America Loves Getting Bigger, and Therein Lies the Problem for Healthcare

I'm a big fan of Morgan Spurlock. If you don't recognize the name, he's the guy that, back in 2004, ate only McDonalds for 30 days and made a documentary about it. (For the record, he gained nearly 25 lbs in the 30 days).

The problem with McDonald's, Spurlock argues, isn't the food itself. While it wouldn't be considered health food, a regular McDonald's hamburger has just 250 calories and 9 grams of fat. Instead, what makes McDonald's so detrimental to our health is that it encourages us to 'supersize' everything — causing us to eat more than we need, and more than we would have eaten without the 'supersize' prompt.

Why do Americans say yes to supersizing? 

Because in America, bigger is better — or at least, that's been the way of thinking for a long time.

The same accepted wisdom has been alive and well in healthcare for decades. 

"It's America. We don't make ourselves smaller," said Kenneth Kaufman, managing director and chair of healthcare consulting firm KaufmanHall. I spoke with Kaufman a few weeks ago about various trends in healthcare, including consolidation.

"A lot of these organizations would be much more effective in the future if they were smaller. They're too big," he explained.

In 1975 there were more than 7,000 hospitals in the U.S. Today there are 5,700. Despite having fewer hospitals, the occupancy rate has also declined. In 1975, 76 percent of hospital beds were filled. In 2012, the rate was 61 percent. In fact, in the six years from 2006 through 2012, the average Medicare inpatient occupancy for the country declined 13 percent, according to MedPAC. Even more telling, there are 121 metropolitan statistical areas (the technical term for 'market') with only a 20-50 percent occupancy rate in the U.S.

Our country is over-bedded.

We've seen the affects of this by way of hospital closures and significant consolidation — both of which are likely to continue as medical advances and preventive care help keep more patients out of the hospital.

What does this mean for healthcare leaders?

There will be fewer hospitals.

This isn't necessarily a bad thing, but it could mean lost jobs and struggling organizations if leaders aren't proactive about assessing their current assets and how they may or may not serve the organization in the future.

When I was chatting with Kaufman, he explained he'd recently met with a health system CEO who questioned the viability of his system's assets in a future of population health management. "'We built this very complicated system,'" said Kaufman as he recounted the conversation. "But I'm not sure this structure that I built from a geography and an asset perspective is the structure that supports population health."

That sort of sophisticated assessment will be critical for adjusting an organization toward risk-based, population health management.

Drawing upon the 'foot on the dock and one in the boat' metaphor used to describe the transition to value-based care, Kaufman said, "Right now people have the boat that they have, and maybe the boat that you have isn't the boat you're going to sail away in."

Yet, trading in your fleet for a new, smaller fleet is incredibly difficult for leaders.

"We're not quite at that tipping point yet, but we're closing in, maybe a year away, maybe two years away," said Kauffman. "If reimbursement continues to get tougher and tougher, people will have to make decisions that at the moment they'd really like to not make.

These decisions may include closing acute-care facilities, consolidating with other systems or consolidating services within a system.

Kaufman summed up the situation many leaders are facing with another metaphor: "It's sort of like somebody who built a baseball stadium but then bought a football team, but it never occurred to the guy who bought the football team that he couldn't play football in the baseball stadium."

If we play population health management right, we won't need the hundred million dollar 'supersize' acute-care facilities we so pride ourselves on today.

How we react will determine our future success.

When was the last time McDonald's asked you to supersize your meal?

 

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