In the 1989 film “Field of Dreams,” Kevin Costner’s Iowa farmer tears up a cornfield to build a baseball diamond on the faith of a whispered promise: “If you build it, he will come.” The idea was building a baseball field attract players, families, spectators and ultimately revenue the farm needed for long term sustainability.
For decades, American health systems operated on a strikingly similar premise — build the hospital, fill the beds, expand the service lines, and assume that patients and revenue would follow.
That assumption is being challenged.
Executives at health systems from large academic medical centers to critical access hospitals are arriving at a common conclusion: physical expansion alone does not produce sustainable performance, and in some cases makes underlying problems harder to solve.
Timothy Layman, RN, president and chief administrative officer of Hospital Sisters Health System’s St. Mary’s Hospital in Decatur, Ill., is seeing this first hand.
“We have shifted from a ‘build it and they will come’ mentality to a ‘build what the community needs, prove the value, and make it exceptionally accessible’ strategy,” he said.
The financial logic behind the change is difficult to argue with. Outpatient care now makes up the majority of revenue at an increasing number of health systems, including University Hospitals in Cleveland, a structural shift that has required different thinking about where capital should go. Bradley Bond, CFO of University Hospitals, said the once-core notion that growth depends on building or acquiring more brick-and-mortar hospitals is gone.
“Revolutionary advancements in medical technology have created a paradigm shift,” Mr. Bond said. “They’ve prompted a move to increased care in outpatient settings, which now makes up most of our revenue.”
The same logic has reshaped strategy at The Permanente Federation in Oakland, Calif., where Nolan Chang, MD, executive vice president of strategy, corporate development and finance, is leading growth efforts.
“We’ve abandoned the assumption that high-quality, value-based care must be anchored to traditional brick-and-mortar medical facilities and legacy administrative processes,” he said. “Today, we’re bringing care directly into patients’ homes and remote environments through telehealth and remote monitoring, redefining ‘value’ to include patient convenience alongside medical outcomes.”
That redefinition is accelerating in part because of how patient behavior is shifting. The days of patients driving long distances to an academic medical center for routine care are waning, said Redonda Miller, MD, president of The Johns Hopkins Hospital in Baltimore. Her institution has reinforced a hub and spoke model, keeping the academic medical center at the center for complex acute care while extending ambulatory clinics, surgery centers and home-based options into surrounding communities.
“This allows us to provide lower-acuity care in communities to facilitate easy access for patients,” Dr. Miller said. “This also preserves capacity at The Johns Hopkins Hospital to meet the growing demand for complex care that can only be provided in an academic medical center setting, while ensuring that patients receive the right care at the right place at the right time to meet their specific healthcare needs.”
The shift, though, is not only about redirecting capital. Some executives say the harder change is in discipline, specifically the discipline to examine what already exists before asking for more.
Robert Wiehe, senior vice president and COO of UC Health in Cincinnati, described discovering that long access waits were not primarily a supply problem. When his team reviewed scheduling templates, return visit patterns and slot utilization, the data told a different story.
“We stopped believing that access is only a capacity problem,” he said. “We’re an academic health system, so for a long time the answer to a wait time was to recruit another physician or find more clinic space. Sometimes that’s still the right answer and we still do it. But when we dug into our own data, what we found was mostly waste in the classic sense. Templates built years ago for a practice that no longer exists. Return visits scheduled out of habit. New patients waiting behind slots that were never going to fill.”
Mr. Wiehe said now when a chair or service line leader requests more resources, his team first asks them to reflect on what has already been done and how they can expand capacity in the current state.
“We review the template utilization first,” said Mr. Wiehe. “Sometimes that’s a less satisfying answer than a hire, but many times it’s the one that changes what a patient experiences.”
Martha Henley, CEO of Unity Medical Center in Manchester, Tenn., applied that same logic to service-line decisions. For most of her career, the unspoken rule was that a hospital offers everything. Her organization has let that assumption go entirely.
“Every service line now has to earn its place before we commit people and capital to it,” Ms. Henley said.
When the hospital reconsidered relaunching a home health service it had previously discontinued, she weighed the market carefully and decided against it.
“If we had gone back in, we would not have been filling a gap, we would have been pulling volume from agencies already serving those patients,” Ms. Henley said.
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