Hospitals(part 1)

Objectives

• Review the history of the development of hospitals in the U.S. health care system

• Learn of common hospital terms and current hospital trends

• Discuss the various types of hospitals that comprise the hospital industry

Hospitals• An institution with at least

six beds providing inpatient care

• Delivers diagnostic and therapeutic patient services

• Licensed• Organized physician staff• Continuous nursing

services under RN supervision

• Designated governing body or board

• Full-time chief executive officer (CEO)

• Maintain medical records• Pharmacy services• Food services• Meet building, fire

protection, and sanitation standards

Common Hospital Terms• Inpatient = patient staying overnight in facility• Discharges = total number of patients released from

a hospital’s acute care beds during a given period• Inpatient day = night spent in the hospital by a

patient (i.e., patient day, hospital day)• Average length of stay (ALOS) = average number of

days patients spend in the hospital• Days of care = total number of inpatient days

incurred by a population over a given period

Common Hospital Terms• Capacity = number of set up & staffed beds• Census = number of patients in hospital that day• Patient days = cumulative census• Average daily census (ADC) = average census over

a given period of time• Occupancy rate = percentage of capacity used

during a given period of time

The History of U.S. Hospitals• Evolved from almshouses & pesthouses• Evolved from government-run to community

institutions supported through charitable donations• Evolved with medical discoveries

– Anesthesia, sterilization, antiseptics, diagnostic technology• Hospitals provided physicians with practical training

and access to technology, becoming a necessity and attracting private payers (generating a profit)

The History of U.S. Hospitals

• Most hospitals in the late 19th and early 20th century functioned as almshouses and pesthouses.– Places for the poor– Funded by private charity– Those who had money could afford to die at home.

• As medical science advanced the hospital came to the center of medical care

• Hill Burton Act of 1946 provided funding to refurbish old hospitals and to build new hospitals

The History of U.S. Hospitals

• The increased prevalence of health insurance in the 1950s resulted in an increase in demand for hospital services

• Creation of Medicare & Medicaid increased demand

• Period of downsizing– Introduction of Prospective Payment Systems– Growth of managed care

Hospitals by Type by Year1975 1990 2000 2010 Change

All Hospitals 7,156 6,649 5,810 5,754 -20%

Federal 382 337 245 213 -44%

Private Nonprofit 3,339 3,191 3,003 2,904 -13%

For Profit 775 749 749 1,013 31%

State-Local Govt 1,761 1,444 1,163 1,068 -39%

Hospital Beds by Type By year (in 1,000)1975 1990 2000 2010 Change

All Hospitals 1,466 1,213 983 942 -36%

Federal 132 98 53 45 -66%

Private Nonprofit 658 657 583 556 -16%

For Profit 73 101 110 125 71%

State-Local Govt 210 169 131 125 -40%

Occupancy1975 1990 2000 2010

All Hospitals 76.7 69.5 66.1 66.6

Federal 80.7 72.9 68.2 65.3

Private Nonprofit 77.5 69.3 65.5 66.2

For Profit 65.9 52.8 55.9 57.1

State-Local Govt 70.4 65.3 63.2 64.4

U.S. Hospitals Today• Ultramodern facilities providing high-tech services• Hospitals often referred to as “medical centers”

– High levels of specialization, wide scope of services– Many facilities affiliated with university-based medical

schools, promoting education and research• Complex organizations• Local market pressures prompting consolidation,

mergers & affiliations– Development of multi-hospital systems & clusters– Diversification & expansion of service offerings

• OP clinics, ASC, Imaging centers, Home care, Fitness & wellness– Aim to acquire power in local markets

Hospital Trends• Hospital ALOS on the decline

– PPS encouraging “quicker and sicker” discharges– Managed care limiting hospital stays– Growth of alternative services

• Movement to outpatient settings• 84% of U.S. community hospitals have less than

300 beds– Rural hospitals average 65 beds; urban hospitals 231

• 5.7 million hospital employees (40% of health care workforce, 4% of employed civilians)– Current trend is to downsize employment– Average hourly earnings highest among healthcare sites

Issues Affecting Hospitals• Technology

– Efficiency, legitimacy, expenses

• Quality & accountability– Outcomes, legitimacy, expenses, transparency– Between 44,000 and 98,000 people die in US hospitals each year because of

preventative medical errors (IOM)

• Health systems & health networks– Consolidation & “clusters”– Health systems: arrangement among hospitals, physicians, and other provider

organizations that involve direct ownership of assets on the part of the parent system

– Health network: strategic alliance that involves contractual arrangements among hospitals, physicians, and other health services organizations

– Integration: vertical & horizontal– Improves efficiency, competitive position, bargaining position, and market

coverage

Types of Hospitals• Community hospitals• Public hospitals• Private hospitals

– Nonprofit– For-profit

• Rural hospitals• Teaching hospitals

• General hospitals• Specialty hospitals

– Psychiatric– Rehabilitation– Children’s– Cardiac– Surgical– Orthopedic

Community Hospitals

• Nonfederal, short-stay hospitals whose services are available to the general public– Excludes federal hospitals (e.g., VA, prisons)– Excludes long-stay hospitals (e.g., psychiatric

facilities, chronic disease hospitals)• Can be private or can be operated by local

and state governments• Can be general or specialty hospitals• ALOS must be 30 days or fewer

Public Hospitals

• Hospitals owned by agencies of federal, state, or local governments

• 19% of U.S. hospital bed capacity• Not necessarily open to the general public

Private Nonprofit Hospitals• Also called voluntary hospitals• 60% of U.S. hospital beds & most multi-hospital systems• Operated by community associations, philanthropic

foundations, fraternal orders, etc.– Donations & endowments help cover expenses in addition to

patient fees & third-party reimbursements• Religious-affiliated groups play a significant role in

operating multi-hospital systems (e.g., Catholic, Protestant, Jewish)– History of caring for communities, observing religious practices– Do not discriminate access to care but are sensitive to spiritual

needs of sponsoring denomination

Private For-Profit Hospitals• Also called proprietary or investor-owned hospitals• Owned by individuals, partnerships, or corporations

– Operated for financial benefit & investment return to stockholders

– Achieves goal by providing high quality care at reasonable price• Some of the largest multi-hospital chains are private for-

profit systems (e.g., HCA, Tenet, CHS)– Originally flourished at beginning of 20th century as physicians

established small hospitals to hospitalize their patients– Many freestanding proprietary hospitals closed or were acquired– Current trend of increased building or acquisition of hospitals by

large investor-owned corporations

General vs. Specialty Hospitals• General hospitals

– Provide diagnostic, treatment, and surgical services for patients with a variety of acute medical conditions

– Many hospitals in the U.S. are general hospitals– Provide a broader range of services for a larger variety of

conditions as opposed to specialty hospitals• Specialty hospitals

– Admit only certain types of patients or those with specific illnesses or conditions

– Increasing competition has fueled the growth of specialty hospitals that provide treatments available in many general hospitals

– Psychiatric, rehabilitation, children’s, cardiac, surgical, etc.

Psychiatric Hospitals

• Provide diagnostic and treatment services for patients who have psychiatric illness– Psychiatric services– Psychological services– Social work services

• Must have written agreement with a general hospital for the transfer of patients requiring medical, obstetric, or surgical care

Rehabilitation Hospitals• Provide therapeutic & rehabilitative services to

restore maximum level of functioning to patients suffering recent disability due to illness or accident

• Stroke, spinal cord injury, traumatic brain injury (TBI), debility, amputation, joint replacement, hip fracture

• Patients often transferred from general acute care facilities

• Length-of-stay averages approximately 2 weeks• Physical, occupational, & speech therapy

Children’s Hospitals• Special facilities and trained staff deal with unique

medical problems of children– 75% of inpatients are treated for chronic and congenital

conditions

– The remainder often require intensive care for conditions such as cystic fibrosis, cancer, transplant, etc.

• Account for less than 4% of all U.S. hospitals but provide vast majority of highly specialized care for children

• Equipment and furnishings specially designed for children

Rural Hospitals

• Located in a county that is not part of a metropolitan statistical area (MSA)– MSA = Geographical area including at least one

city with population greater than 50,000 or urbanized area with population of 50,000 and total MSA population of over 100,000

• Treat larger percentage of poor and elderly patients

• Face financial troubles, threat of closure– Critical access designation

Teaching Hospitals• Offers one or more graduate residency programs

approved by the AMA• Primary role of training physicians• Major and minor teaching institutions

– Depends upon number and type of residency programs offered• Most affiliated with medical schools of large universities• Substantial teaching and research activities• Cutting edge of medicine & technology• Often deliver specialized care for complex problems,

including unique tertiary care services– Burn care, trauma care, organ transplantation

• Often serve disproportionate share of poor population

What We’ve Learned

• Review of hospitals’ history• Common hospital terms• Current trends in hospitals• Types of hospitals & examples