Do Hospitals Still Make Sense? The Case for Decentralization of Health Care
By Jennifer L. Wiler, MD, MBA, Nir J. Harish, MD, MBA & Richard D. Zane, MD, FAAEM
December 20, 2017

From their humble origins as charitable almshouses for the poor and destitute who could not afford to receive care at home, hospitals have evolved into large, profitable, expensive, technology-laden institutions at the epicenter of the health care universe. Almost every community has at least one general centralized hospital, and most have more than one — with those that don’t being considered “underserved” or “frontier” communities, and with the hospitals in such communities sometimes receiving the designation of “critical access.” But health care is changing. The exponential growth of digital and virtual health, the deployment of advanced technology deeper into the community, and the movement of higher-acuity care into the outpatient environment create opportunities to shift from a large, centralized health care system to a smaller, faster, more cost-effective one in which health care is more accessible, more affordable, more personal, and closer to home.

The Hospital as the “Hub”

Until recently, centralizing care around a hospital made sense. Without electronic health records (EHRs), it was nearly impossible for health care providers to understand care longitudinally or to coordinate care without bringing patients to one physical place where information could be organized with the use of archaic documentation management systems. Moreover, the hyper-subspecialization of medicine and the frequent reliance on advanced technology such as imaging, lasers, and expensive chemotherapeutic, biologic, or immunologic agents requiring specialized real-time compounding necessitated a financial model that allowed the aggregation of high fixed costs.

In 2011, U.S. hospitals reported an estimated 49 million surgical procedures in adults and 136 million emergency department (ED) visits, with the rate of care utilization growing faster than population growth. As a result, in 2015 alone, U.S. hospitals hired 100,000 new employees. In a fee-for-service system that rewards hospitals for any care that is provided, there is no reason to limit offered services. But despite the proliferation of mega-hospitals (>1000 beds), capacity is not meeting the growing demand for services. Hospitals around the country are struggling to keep up, with admitted patients being treated in EDs while waiting for inpatient hospital beds to become available. Building bigger hospitals, although profitable in the fee-for-service environment, is not a viable option in financial risk-sharing models. The traditional delivery model of a hospital as the “hub” of care, with a single centralized facility providing every facet of disease management and treatment, from specialized surgical cancer care to routine eye exams and chronic blood pressure management, should be questioned. Furthermore, admission to a hospital can be dangerous, with 1 of every 25 hospitalized patients being expected to develop a hospital-associated infection, slightly worse than the risk profile of injury from bungee jumping.

The Role of Virtual Health and Remote Monitoring in the Decentralization of Care Delivery

There is good reason to seek out new ways of delivering care. In the not-too-distant future, health delivery systems will, and should, be paid for keeping people healthy and out of the hospital rather than for procedures and admissions. The economic framework of health care will be turned upside down, with profit being directed toward maintaining the health of populations rather than toward just thwarting illness. Surgical procedures, which represent the golden goose of profit for health care, may actually become an expense. It is challenging, if not impossible, for most large hospitals, with their high fixed costs, to morph into nimble, low-cost businesses. The delivery models that will succeed are those that do not simply extend the reach of the hospital but begin to entirely replace the hospital as we know it.

Today, remote monitoring, wearables, faster wireless communication devices, robust EHR platforms, virtual health visit capabilities, and, eventually, prescriptive intelligence, are making it less necessary for patients and physicians to always interact within the four walls of a hospital or clinic. Whereas such technology previously was reserved for the purpose of providing care in the most remote areas, an entire industry is increasingly leveraging the power of “mobile health” to connect patients with providers. For example, in Johns Hopkins’ Hospital at Home (HaH) program, patients are admitted to their own homes rather than to the hospital, and their care is managed through the use of advanced remote monitoring and telemedicine. Patients are only eligible for HaH if they are sick enough to require hospitalization. Patients are linked to the hospital through remote monitoring technology and receive daily visits from a physician and other caregivers (e.g., nurses, respiratory therapists, and physical therapists).

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