Managed care, seen as the primary strategy for achieving cost control in a reformed healthcare system, could have a major impact on hospital overcapacity, according to a new report from the American Healthcare Systems Institute.
The study concluded that, over time, inpatient utilization would drop and as many as 2,483 of the nation's 6,539 hospitals could close under such a system. The conclusion was reached by comparing current national hospital utilization rates to those of HMO patients to determine the impact of wider use of managed care.
"To be successful at cost containment, you have to reduce the size of the infrastructure," said James Scott, president of AmHS Institute.
Currently, the healthcare system infrastructure is "bigger than it needs to be," he added. "We're going to need a lot of consolidation" to produce an efficient system.
Bringing the average hospital utilization rate in line with that of HMOs would mean reducing the community hospitals' combined daily census to 321,000, nearly half of the 619,000 census in 1991, according to AmHS. Assuming inpatient utilization on average remained 50% higher than that of HMOs, the census would still drop 22%, to 481,000.
If beds weren't closed, the result would be average hospital occupancy rates of 35% in a system that pared utilization to the current level of HMOs, and 52% if utilization rates remained 50% higher than those of HMOs.
But according to AmHS, hospitals would respond to changing utilization levels "with restructuring to achieve a lower supply of beds."
In 1990, there were 927,000 hospital beds nationwide, according to the American Hospital Association, and the industry's average occupancy rate was 67%. If HMOs' inpatient use patterns were extrapolated to the overall population, the number of hospital beds could be cut to 500,000, or two beds for every 1,000 HMO enrollees, and occupancy rates could rise to 85%, AmHS reported. Since the average hospital had 172 beds in 1990, some 2,483 facilities would close under such a scenario.
AmHS noted that many hospitals probably would shrink capacity at existing facilities and boost outpatient services rather than acquiesce to such widespread closures.
But according to Mr. Scott, closures are inevitable as the trend toward consolidation continues.
The report didn't cite a specific impact on AmHS hospitals, nor did it include specific recommendations. But Mr. Scott said that hospital systems that develop their own insurance business and capitated payment schemes will find it easier to close weak hospitals. That's because patients from closed facilities will more likely remain in the system, rather than move to a competitor, Mr. Scott said.
The large-scale consolidations that already have taken place and are continuing are "precursors to closings," he said.