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In Hospitals: Size doesn't matter. Capacity Management does!

Does size really matter?

As it relates to hospitals, the answer to that age-old question is no. Because no matter how large or small the hospital, it will be plagued with capacity problems unless that capacity is managed actively and correctly.

This is particularly pertinent today as the healthcare industry and the Nation await a U.S. Supreme Court ruling on the Affordable Care Act. 

While the federal government demands the removal of more “waste” from the nation’s health care system, the industry is responding with the biggest building boom since World War II. The most common reason given is the aging of the Baby Boom generation, and depending upon the High Court verdict, the possibility of 30-40 million newly insured Americans seeking more medical aid. 



But another, unspoken motive is market dominance, which theoretically assures survival in the tough years ahead. Expansion and new construction provide geographic reach which can secure new patients and physician groups. 

Yet if all that new capacity isn’t managed correctly, sooner or later those giant health systems will be bleeding red ink again. That’s because size matters most when a hospital or health system is using that size to its fullest potential. 

Capacity is one of the biggest areas of waste.  This waste is due to departmental barriers, bad communications, and outdated processes regarding the movement of patients within the hospital.  That is why most hospitals appear to be overcrowded and why patients are boarded in the emergency departments for up to 24 hours before getting a bed.  Overcrowding leads to patient diversions, loss of revenue, payroll overages, etc.

The projected influx of 100 million patients over the next decade would be a good reason to build if hospitals were truly at maximum capacity now. But most aren’t.  We know because we have been showing leading institutions for more than twenty years how to squeeze as much as 20 percent more capacity from existing space. That equates to billions of dollars a year in lost revenue when projected over 5,000+ U.S. hospitals.  

Perhaps one of the fastest ways the federal government could plug the revenue leaks in our health system would be to incentivize hospitals to adopt capacity management automation technology the way it has supported the adoption of Electronic Medical Records (EMRs). This would go a long way toward eliminating the “space waste” and other resource drains brought about when hospitals are managed in silos.

What do you think? Should government promote the automation of the operational side of health delivery in the same way it has done for the clinical side? 

~Michael Gallup

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