Healthcare executives will have to start thinking the unthinkable.
The fact that hospital closures are up for the first time since 1988 shouldn't surprise anyone involved in healthcare administration. What is surprising is that hundreds of other hospitals have managed to stay open during the payer-driven revolution that has shaken the foundation of healthcare delivery in the 1990s.
And bigger bombs may fall in coming years as the federal government looks to cut the growth of Medicare and Medicaid to help balance the budget. So instead of lamenting the good old days and protecting turf in a no-win game of status quo, healthcare system managers should devote more time to long-range planning.
In many cases, that will mean closing hospitals or converting them to other uses, such as long-term-care facilities or outpatient units. Some may even end up as condominiums, community centers or day-care businesses. Frankly, the day is gone when every community and neighborhood can support a full-fledged acute-care hospital.
HHS' inspector general's office said 37 acute-care hospitals closed last year, up from 16 in 1994 but still fewer than the industry shakeout of the late 1980s. More than 5,000 hospitals in America remain licensed as acute-care facilities even though inpatient occupancy levels, average lengths of stay and staffed beds continue to spiral downward.
It seems that some healthcare systems and integrated delivery networks were formed only after the various partners agreed not to radically alter the landscape. But the uptick in closures indicates more systems are beginning to tackle the tough decisions of consolidation. Columbia/HCA Healthcare Corp. takes heavy heat for buying hospitals to close them, but from a business perspective its market-by-market downsizing strategy is sound.
Like it or not, more community-based, not-for-profit delivery systems must prepare to eliminate duplication of services and start mothballing facilities.