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Hospitals swap beds for other services

If you’ve shopped for books or checked your bank statement lately, chances are you went online and not to a brick and mortar building. While it is clear we cannot manage all of our health care needs online, many hospitals are preparing for a health care system that increasingly relies on ambulatory and home care. Providers, health plans, and life sciences companies are emphasizing population health and are focused on helping patients avoid hospitalization and moving care to the most appropriate and cost-effective settings. New hospital payment models focus less on narrowly defined acute care episodes. Also, consumers increasingly desire care options that are more convenient, including care in the home. But what does this mean for hospitals and health care facilities, and how will they shift to accommodate the changing delivery system?

Results from the Health Facilities Management/American Society for Healthcare Engineering 2015 Hospital Construction Survey show that many hospitals and health systems are in the process of repurposing their existing space. Nearly 67 percent of survey respondents said they are either repurposing health care facilities or currently assessing space for other needs.

According to Deloitte’s report, Hospital repurposing: What to do if you’ve built beds and they don’t come, a number of options exist for hospitals looking to repurpose existing space that is no longer needed. These include transitioning the space formerly used for beds to services that are more in demand (e.g., freestanding ERs, outpatient clinics, post-acute care, or observation). Such options often have another advantage, in that they make it possible for hospitals to monetize unused space by adding revenue-generating services or by either subleasing or selling the space.

Hospitals that transition space to outpatient facilities focused on preventive and low-cost services may see the highest returns in terms of outcomes and financial rewards. Models for this use of space should consider focusing on areas that improve the outcome-to-cost ratio (i.e., the total cost to create incremental clinical improvements), which becomes more important as hospitals take on more financial risk. Increasingly, this means concentrating resources on traditionally high-cost chronic disease populations, such as those who have diabetes.

Some hospitals have merged repurposing strategies with their strategies around wellness. They are dedicating space to programs that align with a medically integrated population health model to go beyond simply offering a fitness center. Many are staffing these centers with exercise physiologists and other multi-disciplinary staff that consider health risk factors and tailor programs to the patient. In the process, most wellness centers are also designed to generate revenue. Focusing on lifestyle factors for a population of patients, such as how often they exercise, their nutrition, tobacco habits, and stress levels, is critical. It is not possible to adequately address lifestyle in a couple of short visits every year, so medically integrated fitness centers may help encourage patients and increase outreach to the community throughout the year.

Analysis: As payment systems increasingly reward quality outcomes and aim to reduce unnecessary utilization, acute care bed demand in hospitals will likely continue to decrease in many markets. Hospitals in service areas where this trend is taking place and that are considering repurposing space should consider assessing the market, competition, and demand trends in the local service area, followed by scenario-based planning using patient volumes, profitability, and cost driver differences to weigh several options. For business development, strategy, and executive officers of healthcare systems, shifting the focus from filling beds may help to maximize assets and space utilization.

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Author bio

Doug leads Deloitte Consulting LLP’s Life Sciences and Health Care practice. With 24 years of experience, he works closely with multiple top health care organizations on major clinical and enterprise transformation efforts and on large-scale technology implementation projects. Doug has extensive experience in comprehensive quality and patient safety transformations, turnaround and performance improvement in academic medical centers as well as organization/workflow redesign and technology enablement. He has served as the lead on a number of enterprise transformation initiatives with some of Deloitte’s most largest and most complex clients.