Hospitals have always been key role players in the health sectors of many countries around the world. In the United States for example, most citizens are known to turn to hospitals for their health care services requirements. However, a lot has changed during the last few years. Many Americans now resort to seeking medical care delivered to their home settings and clinics (Gustafson, 2013). The transformation has caused many hospitals to close down, some to reduce bed space (Gustafson, 2013). Some hospitals have also been forced to renovate and provide other services that may not be health care related (Gustafson, 2013). The long term consequence of these changes in the health industry in the United States is displacement of health service providers, and many health practitioners have also lost their jobs (Gustafson, 2013). It is therefore vital that we study the causative factors of hospital downsizing so as to be able to forge fixes for this conundrum.
Managed Care
Managed care is one of the causes of hospital downsizing in the United States (Baicker, Chernew & Robbins, 2013). Baicker, Chernew and Robbins suggested that managed care is a health care provision criteria that was implemented to manage health service costs, quality and utilization. The trio also affirmed that managed care caused significant transformations in the manner of health care delivery in the United States during the 1990s (Baicker, Chernew & Robbins, 2013). A part from cost containment and ensuring efficiency in health care delivery, Medicaid managed care was also implemented to deliver Medicaid health care and related services at expenses that were fixed and those that were to be paid on later dates: monthly or annually (Shi &n Singh, 2015). Through the Prospective Payment System (PPS), Medicaid managed care was able to regulate the medical expenses, but consequently caused significant inflations in private insurance premiums (Shi & Singh, 2015). When employers from the provide sectors were able to cope well with these changes, the inadequately calibrated rates provided by PPS led to diminishing profit margins to public hospitals in the United States (Baicker, Chernew & Robbins, 2013). Public hospitals found it hard to shift costs so as to cover the amount and quality of medical care provided as a result of PPS (Baicker, Chernew & Robbins, 2013). Operational costs for many hospitals then grew steeper than the returns as a result. Many hospitals have been closed since the initiation of managed care and those that have been able to stay afloat, have scrapped off certain services like inpatient services from their service lists due to the high operational costs associated with them (Baicker, Chernew & Robbins, 2013). The hospitals that have been able to remain operational also tend to favor outpatient services due to their low operational costs and also for the need to make money (Baicker, Chernew & Robbins, 2013).
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Increasing Rates of Hospitals being closed down annually
The rate of hospital closures has significantly increased in the recent past. Kaufman et al. (2015) particularly narrated that since 2010, the incidences of hospital close down has been on the rise. Some hospitals have also put their beds to alternative uses (Ko, Derose, Needleman & Ponce, 2014). The shifts in operation have been inspired by economic reasons, such as underutilization and severe competition (Kaufman et al., 2015). Several hospitals closing down therefore implies that the number of health care facilities in America is decreasing every year. As this happens, the number of acute care beds are also significantly reduced annually (Kaufman et al., 2015). Reduction in the number of acute care as a result of several hospitals closing down has in turn negatively impacted inpatient hospital utilization (Kaufman, et al., 2015). This is the resultant of the fact that there are not many hospitals in America today to match the number of patients who require inpatient care.
Change in Hospital Reimbursements
Changes in hospital reimbursements is also another reason that caused the shift of health care services from inpatient to outpatient services (Popesko, Papadaki & Novák, 2015). The cost of health care services has been on the rise for a long time now and this means that hospitals are forced to explore advanced economics and management tools so as to efficiently utilize the limited resources at hand (Popesko, Papadaki & Novák, 2015). Inpatient services, especially when the patients have to stay in hospitals for a long time, often prove costly, given that health care service costs were fixed as provisioned by PPS (Popesko, Papadaki & Novák, 2015). Hospitals were therefore under immense pressure to reduce the durations patients stayed in hospitals for the purposes of profitability (Popesko, Papadaki & Novák, 2015). Patients were occasionally offered early discharge so as to keep operational costs in check. Early discharge led to advancements in home health care services as well as sub-acute care facilities (Popesko, Papadaki & Novák, 2015). With advanced home and sub-acute care services, the need for inpatient services was substantially reduced.
Conclusion
Hospital downsizing in the United States has been caused by several factors. Changes in hospital reimbursement, the managed care and closure of several health facilities are some of the reasons that have led to reductions in hospital bed space across the United States. Downsizing notably favored outpatient care services. The transformation from the traditional fee-for service criteria to the managed care criteria serves to indicate how effective a government can be when it comes to causing transformations in the various sectors of the economy. Health service providers therefore have to try and adapt to changing government regulations by embracing behavior change.
References
Baicker, K., Chernew, M.E., & Robbins, J.A. (2013). The spillover effects of Medicare managed care: Medicare Advantage and hospital utilization. Journal of Health Economics, 32(6), 1289-1300. DOI: https://doi.org/10.1016/j.jhealeco.2013.09.005
Gustafson, D.L. (2013). The impact of hospital downsizing on registered nurses displaced from full -time employment. Brock University. URI: http://hdl.handle.net/10464/4213 . Accessed October 9, 2018.
Kaufman, B.G., et al. (2015). The rising rate of rural hospital closures. The Journal of Rural Health, 32(1), 35-43. DOI: https://doi.org/10.1111/jrh.12128
Ko, M., Derose, K.P., Needleman, J., & Ponce, N.A. (2014). Whose social capital matters? The case of U.S. urban public hospital closures and conversions to private ownership. Social Science & Medicine, 114, 188-196. https://csuglobal-primo.hosted.exlibrisgroup.com/primo-explore/fulldisplay?docid=TN_sciversesciencedirect_elsevierS0277-9536(14)00193-2&context=PC&vid=01COLSU_GLOBAL&lang=en_US&search_scope=Everything&adaptor=primo_central_multiple_fe&tab=default_tab&query=any,contains,hospital%20closures&sortby=rank&facet=searchcreationdate,include,2013%7C,%7C2018&offset=0
Popesko, B., Papadaki, S., & Novák, P. (2015). Cost and reimbursement analysis of selected hospital diagnoses via activity-based costing. E+M Ekonomie a Management, 18(3), 50-61. https://csuglobal-primo.hosted.exlibrisgroup.com/primo-explore/fulldisplay?docid=TN_proquest1712284194&context=PC&vid=01COLSU_GLOBAL&lang=en_US&search_scope=Everything&adaptor=primo_central_multiple_fe&tab=default_tab&query=any,contains,hospital%20reimbursements&sortby=rank&facet=searchcreationdate,include,2013%7C,%7C2018&offset=0
Shi, L., & Singh, D.A. (2013). Delivering health care in America: A systems approach. Burlington: Jones & Bartlett Learning.
