Tuesday, June 14, 2011

A common Question: Where Are Inpatient Volumes Going?

One of the most common questions being asked by a myriad of audiences- leaders in the C-Suite, physicians, pharmaceutical companies, insurers, supply chain companies, and investors - where are inpatient hospital volumes going? It is clear to me, for a variety of reasons, that these volumes at best are going to remain flat, and most probably are going to decline 2% to 4% annually for the next decade. The question that must be answered if the "Why" - what are the reasons for this picture of future volumes unfolding.

The first, and probably the most significant reason, is the recent economic crisis, which, although it has softened, is still influencing the volumes negatively, and will undoubtedly continue to do so in the future. The resulting high unemployment rate drives a higher number of uninsured, all of whom are reluctant to seek necessary care, let alone elective procedures. The unemployment rate is not expected to decline significantly in the near and mid-term future.

The second reason, which is the best and most positive reason, is the rapid advancements of technologies which have premitted many of the once inpatient procedures to be done in the outpatients areas. These procedures, often demanding less reimbusements, are safer and less painful for the patient. The resultant outcomes, thankfully,  are the drivers of the two crtieria for successful healthcare services  in ther future - those which abd demonstrate high quality and low cost.

A third reason is the acceptance now by many that what I have been saying for years is true.....there is a great deal of overutilization of treatments and procedures that are unnecessary, often leading to even a worsening of the patients' problems. This acceptance and recognition by CMS, insurers, quality and utilization healthcare leaders, physicians, and even the patients themselves, are causing this overutilization to be addressed, being replaced by evidenced-based medical protocols. Hopefully in the future we will be doing procedures only because they are required, not because we can because the equipment is available. This oversue is presently most evident in cardilogy (cardiac caths and stents), gastroenterology (endocopies), and radiology (MRI and Cat Scans).

And finally, many people, faced with the negative outcomes of the economic crisis, have used self medication and alternative and complimentary medicine treatment plans to address their complaints. Becasue many of these pathways have been successful, these people will not quickly return  to the traditional medicines of the past.

In adiition, I have mentioned in previous blogs that probably 1/4 of our present hopsitals will close in the next decade. We also are recently hearing that an increasing number of employers are comtemplating taking the penalty instead of providing health insurance for their employees. Both tof these events will only make the inpatient volumes decline more severe. Yes, we are an overbedded hospital industry in the United States in this present moment. If the reasons for volume declines articulated above are only half true, what should the hospital of the future look like?  Today, the number of beds available, versus the number of occupied beds show a gab of over 20%. If beds are not permanetly closed and /or converted to other uses, this gap will only increase. Hopefully, the leaders of healthcare will do what is necessary to "right their ship" and make sure the volumes of the future are only the necessary ones....critically important for we know they will be judged on value not volume going forward!