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Originally printed in the SpaceMed Newsletter Winter 2015 www.spacemed.com

Fluctuating Demand for Hospital Beds By Cynthia Hayward

BACKGROUND Starting in the 1980s, healthcare strategists and policy experts encouraged hospitals to reduce their surplus inpatient bed capacity in response to de-clining admissions, use rates, and lengths of stay — as a result of the ad-vent of Medicare’s diagnosis related groups (DRG) payment methodology in the public sector and managed care in the private sector. Hospitals re-sponded to changes in demand by shifting their resources. Between 1980 and 2003, community hospitals in the United States took 175,000 inpatient beds out of service — an 18 percent reduction — through downsizings, consolidations, and closures. At the same time, skilled nursing and sub-acute care facilities were developed to provide a less expensive and less resource-intensive alternative for patients requiring a lengthy recuperation. Home health agencies also proliferated. Since 2003, the number of hospital beds has declined less dramatically — a reduction of another 12,700 beds. Although, nationally, inpatient admissions rose from 1992 to 2012, both the rate of inpatient admissions per 1,000 population and the average length of stay have declined to an all time low — resulting in an overall decline in the demand for inpatient beds. CURRENT TREND Hospitals today are at a crossroads that few anticipated years ago. In addi-tion to reducing the number of uninsured Americans, a goal of the Afforda-ble Care Act is to manage a population’s health across the care continuum, keeping patients healthy through preventive and primary care services, and out of acute care facilities whenever possible. As healthcare transforms from a hospital-centric to a population-centric model, supported by sophisti-cated diagnostics and minimally-invasive treatment, inpatient utilization may continue to decline despite the needs of aging baby boomers and the newly insured. FACILITY IMPACT U.S. healthcare providers have removed significant numbers of inpatient beds from service over the past decade and minimized investments in up-grading and renovating their existing beds. However, in many parts of the country, inpatient units are deteriorating and do not meet contemporary standards relative to room size, support space, patient and family ameni-ties, and appropriate infrastructure. When a replacement hospital is planned, total bed need should be carefully scrutinized and acuity-adaptable patient rooms planned to accommodate varying patient popula-tions over the life of the facility. When bed expansion is planned on an exist-ing campus, providers should develop a strategy to upgrade, and potentially

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Fluctuating Demand For Hospital Beds Continued

replace existing beds in conjunction with new bed expansion. In this case it is advisable to build as many beds as financially feasible, such that if the total new bed need is overestimated, replacement of existing beds can be accelerated. The need for patient observation space should also be ad-dressed as part of overall inpatient bed expansion and renewal.

Cynthia Hayward, AIA, is founder and principal of Hayward & Associates LLC.