Dangerous trends threaten local hospitals

November 17, 2006

U.S. hospitals are in trouble, with an estimated shortage of up to 200,000 beds nationwide predicted by 2012. Profitability issues are to blame, according to a report by the Center for Health Design in Concord, CA.

U.S. hospitals are in trouble, with an estimated shortage of up to 200,000 beds nationwide predicted by 2012. Profitability issues are to blame, according to a report by the Center for Health Design in Concord, CA.

The report cited the five most dangerous trends facing hospitals:

  • Bottom line performance is not improving. Efficiency and cost-cutting policies are not working. While hospitals have been going out of business at a rate of one facility every eight days for the last 30 years, the bankruptcy trend began to accelerate in 2005.

  • Cutthroat competition to U.S. medical centers includes medical tourism. Recent Medicare and Medicaid reimbursement reductions have made it harder for medical centers to survive. Competition from diagnostic testing facilities, ambulatory surgery centers, and specialty hospitals is growing at record rates. India has become an early threat, with two hospitals that have been approved by the Joint Commission on Accreditation of Healthcare Organizations.

  • The public is losing confidence in local hospitals. Thirty-five percent of patients indicate a likelihood of not returning to the same hospital, while 41% wouldn't recommend a hospital to their family.

  • Staff satisfaction is low. A shortage of more than one million nurses, as well as significant shortages of pharmacists, lab technicians, and other technical employees, is expected by 2010. The hospital working environment is a key contributor to the 20% average staff turnover.

  • Lawsuits are on the rise. Medical malpractice has grown at an annual rate 30% faster than for all U.S. tort cases. The average malpractice settlement more than tripled from $95,000 in 1986 to $320,000 in 2002.

The solution proposed to these problems is Fable Hospital, a composite of recently built or redesigned healthcare facilities that have implemented facets of evidence-based design, according to Jack Reichenthal, executive vice president of American Art Resources, which underwrote the study.

Fable Hospital is a virtual 300-bed regional medical center built to replace a 50-year-old 250-bed facility. It's a perfect hospital designed without cutting corners for cost savings, Reichenthal said.

Everything about the hospital design was scrutinized to provide optimum physical and mental health benefits, including ceiling height, transfer routes, and fine art selection and placement. The model went $22 million over budget, including $12 million for innovations such as a staff gym and noise reduction measures.

Evidence-based design resulted in savings in several areas:

  • $2.4 million, patient falls reduced saving

  • $3.8 million, patient transfers reduced

  • $80,000, nosocomial infections reduced

  • $164,000, nursing turnover reduced

The hospital increased revenue by $2.1 million by gaining a greater market share and added $1.5 million by increasing philanthropy. Conservative estimates have Fable Hospital realizing $11.4 million in the first year of operation and then recapturing the $11 million every year thereafter, Reichenthal said.

He added that the money saved and recouped is being recaptured from two dozen or so changes that most investors would cite as initially too expensive to even undertake.

"The competition is coming. Learn what processes to put in place that will leave you virtually untouchable," he said.

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