Inpatient unit consolidation saves hospitals money

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Health systems traditionally manage financial challenges through volume and cost control. When that isn't enough, executives may want to consider consolidation of inpatient units, according to the Berkeley Research Group.

The group's healthcare consultants work with hospitals and health systems to look at how many inpatient units are being run, the number of empty beds and data they've gathered on each facility to advise when to open or close these units.

Oncology and orthopedics are two units which often see variable inpatient numbers.  

The consultants aggregate the data around patient movement and patient types, according to Managing Consultant Lauren Phillips. It's about tracking the trends and understanding the seasonality of some units. Hospitals should be asking, are the inpatient numbers lower because of something new and novel? Has there been a gradual decrease because of more patient care going to outpatient? Or are there other factors?

"We help facilitate by bringing in data and analytics," Phillips said.

Perhaps the patient population has changed year-over-year, or maybe it is a seasonal population change, according to Managing Director Bill Orrell.

COVID-19 surges have impacted the total numbers in inpatient care, but not how many patients need acute care and a hospital bed due to other conditions.

But knowing which units can be closed to allow for the expansion of beds for COVID-19 patients has helped "right-size their organization," said Kimberly Vance, associate director. 

The use of telehealth, which increased dramatically during the pandemic, also did not have as much of an impact on inpatient care because of the acute care required.

WHY THIS MATTERS

The bottom line is that unit consolidation helps to manage expenses when done at the right time.

"Helping them with a data-driven approach helps them save money," Orrell said.

The workforce represents about 60% of a hospital's expenses. Shrinking the footprint, even temporarily, helps to strategically shift personnel, especially during the current nursing shortage. Hospitals are paying a premium for overtime. Hospitals need to look at staffing by time of day and the day of the week.

"When we do a workforce project, we can help save them 7, 10 or 12% in workforce expenses," Orrell said. "We're looking at the whole workforce structure."

"Managing staff more nimbly has become a top issue in discussions with executives," Phillips said. "A lot of different issues are at play and levers to make an organization successful."

How much money is saved may depend on the organization's ability to retain staff and whether the market is rural or urban.

Key indicators to help discover whether a health system could benefit from unit consolidation planning include sustained, low census, recruitment and retention challenges, patient population changes, and temporary collapsing of beds or units.

THE LARGER TREND

Hospitals are moving back to a new normal, but many are still struggling financially from the COVID-19 pandemic.

Even in the best-case scenario, 39% of hospitals will likely have negative operating margins in 2021, according to a Kaufman Hall report.

In March, the American Hospital Association predicted that total hospital revenues this year could be down between $53 and $122 billion, representing between 4 and 10% of total revenue.

As of May 14, the seven-day average of daily new COVID-19 cases of 35,442 decreased 23.6% compared with the previous seven-day average of 46,390 cases. The peak was 250,037 cases for the week of January 8. A total of 32,643,851 COVID-19 cases have been reported as of May 12, according to figures from the Centers for Disease Control and Prevention.

"Who knows what the new norm is going to be?" Vance said. "Sometimes you don't want to believe that volume is not coming back. We see people changing, adapting. We learned a lot under COVID."
 

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com