Hospital closures. Service line elimination. With 1 in 5 hospitals facing financial difficulties, the healthcare sector’s slow-motion shakeout shows no signs of abating.
The pain is being felt in communities across America. Older suburbs and inner-city neighborhoods are just as likely as rural counties to lose their Blue H facilities or watch them shrink like the Arctic ice. The towns benefiting least from the current economic expansion are the ones being hit hardest by hospital retrenchment.
This downsizing will intensify in the years ahead from what appear to be unstoppable technological, demographic and economic trends. Surgeries that once required a week in the hospital can now be done in a day in an outpatient setting. Women of child-bearing age are having fewer children.
Home-based care and hospice, which reduce use of expensive hospital stays, are among the fastest growing services in healthcare. Care coordination, driven by the increased substitution of value-based reimbursement for fee-for-service medicine, is producing both better outcomes and lower costs by keeping people out of the hospital.
And, even as the bulk of the baby boom moves into its high-need years, the demand to lower healthcare spending will only grow more insistent. The nation’s anti-immigrant mood isn’t helping. There will be fewer workers to pay the higher taxes needed to support Medicare and Medicaid, which already pick up half of the healthcare tab.
If hospital use falls at the same pace in the next decade as it did in the past one, surplus capacity will grow to 24% from 17% of all hospital beds, according to Modern Healthcare Metrics. Just maintaining the current level of overcapacity will require eliminating the equivalent of hundreds of community hospitals.
Policymakers need a clear-eyed view of the underlying dynamics in order to develop an appropriate response. As Modern Healthcare’s Alex Kacik reported last week, hospital officials, especially at consolidating systems, are making decisions every day about what facilities to keep open, what services to locate where, and whether some service lines are needed at all.
It’s inefficient and potentially unsafe to keep a surgical suite open at a community hospital when a flagship medical center a few miles away can easily absorb its patients. Hub-and-spoke referral patterns make a lot of sense, especially when the hub gets better results because it does far more operations.
But should every service be eliminated on the perimeter? Of course not. Closing an obstetrics unit can lead to disastrous consequences if expectant mothers wind up skipping their appointments because they have to spend hours on a bus to get there. If a neighborhood hospital operates the only emergency room within a five-mile radius, officials must carefully weigh the alternatives and response times before shutting that facility down.
These are not easy decisions in an environment where local communities and their elected representatives remain oblivious to the underlying trends. In Illinois, local officials with support from newly elected Gov. J.B. Pritzker have gone to court to force California-based Pipeline Health to keep 158-bed Westlake Community Hospital open in a mostly minority Chicago suburb. The hospital’s new owners, who lost $10.3 million on $56.8 million in operating revenue last year, had promised to keep it open when they purchased it from Dallas-based Tenet Healthcare Corp.
Vainly trying to hold on to the past makes no sense. When a closing looms, local and state officials should identify what critical healthcare services will no longer be accessible for residents and arrange alternative ways to deliver and pay for them in the local community. The Medicare Payment Advisory Commission recently proposed doing that for rural communities facing hospital closures.
Hospital closings are not like factory closings. The people left behind will still need care. It will require speedy and smart government action to avoid creating healthcare deserts as the hospital sector downsizes.