Building Flexibility In Today’s Healthcare Market
Today’s new healthcare landscape, specifically its changing reimbursement models, is having a transformative effect on how providers might best approach the concept of creating flexibility in the built environment.
Speakers Jason Busby, senior manager of Kurt Salmon, and David Chamberlain, senior manager of Kurt Salmon, took a deep dive into this topic during their session “A New Way to Define Flexibility for Tomorrow’s Health Care Environment” at the ASHE PDC Summit in San Antonio.
Historically, Chamberlain noted, more space in hospitals was a revenue driver (for example, more ORs equal more surgeries) and larger rooms equaled more flexibility in use. But it’s time to rethink that model. “We were saying the same things,” Chamberlain said, nothing that it wasn’t bad advice at the time. “Going forward, we’re going to have to really look at those things.”
Why? For starters, inpatient utilization is dropping dramatically, creating markets with excess building stock. In order to not contribute to the problem, Chamberlain urges a thorough analysis during strategic planning to determine if a provider’s needs should really be answered with a new space or whether other solutions might be a better fit.
The first area to consider is right-sizing the care platform. For example, does a provider really just need six beds to accommodate growth or is a new unit necessary? And it’s important to determine which side to err on in terms of building more than is required right now or just enough. Ten years ago, that answer was easy: build more. Today, providers may be a lot more willing to operate at capacity. “If it hasn’t already changed, it’s changing very quickly,” Chamberlain said.
Next is to maximize system opportunities, such as centralizing highly complex services to reduce duplication across a system’s sites. On the ambulatory side, a lot of providers have acquired excess real estate over the years in anticipation of the outpatient shift, but is it too much? Chamberlain recommends assessing whether, say, 200 disparate sites are needed or perhaps just 25 multidisciplinary care locations.
Also necessary is to optimize operational processes at existing locations before thinking of building new, noted Busby. After all, additional capacity is lost resources thanks to that cost of maintenance and operations. “The hospital was always seen as a revenue source; that is no longer the case,” he said. Instead, hospitals in a value-based system are cost centers.
To ensure operations are where they should be, Busby suggested studying length of stay averages and ensuring not only whether patients are staying longer than average but whether their conditions warrant being admitted at all. Developing population health initiatives is an important piece to better manage chronic illness, in particular, to keep those patients out of the hospital.
Another solution is envisioning new care models that address lower-acuity needs rather than admitting those patients into the high-cost acute care environment (think an adjacent treatment space to the ED that could handle long-term observation as opposed to inpatient admission). Flexibility can also come via technology, as new solutions lower the cost of care by offering virtual physician consults, for example.
Finally, Busby recommended evaluating real estate strategy and seeking alternatives to care providers being in the expensive business of building ownership, possibly exploring models like public-private partnerships or renting space as opposed to always building new.