Empty Threat: How Much Space Will Hospitals Need Tomorrow?

The biggest guessing game in healthcare today isn’t what the U.S. Supreme Court will do with “Obamacare” in June.

It’s about how much capacity hospitals will need tomorrow.

Right now, hospital capacity is in the intensive care unit as healthcare executives monitor its vital signs. Will volume go up or down?

Nobody seems to know for sure, despite the fact that the largest generation in U.S. history is entering its retirement years and 40 million more Americans may become insured by the High Court ruling this summer.


Some hospital executives believe reimbursement changes will shift the focus to prevention of disease and therefore, more primary care.  Others are preparing for an onslaught of new patients who will be demanding private rooms, requiring new construction.

As a result, the trend lines are all jumbled up.  In a weak economy, a hospital building boom is underway.  At the same time, some hospitals are acquiring alternative delivery venues in order to actually keep patients out of their units.

Ascension Health, the largest not-for-profit U.S. system, constantly analyzes capacity while trends change, system president and CEO Robert Henkel told Modern Healthcare Magazine recently.

Admissions within the 76-hospital system have been flat over the last three years, Henkel says, and Ascension will “continue to be cautious” about expanding inpatient capacity, despite population growth trends.  The same article cited efforts by Eisenhower Medical Center of Rancho Mirage, CA to extend its market reach through acquisition of clinics and physician practices in hopes of gaining more referrals. At the close of 2011, the medical center had lost $26 million. The loss followed the opening of the hospital’s $212 million, 248-bed addition.

Demographic and geographic population shifts, technological advances, pressure from government and insurers, and changing public behavior are all factors to be considered. What seems most likely is a rise in hospital volume as Baby Boomers move into their senior years, then a tapering off as healthcare shifts to alternative delivery modes, possibly followed by another rise as Boomers face acute illnesses.

According to healthcare economist Gloria Bazzoli, of Virginia Commonwealth University, should the Supreme Court uphold the Patient Protection and Affordable Care Act, demand from the newly insured will outpace reductions in volume brought about by other reform measures.

With all the fogginess surrounding the volume question, one thing should become clear. Keeping a close eye on capacity will become increasingly important to the financial wellbeing of all hospitals, regardless of whether the volume roller coaster is going up or down.

Managing capacity in real-time gives managers a moving picture of operations as they are happening so they can keep their hospitals leaner and more efficient.. It allows them to plan for rises and falls in volume on a daily and even monthly basis. It lets them make the best use of the space and other assets they have on a 24/7 basis.

Advocate Good Samaritan Hospital, a recent winner of the Malcolm Baldrige award, uses TeleTracking’s Capacity Management Suite™ system to plan for a possible downturn in admissions related to broader outpatient services. They feel capacity control will be just as important in a downturn as it is in an overcrowded environment.

That makes sense, because waste is waste.  Anytime you can take it out of the system, you are doing something good. TeleTracking made its bones on taking wasted time out of the patient flow process and turning it into usable space.

Now we’re taking waste out of the entire enterprise. Could the timing be any better?

Michael Gallup

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