Becker's Hospital Review

12 CFO / FINANCE The cost of unnecessary hospital days in 8 numbers By Laura Dyrda Hospitals across the U.S. are having capacity issues, leading to unnecessary stays and higher costs overall. Kaufman Hall reported in a February 2024 analysis associated lower length of stay as one of with top financial performance because patients are able to move through the hospital more efficiently and incur lower unnecessary costs. In the most recent "National Hospital Flash Report" for April 2024, Kaufman Hall reported average length of stay for the month dropped 5% since 2021 but has been relatively flat year over year. "We also have learned over the past several decades that an intense focus on improving length of stay has always been a winner," wrote Kenneth Kaufman, managing director and chair of Kaufman Hall, in a May 8 post. "Hospitals that put in place the structures, processes and technologies; hospitals that have true executive commitment to this issue–these hospitals have a significant advantage when it comes to financial performance." Patient stays can be extended for a variety of reasons, including inefficient discharge processes, staff shortages, miscommunications and lack of post-acute beds for patients who can't be discharged home. Here are seven points on the costs associated with unnecessarily extending length of stay. 1. e average 425-bed hospital would save more than $20 million per year in operating expenses by cutting out the costs associated with unnecessary days in the hospital, according to Mr. Kaufman's blog post. 2. Moving patients through the hospital quickly opens up additional space for other patients. For a 425-bed hospital with an average $4,500 margin per admission, dropping the length of stay by one day would add $20 million in additional margin because the hospital could accommodate more patients, according to the Kaufman Hall's report. 3. Less efficient hospitals may decide to add beds or expand capacity to accommodate patients, which has a hey price tag. New construction typically costs around $2 million to $3 million per bed. 4. e average adjusted expenses per inpatient day at hospitals was $3,025 in 2022, according to the most recent data from Kaiser Family Foundation. At that rate, one patient staying an unnecessary day at the hospital for each of the 365 days per year totals $1.1 million in extra costs. 5. e Healthcare Association of New York State examined data from 52 hospitals and found 60,000 delay days from April to June 2022, estimating associated costs of $169 million. 6. e California Hospital Association released a report in February estimating 1 million days of unnecessary inpatient care and 7.5 million wasted emergency department hours due to discharge delays in the last year. e CHA estimated delays totaled $3.25 billion in "avoidable" healthcare costs per year at California hospitals. 7. e Minnesota Hospital Association said hospitals and health systems lost $487 million to delayed discharges in 2023. MHA also found more than 76,000 days of unnecessary hospital care in the first five months of the year; 67% of Minnesota hospitals reported operating losses for the first half of the year. Hospitals zeroing in on lowering the length of stay are seeing financial benefits. Siri Nelson, president and CEO of Marshall Medical Center in Placerville, Calif., said reducing and managing length of stay has been a key initiative for clinical and administrative staff in the last year. In 2023, the team was able to hit their goal of an average length of stay under 4 days. "Our success has been driven through a combination of training, education and workflow improvements to ensure timely action on care management decision-making," said Ms. Nelson. "Underpinning all of this has been a strong emphasis on the importance of team- based care." e most consistent issue delaying discharge in the last year was difficulty obtaining durable medical equipment and skilled nursing facility placement, driven by payer delays. n Large health systems may need to rethink growth: Moody's By Laura Dyrda S crutiny on nonprofit health system mergers and acquisitions is intensifying and Moody's warned it could become a tougher exit strategy for distressed hospitals, and affect growth of large systems, according to an April 18 2024 Healthcare Quarterly report. While planned mergers, acquisitions, and joint operat- ing agreements will likely continue to increase, Moody's cautioned that scrutiny from federal and state regulators has become a costly risk for even cross-market deals. "On the regulatory front, not-for-profit cross-market mergers have generally not led to the same degree of scrutiny as combinations in a single market," the report notes. "That scrutiny is intensifying as federal and state regulators increasingly have antitrust concerns and seek to control healthcare costs." The federal government is challenging more healthcare deals than in the past, and some have folded under the pressure. States are also reviewing healthcare consoli- dation and its impact on competition, quality and costs. Both Indiana and California state legislatures are work- ing to expand review authority over hospital transac- tions, and Washington could follow suit. "Heightened concerns among regulators about con- solidation carries particular risks for distressed systems seeking exit strategies because it could make it hard- er to find a buyer," the report notes. "If the number of merger denials increases, larger systems active in M&A may also need to reassess their growth strategies." n

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