Hospitals face closures as 'a new day in healthcare' dawns
Skip to main content
MDHC_Logotype_white
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • This Week's News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • People
    • Regional News
    • Digital Edition
    • Cigna's MDLive acquisition could foster virtual-first plan development, analysts say
      As COVID surged, vaccines came too late for at least 400 medical workers
      Why AstraZeneca and J&J's vaccines, in use elsewhere, are still on hold in America
      Lawmakers probe if Cuomo's policy fueled nursing home deaths
    • As COVID surged, vaccines came too late for at least 400 medical workers
      Why AstraZeneca and J&J's vaccines, in use elsewhere, are still on hold in America
      Lawmakers probe if Cuomo's policy fueled nursing home deaths
      0928p1_nysna Rally 2_Dave Sanders_i.jpg
      New York State Nurses Association report finds over 26,000 nurse understaffing complaints filed in 2019 and 2020
    • Dr. Imran Andrabi
      Q&A: ThedaCare CEO says lessons from COVID-19 will inform new approaches to population health management
      The Check Up: Dr. Imran Andrabi
      The Check Up: Dr. Imran Andrabi of ThedaCare
      Hospitals confront water shortages in winter storm aftermath
      beaumont-hospital-royal-oak_i_i_i.jpg
      Beaumont says nearly 2,000 second-shot vaccinations canceled due to vaccine shortage
    • High MLRs inspire insurers to focus on quality improvements
      Blue Cross and Blue Shield of Oklahoma, OU Health Physicians mired in contract dispute
      Beyond the Byline: Insurers are betting on virtual-first plans as COVID-19 shifts care pathways
      Beyond the Byline: Insurers are betting on virtual-first plans as COVID-19 shifts care pathways - Transcript
    • Why AstraZeneca and J&J's vaccines, in use elsewhere, are still on hold in America
      Lawmakers probe if Cuomo's policy fueled nursing home deaths
      Questions arise about public disclosure of wasted vaccines
      Becerra confirmation starting to look more likely
    • Genomics firms taking advantage of SPACs trend to go public faster
      COVID-19 could dent hospital revenue by at least $53 billion in 2021, AHA says
      deloitte GDP image chart graph going up
      Sponsored Content Provided By Deloitte
      Breaking the cost curve
      Modern Healthcare CEO Power Panel
      Providers focus on adding nurses, expanding outpatient care
    • Teladoc reports $383.3M in fourth-quarter revenue, up 145%
      man and woman looking at ipad wearing face masks stock image
      Sponsored Content Provided By Surescripts
      Improvements to benefits data can enhance ePrescribing and the patient experience
      Oscar Health's $1B IPO sets the stage for more health tech exits in 2021
      A map of the U.S. with images of the coronavirus.
      The digital divide becomes a new social determinant of health
    • Why AstraZeneca and J&J's vaccines, in use elsewhere, are still on hold in America
      COVID vaccine websites violate disability laws, create inequity for the blind
      Walgreens to sell Labcorp COVID-19 PCR home collection kits over-the-counter
      angela karpf headshot
      Sponsored Content Provided By B. Braun
      Making patient safety a policy priority
    • Michael Jordan, Novant team up to address health equity
      Former Ascension CEO, the first to lead the health system, passes away
      Biden's pick to head CMS would be first Black woman to hold post
      RAKESH SURI MD_i.jpg
      Cleveland Clinic creates president of international operations position
    • Midwest
    • Northeast
    • South
    • West
  • Insights
    • ACA 10 Years After
    • Best Practices
    • Special Reports
    • Innovations
    • The Affordable Care Act after 10 years
    • Dr. John Fischer
      Patient-reported outcomes tool for hernia surgery helps physicians improve care
      New care model helps primary-care practices treat obesity
      doctor with patient
      COVID-19 treatment protocol developed in the field helps patients recover
      Rachel Wyatt
      Project to curb pressure injuries in hospitals shows promise
    • What's next for on-demand telehealth companies?
      A map of the U.S. with images of the coronavirus.
      The digital divide becomes a new social determinant of health
      A CalOptima PACE vaccination clinic.
      Will COVID-19 be the catalyst for creating a more sustainable healthcare system?
      Ascension’s St. Mary’s Hospital Surgery Center at Towne Centre and Allegheny Health Network’s Bethel Park surgery center
      Hospitals see opportunity, risk in ambulatory surgery centers
    • Dr. Daniel Hall
      UPMC pilots machine learning, telehealth to inform patient transfers
      A woman being recorded using her inhaler on a smartphone.
      Digital check-ins, connected inhalers help control asthma
      A phone screen showing the question, "Mary we hope this information was helpful and we'd like to keep guiding you. Are you interested in knowing when it's your turn to receive the vaccine?"
      Chatbots, texting campaigns help manage influx of COVID vax questions
      A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
  • Transformation
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • What's next for on-demand telehealth companies?
      Rising prescription copays drop adherence, spike mortality, research shows
      Dr. John Fischer
      Patient-reported outcomes tool for hernia surgery helps physicians improve care
      Highmark Health inks six-year cloud, tech deal with Google
    • Hospitals' Medicare billing practices suggest upcoding, OIG says
      California hospitals prepare ethical protocol to prioritize lifesaving care
      Amazon, JPMorgan Chase, Berkshire Hathaway disband Haven
      Digital pathways poised to reshape healthcare continuum in 2021
    • Dr. Daniel Hall
      UPMC pilots machine learning, telehealth to inform patient transfers
      A woman being recorded using her inhaler on a smartphone.
      Digital check-ins, connected inhalers help control asthma
      Humana partners with in-home provider for 24/7 care
      A phone screen showing the question, "Mary we hope this information was helpful and we'd like to keep guiding you. Are you interested in knowing when it's your turn to receive the vaccine?"
      Chatbots, texting campaigns help manage influx of COVID vax questions
    • Coordinated payment policies could speed transition to value, experts say
      CMMI's geographic direct contracting model needs an overhaul, experts say
      Hospitals fight UnitedHealthcare policies over lab test, specialty drug payments
      Cigna eliminates prior authorization for coronary CT scans
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
    • Health Systems Financials
      Executive Compensation
      Physician Compensation
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
    • Dr. Alan Kaplan
      The risks, rewards of taking organizations 'where they haven’t gone before'
      Wellstar CEO calls adapting for the pandemic her bold move
      Howard P. Kern
      Recognizing the value of telehealth in its infancy
      Dr. Stephen Markovich
      A bold move helped take him from family doctor to OhioHealth CEO
    • Dr. Stephen Markovich
      Making sure we're aligned along the path to achieving inclusion
      Barry Ostrowsky
      Ending racism is a journey taken together; the starting point must be now
      Laura Lee Hall and Gary Puckrein
      Increased flu vaccination has never been more important for communities of color
      John Daniels Jr.
      Health equity: Making the journey from buzzword to reality
    • In-person visitation must be part of the national COVID-19 response
      We've lost so much to the pandemic, but we've also made gains that will endure
      Medical groups key to meeting president's vaccine pledge
      We need a better social care referral loop, but it requires technology as well as the human touch
    • Letters: Eliminating bias in healthcare needs to be ‘deliberate and organic’
      Letters: Maybe dropping out of ACOs is a good thing for patients
      Letters: White House and Congress share blame for lack of national COVID strategy
      Letters: VA making strides to improve state veterans home inspections
    • Sponsored Content Provided By Optum
      How blockchain could ease frustration with the payment process
      Sponsored Content Provided By Optum
      Three steps to better data-sharing for payer and provider CIOs
      Sponsored Content Provided By Optum
      Reduce total cost of care: 6 reasons why providers and payers should tackle the challenge together
      Sponsored Content Provided By Optum
      Why CIOs went from back-office operators to mission-critical innovators
  • Awards
    • Award Programs
    • Nominate
    • Previous Award Programs
    • Other Award Programs
    • Best Places to Work in Healthcare Logo for Navigation
      Nominations Open - Best Places to Work in Healthcare
      Nominations Open - 50 Most Influential Clinical Executives
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Minorities in Healthcare
      • - Luminaries
      • - Top 25 Minority Leaders
      • - Minorities to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Excellence in Nursing Awards
    • Design Awards
    • Top 25 COOs in Healthcare
    • 100 Top Hospitals
    • ACHE Awards
  • Events
    • Conferences
    • Galas
    • Webinars
    • COVID-19 Event Tracker
    • podium march webinar logo lockup
      Sponsored Content Provided By Podium
      Webinar: Critical Touchpoints for Every Patient’s Journey — How Technology Plays an Important Role
      scp health logo lockup march 2021
      Sponsored Content Provided By SCP Health
      Webinar: COVID’s call to action — Reset for success in 2021
    • Women Leaders in Healthcare Conference
    • Social Determinants of Health Symposium
    • Healthcare Transformation Summit
    • Leadership Symposium
    • Virtual Briefings
      • - Hospital of the Future
      • - Mental Health
      • - Patient Safety & Quality
      • - Strategic Marketing
      • - Virtual Health
      • - Workplace of the Future
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Minority Leaders Gala
    • Top 25 Women Leaders Gala
  • Listen
    • Podcast - Next Up
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
    • Next Up Podcast: Educating patients on the COVID-19 vaccine with Tanya Andreadis
      Dr. Joseph Cacchione
      Next Up Podcast: Educating patients on the COVID-19 vaccine with Dr. Joseph Cacchione
      Dr. Karen DeSalvo
      Next Up Podcast: What to expect with telehealth and healthcare technology in the next four years
      Carter Dredge
      Next Up Podcast: Ready, set, innovate! Innovation and disruption in healthcare
    • Beyond the Byline: Insurers are betting on virtual-first plans as COVID-19 shifts care pathways
      Beyond the Byline: How residents' stories shape our coverage of the vaccination rollout in nursing homes
      Beyond the Byline: Regulators aim to boost value push with fraud and abuse law updates
      An older man wearing a mask receiving a vaccine.
      Beyond the Byline: Verifying information on the chaotic COVID-19 vaccine rollout
    • Outreach during COVID-19
      Leading intention promote diversity and inclusion
      Introducing Healthcare Insider Podcast
    • The Check Up: Dr. Imran Andrabi
      The Check Up: Dr. Imran Andrabi of ThedaCare
      The Check Up: Tanya Blackmon
      The Check Up: Tanya Blackmon of Novant Health
      The Check Up: Dr. Patrick Hwu
      The Check Up: Dr. Patrick Hwu of the Moffitt Cancer Center
      The Check Up: Suresh Gunasekaran
      The Check Up: Suresh Gunasekaran of the University of Iowa Hospitals & Clinics
    • ivana naeymi-rad one on one intelligent medical objects
      Video: Ivana Naeymi Rad of Intelligent Medical Objects
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Providers
February 21, 2015 12:00 AM

Hospitals face closures as 'a new day in healthcare' dawns

Melanie Evans
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Cone Health is closing its Women's Hospital after assessing its excess capacity at 200 beds.

    As hospitals increasingly lose patients to medical care delivered in clinics and home settings, hospital operators are escalating their efforts to shrink capacity.

    Hospitals are operating with fewer beds or closing outright, in some cases to make way for new ambulatory-care centers. In Lakewood, Ohio, where chronic conditions such as heart disease and diabetes are just as prevalent as in the rest of the country, the city is about to close its only hospital, whose 200 beds are typically half empty.

    With three other hospitals within seven miles, the low occupancy rate makes city-owned Lakewood Hospital the high-cost provider in the area. “That's not sustainable or competitive,” said Lakewood Mayor Mike Summers, a hospital trustee.

    Last month, the city announced it will replace the hospital with a $34 million ambulatory health center and emergency department. The proposal is a lower-cost, more accessible alternative. The new center will bring another 16 primary-care doctors to a community grappling with diabetes, obesity, heart disease and mental illness. “None of those would you lay in a bed to fix,” Summers said.

    Behind closures like Lakewood's are the boom in high deductibles, better technology, more case management and shrinking reimbursement. While hospital admissions and lengths of stay have been falling for years, decline in U.S. hospital capacity has not kept pace. And overall hospital employment has been rising.

    But that could change over the next few years. New public policy and marketplace incentives are encouraging health systems to promote prevention and keep patients with chronic diseases out of the hospital. The shift to outpatient care, underway for decades, is accelerating.

    New technology and better drugs also are allowing more patients to receive treatment outside of hospitals. Meanwhile, discretionary surgeries and other procedures are still being postponed since household finances remain stressed, partly because of poor wage growth in the wake of the Great Recession, and partly because more workers are being shifted to high-deductible health insurance plans, which increase household medical bills.

    hospital bed supply and demand

    Admissions to the nation's hospitals have slumped in the wake of the Great Recession and Affordable Care Act. The federal government's two-midnight rule no longer recognizes admissions for patients with very short hospital visits. The rule is fueling the drop in U.S. hospital occupancy rates, which fell to 60% in 2013 from 64% five years earlier and 77% in 1980.

    Numerous markets across the country now have more hospital beds than they need. Given the intense pressure on hospitals to reduce costs, many healthcare organizations are driven to participate in narrow-network health plans as a way of outflanking the growing competition. Overcapacity is also feeding the ongoing merger-and-acquisition wave, which shows no signs of abating. Prime Healthcare Services' looming takeover of the six hospitals in the failing Daughters of Charity Health System in California will inevitably lead to reduced bed counts in those communities as Prime applies its own cost controls to the acquired facilities.

    MH Takeaways

    Expect stepped-up hospital closures and bed-count reductions over the next few years as better coordinated care drives more patients to outpatient settings and consumers remain under financial constraints.

    Others are moving in that direction. Pittsburgh giant UPMC eliminated 410 beds, or roughly 8.5% of its capacity, last year. And Baxter Regional Medical Center in Mountain Home, Ark., shut units with little demand in 2014. The Medicare Payment Advisory Commission reports 27 hospitals closed last year.

    Favorable demographics won't reverse the trend, consultants and health system executives say. Weak admissions are projected to last for years despite the millions of newly insured Americans, the aging of the baby boom generation and the steady upward creep of the overall population. “This flat or declining volume for inpatient is not a blip on the radar screen,” said Karin Henderson, executive director of strategic management for six-hospital Cone Health in Greensboro, N.C.

    Small, independent hospitals and academic medical centers may be the most vulnerable to financial stress as occupancy rates decline. Small hospitals lack the capital to invest in primary- and ambulatory-care facilities to attract patients seeking prevention and wellness services or whose insurers are pushing them to seek care in outpatient settings.

    Keandra Griffin of Belhaven, N.C., attends a rally at the end of Mayor Andy O'Neal's 273-mile walk to D.C. to call attention to rural hospital closings.

    Small hospitals also lack consolidation options, leaving them with expensive, empty space that narrows margins and erodes viability. About half the hospitals that closed last year operated an average of roughly 60 beds, according to MedPAC data. “It's not enough to be just breaking even or getting a very small return to be a sustainable force in a marketplace,” said Margaret Guerin-Calvert, president of the Center for Healthcare Economics and Policy at FTI Consulting.

    For academic medical centers, the high cost of their education, research and specialty services makes them less competitive as occupancy rates fall, consultants say. Many major AMCs are acquiring community hospitals to handle less-complex patients in lower-cost settings and reserving beds in the flagship academic hospital for only the sickest and most complicated patients.

    Hospital executives say patients with high-deductible insurance policies, which now represent roughly 20% of all employer-provided health plans, are encouraged to seek care in lower-cost settings to hold down medical bills. That choice is adding to an already-growing demand for ambulatory care. “Patients are shopping,” said Henderson of Cone Health. “It is a new day in healthcare.”

    That system has pegged its excess capacity at 200 beds. Cone Health is closing its Women's Hospital, and shifting the average daily census of about 100 women and infants to its flagship Moses H. Cone Memorial Hospital. It also plans to move more surgeries to the system's outpatient centers. “We will definitely go down some beds,” Henderson said. “And that's the point.”

    UPMC also is replacing beds formerly used in its medical-surgical, psychiatric and skilled-nursing units with outpatient services. “Hospitals don't want to staff more beds than they have to,” said Moody's Investors Service senior analyst Daniel Steingart. “Hospitals, by and large, are constantly looking at their census and will close units as is possible.”

    Hospitals with fewer staffed beds are looking for new ways to generate revenue from their excess physical space, including signing leases with hospice providers or even hotel operators, said Mark Grube, a managing director with Kaufman Hall. But there are limits to how far a hospital can take that strategy.

    Many hospitals across the country are reaching a crossroads. The median age of U.S. hospital buildings is rising, and new construction has dropped sharply, with capital going toward ambulatory-care facilities, physician hiring, information technology and telehealth. Mobile-health apps will become more prevalent over the next few years as hospitals, patients and insurers look for new ways to improve care and reduce costs.

    “Why would it happen in all other parts of our personal life and our economy and not happen in healthcare?” asked Kenneth Kaufman, managing director and chair of Kaufman Hall.

    Follow Melanie Evans on Twitter: @MHmevans

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Q&A: ThedaCare CEO says lessons from COVID-19 will inform new approaches to population health management
    Q&A: ThedaCare CEO says lessons from COVID-19 will inform new approaches to population health management
    The Check Up: Dr. Imran Andrabi of ThedaCare
    The Check Up: Dr. Imran Andrabi of ThedaCare
    Sponsored Content
    Get Free Newsletters

    Sign up for free enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today

    The weekly magazine, websites, research and databases provide a powerful and all-encompassing industry presence. We help you make informed business decisions and lead your organizations to success.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS
    • Instagram

    Stay Connected

    Join the conversation with Modern Healthcare through our social media pages

    MDHC_Logotype_white
    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • This Week's News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition
    • Insights
      • ACA 10 Years After
      • Best Practices
      • Special Reports
      • Innovations
    • Transformation
      • Patients
      • Operations
      • Care Delivery
      • Payment
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Award Programs
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Minorities in Healthcare
          • - Luminaries
          • - Top 25 Minority Leaders
          • - Minorities to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Nominate
      • Previous Award Programs
        • Excellence in Nursing Awards
        • Design Awards
        • Top 25 COOs in Healthcare
      • Other Award Programs
        • 100 Top Hospitals
        • ACHE Awards
    • Events
      • Conferences
        • Women Leaders in Healthcare Conference
        • Social Determinants of Health Symposium
        • Healthcare Transformation Summit
        • Leadership Symposium
        • Virtual Briefings
          • - Hospital of the Future
          • - Mental Health
          • - Patient Safety & Quality
          • - Strategic Marketing
          • - Virtual Health
          • - Workplace of the Future
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Minority Leaders Gala
        • Top 25 Women Leaders Gala
      • Webinars
      • COVID-19 Event Tracker
    • Listen
      • Podcast - Next Up
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing