Catalysts Impacting the Hospital of the Future

October 26, 2017

ERDMAN

In This Article

Factors Contributing to Shifting Care Settings
The 11 Operational Domains Hospitals of the Future Must Address
Key Considerations for Boards and C-Suites

Historically, demand forecasting for hospitals has been relatively predictable, based on the demography in a community, its population growth and historic mortality rates. However, in light of recent dynamics influencing the healthcare industry, this straightforward approach is no longer sufficient. In our view, four factors are reshaping demand for hospital services and prompting leadership to reassess their forecasts:

Factors Contributing to Shifting Care Settings

Influenced by the factors below, demand and utilization of hospital services have shifted from inpatient to outpatient settings. In those clinical programs where inpatient care is the standard, lengths of stay have been shrinking and efficiency gains have been achieved through clinical process redesign and facility improvements. The hospital of the future operates around a presumption that market dynamics address the following:

Clinical Innovation

Advances in diagnostics and treatment, the evolution of information technologies and advanced analytics, and digital connectivity to individuals and households are fast paced. The convergence of physical and behavioral health, traditional and alternative methods and acute and post-acute services is forcing hospitals to innovate in every clinical program.

Cost pressures

Per capita and aggregate costs of care are increasing faster than the GDP and CPI. Insurers, employers and individuals are particularly sensitive to hospital and drug costs.

Competition

New niche players in each sector (acute, post-acute, primary care, et al) are competing against local hospitals. Many are funded by private investors. Some are sponsored by physicians in the community. With access to capital available at low rates, niche players like Laser Treatment, Cancer Centers of America, and others will increase their presence as competitive options.

Consolidation

Hospitals are increasingly affiliating with multi-hospital networks to acquire capital inexpensively and leverage scale for purchasing and managed care contracts. Consolidation is expected to continue for several years as acute providers seek to offer a wider scope of services across preventive and retail health, chronic care management, acute and post-acute services, and in some, sponsorship of health insurance.

Most hospitals have been active in managing their costs, quality and patient experiences. The vast majority of hospitals are actively engaged in efforts to improve the efficiency and effectiveness of their performance.

Most are pursuing supply chain and revenue-cycle efficiencies through direct purchasing for big ticket technologies, outsourcing of purchasing and business office functions, and workforce reductions.
Most are evaluating workforce productivity and compensation strategies to reduce their labor-related fixed and variable costs.
Most have developed clinically integrated networks with a core of employed physicians to participate effectively in shared-risk arrangements with payers.
Most are reorganizing their clinical portfolios to achieve optimal volume and efficiencies. And in this process, integrating physical and behavioral health in managing chronic, acute and post-acute settings.
Most are investing in digital technologies and expanded primary and preventive health programs to engage patients more effectively
Most are assuming more responsibility for the affordability of the services provided.
And most are assessing methods of improving access to their services through physical facilities offering a broader range of services and online access.

Looking forward, market dynamics will force hospitals to accelerate their efforts to become systems of health offering more than traditional inpatient and outpatient services.

The hospital of the future must be market-driven. Hospitals must adapt to changing market conditions – some quicker than others. They are not paralyzed by regulatory constraints or shared risk arrangements, nor timid about deploying capital outside traditional hospital services.

Payments

Allows the scanning of people to ensure they are following safety protocols

Scope of Services

Verifies who is entering the building and allows check-in without touching a kiosk

Scale of Operations

Allows visitors and employees to complete a touchless check-in process using their mobile devices and scanning QR codes

Customers

Monitors the temperature of visitors and employees upon entry of the building, providing an extra safety measure

HOSPITAL OF THE FUTURE
FROM COMMUNITY HOSPITAL OR HEALTH SYSTEM		TO SYSTEMS OF HEALTH
TODAY’S THINKING Unit Costs Inpatient, Outpatient Services, Physician Services Medical Staff, Employed, ACO Safety, Outcomes Patient Experience, Allopathic Campus Orientation Facility Locations Affiliations Technology, Facilities for Inpatient, Outpatient Core Screenings, Social Services Annual Negotiation Reputation, IP-OP Location	OPERATIONAL DOMAINS Cost Orientation Business Unit Orientation Physician Organization Clinical Orientation Network Design Access Provider Network Capital Deployment Community Benefit Focus Insurer Orientation Value Proposition	FUTURE STATE OF THINKING Total cost of care Acute, Primary, Post Acute, Retail + Insurance Exclusive Network + Alternative Providers Effectiveness, Efficiency, User Experience Regional Sites of Care Facilities + Digital Connectivity Narrow, Formal Regional Hubs Social Determinants Partnerships Scale, Scope, Outcomes, Affordability, Locations

In responding to these dynamics, hospital leaders will have expanded operational responsibilities that, in some cases, require new skills and competencies: Per the illustration below, there are 11 key domains of attention: