My wife sent me this great article by health care reporter Lola Butcher. In it, Butcher explains why the traditional “volume-based” payment system for the general acute care hospital is “in its death throes.” In its place, hospital executives are exploring new business models that incorporate hospitals into a larger continuum of health care services, including both pre- and post-acute services, hospice and palliative care and even patient-centered medical homes that emphasize planned and consistent care over episodic inpatient treatment.
Indeed, regardless of payer mix, bed size or ownership status, the business model for American hospitals is in a time of upheaval. As health care moves from a volume-based payment system to one that rewards value — cost divided by quality — inpatient hospital utilization is no longer the breadwinner it used to be. In fact, emerging pay models discourage hospital use as much as possible.
Among several examples, Butcher cites Mountain States Health Alliance, which is in the middle of a 10-year strategic plan to move away from a “hospitalcentric” business model to one based on managing population health and accepting financial risk. Some components of MSHA’s plan involve increasing outpatient and retail services to offset reduced inpatient revenues, establishing a community-based “accountable care organization” and, of course, reducing operating costs.
This is all interesting, but my question is: Don’t these services already exist elsewhere? Take a look around almost any hospital and you’ll find various clinics nearby delivering the full spectrum of health care services. What hospitals like MSHA are doing, then, is nothing more than consolidating the breadth of health care services under one financial roof.
Maybe I just don’t understand the benefits of this. I know that scale can help reduce costs (think Walmart), but I’m not convinced that this isn’t anything more than hospitals buying into enterprises that might be profitable on their own, but don’t change the fact that inpatient stays have become a moneysuck for hospitals and prohibitively expensive for many people. Think Facebook’s recent $19B buy of WhatsApp — a product Facebook says won’t be integrated with their flagship social networking service and does nothing in the way of solving Facebook’s other problems. In the end, the problems of rising costs and falling demand for inpatient stays remain, and it spells disaster for those of us (that is, all of us) who will need inpatient stays at some point or another.