2018: The year hospitals wore out their welcome

At the beginning of the year, health care prognosticators were in agreement about one thing: hospitals were likely to have a tough year. Dwindling admissions, shorter stays, declining reimbursements, greater competition from outpatient settings.

Many analysts expect hospitals to be unable to withstand these trends, predicting that 2018 may be dominated by hospital layoffs and closings.

The trickle begins

While it’s certainly too early to tell, we’re seeing preliminary evidence that this prediction may come true. Nassau University Medical Center in New York just shed $2.3 million of expenses, eliminating executive positions and marketing contracts deemed unnecessary in today’s environment. Atrium Health in Charlotte, NC, launched a four-year initiative to reduce labor costs, laying off 90 workers since November and seeking to lower labor costs to 50 percent of operating revenue, down from 59 percent today.

A trickle, perhaps. Or the canary in the coal mine. We’ll find out soon enough.

Hospitals chose this path

The sad thing is that hospital executives have known for years that their health care delivery model was unsustainable. Hospitalizations have been declining since 1981. Instead of embracing the future, however, most chose to double down on the doomed strategy of building hotel-like hospitals on campus settings, merging with other hospitals to boost clout in negotiations with insurers, marketing themselves to retain patient volumes, buying up private practices to ensure referral streams, and raising prices to accumulate profits so that they could ride out the storm when it hit.

So here we are. What does the future hold? Upheaval, certainly. And a diminishing role for hospitals in the health care landscape. Ezekiel J. Emmanuel, vice provost at the University of Pennsylvania, applauds the inevitable, predicting what many health care analysts seem to agree about:

  • Smaller hospitals specializing in acute care.
  • Growing outpatient facilities of every variety, emphasizing convenience and affordability.
  • Greater use of technology, allowing patient monitoring services from home.

In some ways, a return to medicine as practiced long ago.

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