight-loss surgery and orthopedic trauma cases. Mount Sinai is replacing theantiquated Beth Israel hospital with a new downtown network of primary, specialty, urgent,behavioral and outpatient-surgery services, as well as a new hospital designed for short staysand procedures with an emergency department. And New York Eye and Ear Infirmary’s currentsite will be transformed into a full-scale ER with stroke and heart care, along with beds forshort stays.
The goal is to care for each patient in the most appropriate setting, whether in a traditionalhospital bed, an outpatient center or at home, Dr. Davis says. While Mount Sinai has facedquestions from some groups concerned about a reduction in the number of hospital beds,especially should there be a citywide emergency, “we can’t build facilities for doomsday,” Dr.Davis says. “We need a new model of care that focuses on wellness and prevention and keepspeople out of hospitals.”
Reach out to those at risk
The population-health strategy at Geisinger Health System includes identifying groups whocan benefit from programs to improve health and avoid hospitalization, such as diabetics whoseblood sugar isn’t well controlled. Dr. Feinberg says preventive care could have prevented footamputations in many such patients in Geisinger hospitals.
In Shamokin, Pa., for example, about 50% of the population is predisposed to diabetes, mostlydue to obesity, and one in three residents is considered “food insecure.” A healthier diet canlead to improvement in the disease. In a pilot program, Geisinger established a Fresh
FoodFarmacy, prescribing fruits, vegetables, lean proteins and whole grains, and providing themfree to patients and families who need assistance, along with diabetes education, cooking toolsand recipes.
Dr. Feinberg says Geisinger has seen a decrease in blood-sugar levels for participating patients,“and we are scaling the program up as fast as we can.”Research is helping identify the health risks of other patients. A study of Geisinger electronichealth records, published in JAMA Internal Medicine in 2016, suggested that patients who livednear heavy gas-drilling activity from fracking in Pennsylvania face a larger risk of asthmaattacks. And a 2013 study of Geisinger patient records found that proximity to high-densitylivestock production was associated with MRSA, a form of staph. Doctors can wait untilchildren “We can wait until kids show up with asthma or come in with a staph infection, or gointo the community and intervene with those people who have risk factors,” Dr. Feinberg says.
Geisinger is also conducting a study, the MyCode Community Health Initiative, sequencing thegenome of volunteers to look for risks such as cancer and heart disease. So far more than170,000 patients have signed on; in many cases, Dr. Feinberg says, “people have a medicallyactionable condition, and there is something we can do.”
Help from afar
More hospital systems are reducing the need for large hospitals staffed by high-level specialistsby investing in telemedicine. Thistechnology lets doctors in one or more central hubs monitorand care for patients in widely dispersed intensive-care units, such as stroke victims andpremature newborns.
For instance, specialists using two-way video and audio technology can monitor andrecommend care for newborns in multiple neonatal units from one hub, while a patient with arash or wound needing special care can use Skype or FaceTime to consult with a specialist fromtheir local doctor’s office, home computer or mobile phone. Telemedicine also allows localpractitioners to consult remotely face to face with experts in big medical centers.
With 179 hospitals, HCA Healthcare Inc. still sees demand for more hospital capacity in itsmarkets, adding 1,350 inpatient beds over the past three years, with plans for 2,000 more in thenext three years. But last year, HCA also provided 115,000 telehealth consults, including forhospitals it doesn’t own. “Telehealth is the glue that allows us to transcend time andgeography,” says Jonathan Perlin, president, clinical services, and chief medical officer of HCA.
Dr. Perlin says HCA guarantees it can remotely evaluate stroke patients within 15 minutes of arequest to help local doctors determine whether to administer clot-busting drugs or transfer apatient to a higher level of care.Intermountain Health Care, based in Salt Lake City, with 22 hospitals in Utah and one in Idaho,uses telemedicine for patients in its more far-flung locations. In Utah, smaller rural hospitals can connect emergency-department patients with crisis-care workers in Salt Lake City.Intermountain Medical Center also offers remote outpatient psychiatry consults, as well asguiding local treatment of wounds.
Eighteen rural hospitals, for example including two it doesn’t own, have access to remoteneonatologists, and more than 1,000 patients have been treated through its telestroke program,administered by experts at its main Intermountain Medical Center to patients in emergencyrooms across its system.
“We aren’t interested in building more bricks and mortar, but are leveraging technology toexpand our reach and our footprint,” says Jim Sheets, Intermountain Healthcare vice presidentof outreach services. “Patients and families shouldn’t be penalized because they were born inBlanding, Utah, and don’t have access to the level of acute care we have in Salt Lake City.”
Make hospitals more efficient
As less-complex care moves outside of their walls, traditional hospitals are turning to big dataand the science of predictive analytics to improve care of the sickest patients. That allows themto better recognize who is deteriorating quickly in intensive care, identify which patients arelikely to end up back in the hospital once they’ve been discharged, and make sure operatingrooms are available when needed for surgeries.
UCHealth in Colorado typically assigned blocks of operating-room time to surgeons, but the fullallocations weren’t always used, and there was no reliable way to open them up for othersurgeons and procedures, according to Steve Hess, UCHealth’s chief information officer.In partnership with Silicon Valley company LeanTaas, UCHealth has adopted a program callediQueue, which analyzes data about how surgeons are using their operating-room time,identifies the causes of delays such as starting the first case late, and pinpoints other problemscausing bottlenecks. It uses machine learning to detect patterns of over- or underuse andreallocates operating-room time as needed.
“We can easily see if a surgeon is consistently using only two-thirds of an eight-hour block, andwhether we can easily reduce that to six hours without any pain,” says Mr. Hess. Surgeons getearly warnings when their use of operating-room time approaches lower bounds set by thehospital. And surgeons can use their mobile phones to release assigned blocks, request blocksand swap time with other colleagues.
“Many hospitals would say we need to build more ORs instead of trying to optimize the 10 wehave,” says Mr. Hess. “But we know the increase in health-care costs is unsustainable, and wehave to do things more efficiently.”