After nearly two decades of decline, inpatient capacity is on the rise as acute-care hospitals reactivate dormant rooms, open shuttered wings and transform administrative space to clinical use in order to rush new beds into service. In some cases, these unconventional efforts-including reopening old buildings-are being combined with more traditional expansion projects.
Even as the number of hospitals continued to decline, the licensed bed count increased slightly for the first time in 17 years, to about 826,000 in 2001, according to the most recent survey by the Chicago-based American Hospital Association. That annual growth of about 2,000 beds in all came at a time when the number of hospitals dipped to 4,908, a downward slide that has continued for at least the past three decades.
"The demographic trends in this nation say you either have to build more hospitals or add more capacity to existing hospitals," said Thomas Selden, president and chief executive officer of 328-bed Parma (Ohio) Community General Hospital. "As people like me-the baby boomer generation-start to age, there's going to be a need for much more hospital resources. And that's what we're seeing right now."
Like many other hospital executives across the nation, Selden has attempted to postpone expensive capital projects by creating a handful of new staffed beds from existing space. By year-end, he said, the overburdened hospital will relocate the physical therapy area and a handful of tenants from the first floor of the main structure to an adjacent office building, adding about 7,000 square feet of much-needed space for inpatient services. That reconfiguration, along with a doubling of the size of the emergency room, will boost total beds by about 10%, or anywhere from 30 to 35 beds, Selden said.
Despite the constraints of managed care and the subsequent move to fewer inpatient services in the 1980s and early 1990s, Parma's patient census has been growing at 6% to 7% annually in the last five years, Selden said.
"So now I'm trying to do the opposite-move outpatient services to other areas and add inpatient beds-in order to push back the time when I'm going to have to build another 100-bed tower."
Construction projects move ahead
Not all hospital administrators are postponing construction projects. Indeed, scores of new hospitals or major additions and renovations are being developed across the country, highlighting the need for additional space and contributing to these higher national bed-count totals. A survey by Modern Healthcare (March 3, p. 26) shows that 82 new acute-care hospital projects were completed in 2002, about the same as the previous year, and that 105 are under way. Although some are replacement projects, others will expand capacity.
Still, administrators such as Selden who are reluctant to build from the ground up have become far more creative in recent years as they shake the mothballs from long-dormant beds or underused and inactive wings. By doing so, they are able to add capacity and meet immediate demands without the long delays associated with major construction projects or cumbersome certificate-of-need regulations.
Until those new construction projects open, hospitals will have to find a way to accommodate more patients. That trend is reflected in an average daily census of 533,000 nationwide in 2001, an increase from the 2000 number of 526,000, according to the AHA.
The United Hospital Fund, a New York-based not-for-profit that studies healthcare issues, released a study in mid-February indicating utilization in city hospitals shows signs of increasing after plunging about 33% from 1987 to 1999. Aging demographics, population growth and reliance on new technology such as cardiovascular surgeries are contributing to rising hospital admissions after a 15-year decline-a trend first highlighted in a Modern Healthcare special report (Nov. 26, 2001, p. 28).
"Everybody seems to be scurrying to find every space for every available bed," said Rich Galling, senior healthcare partner at Brookfield, Wis.-based Hammes Co., one of the nation's biggest healthcare real-estate developers. "It's a stopgap measure. But it won't be a long-term solution."
Reopening a wing
Last fall Louisville, Ky.-based Norton Healthcare officially reopened an entire wing at 235-bed Norton Audubon Hospital, one of three metro-area facilities it purchased in 1998 from Columbia/HCA Healthcare Corp. That wing of the hospital's fourth floor had been used as a makeshift storage area by Columbia/HCA.
Norton used the wing for administrative offices until early last year, when officials realized they needed new space to meet the demands of a daily census that jumped 30% in the last four years. In relocating those offices, Norton spent $5,000 to $5,700 per bed to renovate the wing, adding 40 new beds in private rooms. They also outfitted the area so that 10 of those rooms can be immediately recast as semiprivate to meet additional demands, and added another 27 beds in other sections of the hospital.
"We really celebrated the event as a recommissioning of the hospital wing," said Russ Cox, senior vice president and chief development officer of eight-hospital Norton Healthcare. "There was really a bit of a feeling of a rebirth. As far as space concerns, we got hit with both barrels-the demographics (of an aging population), and the fact that we had about 12 new doctors who relocated to our hospital and wanted to focus their practices here, bringing a lot of patients with them."
Faced with rapid population growth in the booming Atlanta area, WellStar Health System in Marietta, Ga., resuscitated about 80 licensed "ghost beds" that had been left dormant at its two largest facilities, the flagship 448-bed WellStar Kennestone Hospital, also in Marietta, and 302-bed WellStar Cobb Hospital in neighboring Austell, Ga. Both are now at their licensed capacity. What's more, officials consolidated the two hospitals' 24-bed psychiatric units, which had been running at about 50% capacity, into a 48-bed facility at Cobb. That paved the way for Kennestone to open a much-needed 24-bed telemetry unit.
"I think we grossly underestimated utilization of hospitals back 10 years ago," said Robert Lipson, an internist and the system's president and CEO.
This increased demand hasn't escaped the attention of top hospital associations. In February, the country's two leading hospital lobbying groups-the AHA and the Federation of American Hospitals-released a report blaming the recent increase in expenditures on escalating utilization. Of the nearly $87 billion in increased expenditures from 1997 to 2001, about 55% was attributed to increased volume, the report said (Feb. 24, p. 10). Though annual increases are expected to decline, the trend will continue, experts said.
"The arithmetic says we're likely to see increased demand in the coming decade," said James Tallon Jr., president of the United Hospital Fund. "If anyone thinks we're sitting with significant excess capacity in the system, (the numbers and trends) probably mean we're not."
Contingency plans at Northwestern
Officials at Chicago's Northwestern Memorial Hospital, which opened a 687-bed replacement facility just three years ago, already are adopting contingency plans to add more beds to the 2.2 million-square-foot facility in the heart of a booming residential area known as Streeterville.
Jean Przybylek, Northwestern's vice president of operations, said the hospital is being overwhelmed by several factors, including increased utilization by baby boomers and an explosion of new residents in the bustling area, with about 20,000 people living within walking distance of the hospital.
Also contributing to capacity issues is the closure of several Chicago-area hospitals in the last dozen years and the elimination of beds by many planners, beginning in the late '70s.
In January, Northwestern opened 13 beds in a 7,856-square-foot section of the main hospital tower's 16th floor when officials relocated a wing of offices that housed case-management and infection-control officials, transferring those employees to another building. Meanwhile, an area that had been given over to educational space three floors below was converted into four patient-care rooms covering 1,258 square feet. On the mezzanine level, the medical-records department and other administrative space also received the boot, making way for 24 new bays for emergency room observation. Those beds are expected to open in June.
"We anticipated (before the new hospital was built) that there might be a time when we would require additional locations for beds," Przybylek said. "So we strategically placed certain administrative functions in similar footprints" that could accommodate patient-care needs.
Capacity near 100%
With capacity running at or near 100% on many days, Northwestern also has made plans to reopen an ambulatory surgery wing in empty space in an adjacent eight-story building, she said. That nearly 43,000-square-foot space-expected to open in about 18 months if Northwestern receives state approval-will include 12 operating rooms as well as recovery areas.
The hospital also has opened space on three floors of an adjacent building to handle continued growth in obstetrics-gynecology services until the opening of the new Prentice Women's Hospital, a 256-bed, 880,000-square-foot facility set to debut in 2007. That refurbishment will add about 15,000 square feet of clinical space and about 40 beds.
Mirroring the creative architectural work at Northwestern, officials at 131-bed Florida Hospital East Orlando relocated the administrative offices on the facility's sixth floor to make room for a 24-bed unit that opened in early February. Nine of those are "universal rooms," meaning they can be used for almost anything: medical-surgery, labor and delivery, or intensive care. An additional 12 beds were added on the first floor of the hospital, which is a satellite campus of the 882-bed Florida Hospital Orlando, the flagship of a network of seven campuses.
At Florida Hospital Orlando, which claims to be one of the busiest hospitals in the nation, an entire wing of human resources offices on the first floor was moved across the street, opening space for 42 observation units.
"We've had to be very creative," said Diane Godfrey, director of government and regulatory affairs for the hospitals' parent, 17-hospital Adventist Health System in nearby Winter Park, Fla. "Because of volume, we've had to go in and say, `Hey, guys-you're moving.' Or, `You're going to have to do with less space because we need this for patients.' We've had to constantly look at adding space. And we're doing everything we can to avoid going to bricks and mortar."
Meanwhile, in the Chicago suburb of Park Ridge, 572-bed Advocate Lutheran General Hospital is converting designated private rooms into semiprivate rooms, adding as many as 14 beds. Though officially licensed for more, Advocate Lutheran hits its capacity at 480 because so many inpatient areas have been converted in recent years to other uses and can't easily be reopened for clinical services except through major construction projects, said Julie Schaffner, the hospital's chief operating officer. "We're at capacity almost every single day," she said.
The rise throughout the country in the total number of beds-along with increased capacity-is something of a doubled-edged sword for many hospitals. In fact, some officials note, the increase in patients doesn't necessarily mean a corresponding uptick in profits.
"A lot of people are saying, `I've never been busier-the hospital is full ... but I'm not making any money,' " said Jon Hilsabeck, senior vice president of the Texas Hospital Association. "The refrain I'm hearing goes like this: `We can't take any more patients we're so busy-and, by the way, we're also going broke.' "
Said Adventist Health's Godfrey: "Utilization is increasing. Reimbursement isn't. We've got to be smarter in how we deal with it."
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