Becker's Hospital Review

Save the date! Becker's Hospital Review 6th Annual Meeting — May 7-9, 2015 — Chicago. Please call 800-417-2035 to register. 12 Hospital closures. Goldilocks was more certain about the proper tem- perature of her porridge than healthcare experts seem to be about the proper number of hospitals in the United States. Some make the argument that there are too many hospitals and hospital beds, leading to low occupancy rates, consolidation and closures. Others argue that America has too few hospitals, especially in critical access areas, endangering patients who have to travel long distances for care. For instance, researchers from UC San Francisco recently discovered a correlation between emergency department closures and increased inpatient mortality rates at hospitals in the surrounding area. Regardless of whether they should, hospitals are closing around the country, presenting numerous challenges for the patients, employees and community residents. Kevin C. "Casey" Nolan, managing director of the healthcare provider strat- egy practice at Navigant Consulting, highlighted several challenges commu- nities face after a hospital closes, including the wind down and redeployment of patients to other facilities and the issue of what to do with the physical hospital and real estate. Dawn Gideon, managing director of Huron Consulting Group, cited securing and transporting EMRs as a major challenge for hospitals shutting down, as well. Both Mr. Nolan and Ms. Gideon explained how hospitals shutting down can be a major hit to local economies given their status as major employers. Any debt and pension liability after a shut down can also be extremely problematic. Shrinking inpatient activity, increasing reimbursement rate pressures, chang- ing delivery patterns and numerous other factors lead Mr. Nolan to predict an increase in the number of hospital closures hospitals in the near future. Although any closure is going to cause speed bumps, Ms. Gideon argues the real concern is not so much that hospitals are closing but what types of hos- pitals are closing. "One of the things we're seeing is, not surprisingly, that the safety-net hospi- tals caring for the uninsured or the Medicaid populations are the most finan- cially distressed and under threat of closure," said Ms. Gideon. "The impact on those communities when safety-net hospitals close their doors is pretty significant." On the flipside, hospital closures present opportunities to improve integra- tion of care and realign delivery capacity in a given market with what the community really needs. "In many communities, what you'll find is that the people no longer need an inpatient hospital, but perhaps they need a comprehensive ambulatory cen- ter with lots of services," said Mr. Nolan. The key, in his opinion, is not trying to be all things to all people but honing in on what the community demands and what the hospital or health system can best provide. Reimbursement rate differences. On average, Medicare paid hospital outpatient departments 78 percent more than ambulatory surgery centers for the same procedure in 2013, in accordance with the Medicare Payment Advisory Commission. Addressing the payment differential in spring 2014, the HHS Office of In- spector General recommended CMS reduce hospital outpatient prospective payment system rates for ASC-approved procedures to ASC levels for low- risk patients. The change could save Medicare as much as $15 billion between 2012 through 2017, but it could also present a big challenge to hospitals. Hospitals have very specialized real estate that is capital intensive and difficult to convert, according to Mr. Belokrinitsky with Strategy&. "Hospitals' whole business model is based on covering these fixed costs as well as ensuring high occupation and utilization of the operating and patient rooms that have been built," said Mr. Belokrinitsky. "When hospitals have a brand new ambulatory surgical center nearby that has potentially lower costs because it's newer and has less overhead, while the hospitals have a higher cost base, they are inherently disadvantaged." Hospitals and health systems have several ways of addressing the issue, in- cluding creating their own ASC in their competitor's territory or entering into joint ventures and partnerships with physician groups to open an ASC together. In addition to pushing hospitals to decide whether or not to ex- pand, reimbursement rate differences also give hospitals the opportunity to reevaluate their costs. "Fundamentally, reimbursement rate differences creates incentive for all hos- pitals and health systems to get a better handle on their costs and prepare themselves for transparency," said Mr. Belokrinitsky. "Every hospital has the opportunity to get rid of waste as well as get rid of processes and activities that don't add value for patients, physicians or staff, and don't improve qual- ity. The ASCs just make the pressure that much greater." Data, data everywhere. Health IT has generated some of the biggest buzzwords in healthcare this year, including such staples as "disruption," "in- novation" and "big data." And, health IT does things worthy of those big ideas in areas both clini- cally- and consumer-driven. For instance: IBM's supercomputer Watson is poised to tailor treatment plans to an individual's genetics. Telehealth brings world-class care to the most remote areas in the country. This year alone, Apple, Microsoft, Samsung and more have launched platforms for health and wellness tracking accompanied by wearable consumer technology. However, these successes mean data is piling up faster than many health- care organizations are prepared to use it. This is the focus of Thomas Jans- sen's job. Manager of Springfield, Ill.-based Memorial Health System's data warehouse, he works closely with the team of C-suite stakeholders to deliver meaningful insights for patient care. Mr. Janssen says when he first started Memorial had the back-end systems to track its data, but it didn't have a system-wide infrastructure to leverage it. "When we talk about big data, we're not just talking about volumes — we're talking about type of data. That's one of the biggest challenges of making sense of the data, seeing how it's stored and bringing it all together," he says. He was tasked with doing just that. For a while, the focus for big data analysis was on descriptive analytics — what had already occurred. Then, it was on predictive analytics, or what might happen. Now, Mr. Janssen says he's fo- cused on building data systems to for prescriptive analytics: what Memorial can do to prevent things that might happen. "It's a piece that's really of inter- est to us. Why a patient comes back, when he might come back again, and how to understand the root causes of that and be proactive with that patient to provide better care at lower cost to patients for a better outcome." However, preparing data to be integrated is a huge challenge for healthcare organizations undertaking data warehousing, he says, and the goals for data analysis continue to move, which means it's easy to get left behind. While Memorial Health System has been remarkably successful, the story isn't the same for everyone. The fact that data analytics in healthcare are far behind capabilities of lower-risk organizations, such as fast food or retail sales, is commonly acknowledged: Lack of interoperation in the industry cripples analytics capabilities, and there are no easy solutions in reach. So, while the advances healthcare has made toward population health-based preventative analytics have been impressive, and for organizations in isola- tion leveraging health data in pursuit of value-based care and population health management is becoming a reality. But for many, there is still a long way to go. n Data is piling up faster than many healthcare organizations are prepared to use it.

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