THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, July 9, 1995 TAG: 9507080608
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MARIE JOYCE, STAFF WRITER
LENGTH: Long : 138 lines
The ward on the fifth floor at DePaul Medical Center in Norfolk is empty. The rooms, quiet and dark, house storage boxes from the gift shop.
But down on the first floor, the outpatient surgery center bustles. Family and friends wait for patients in a new, expanded lobby with comfy chairs and huge glass windows. The rooms brim with new equipment designed to make a patient's visit as quick as possible.
The story's the same at other hospitals. Here and around Virginia, about half of all hospital beds are empty.
By state standards, a healthy hospital keeps an average of 80 percent of its beds occupied. The local hospital that did the best, Chesapeake General, kept 71 percent of its beds filled in the last fiscal year; Newport News General Hospital had the worst occupancy rate - 25 percent.
Local institutions are adapting to one of the realities of medicine in the '90s: Get patients in and out the door in one day, or lose their business.
Hospitals are scrambling to become more efficient. They're cutting staff, streamlining operations and beefing up other services to stay competitive.
Will it be enough? The people running the hospitals say they can make up the money lost from the empty beds.
But hospitals are finding it harder to pass on the cost of those unused beds to insurance companies and Medicare. Hospitals have been shutting down in other parts of the country, and industry observers expect the trend to continue.
``We have too many hospitals,'' says Douglas L. Johnson, head of the company that owns Virginia Beach and Portsmouth General hospitals. ``I think some hospitals are going to close in the next five years.''
Why are so many beds empty?
Technology is one of the forces emptying beds. The lithotripter is a good example. Lynn Walls can't remember the last time she arranged for a patient to have surgery for kidney stones. Walls, who handles scheduling for Devine-Fiveash, a large Hampton Roads urology practice, says the procedure used to require almost a week's recovery in the hospital.
But now doctors use lithotripters, which use shock waves to disintegrate stones. There's no cutting involved, no hospital stay. In fact, the machine doesn't even need to be in a hospital.
Insurance companies are also emptying beds. Locally, the typical hospital stay costs $4,000 or more. Insurance policies emphasize - and in many cases mandate - cheaper outpatient treatment.
Who pays for empty beds?
Louis F. Rossiter, a medical economist at the Medical College of Virginia, estimates that people who stay in the hospital probably pay an extra 3 percent to 5 percent to cover the cost of the empty beds. In Hampton Roads, that means $128 to $214 added to the average cost of an admission.
Some hospitals are still paying for beds that were built before this trend took hold. In the days when insurance companies generally paid whatever the hospitals charged, there was incentive to build new beds.
The government also fueled overbuilding. Concerned about a shortage of hospitals, the federal government gave more Medicare reimbursement to hospitals that spent money on capital improvements. The more they spent, the more taxpayer money they got.
``The old theory was: You build a hospital bed, and it gets filled,'' Rossiter said.
The federal program still exists. But the reimbursements were cut several years ago, and the program is expected to shut down completely as part of proposed Medicare cuts.
What are hospitals doing about this?
Most local hospitals have boosted their outpatient centers, designing them to offer the same convenience as doctors' offices. They've also opened their own free-standing facilities, or developed new services, like home nursing visits.
When Suffolk's Obici Hospital finishes renovations, outpatient surgery will have its own entrance on the opposite side of the building from the main entrance. Sentara Bayside is also renovating its outpatient center. So is Chesapeake General.
DePaul has already redone its outpatient center and is making plans for the empty fifth-floor ward, hospital officials said. One possibility: Physical rehabilitation - inpatient and outpatient - is going be more important in the future as the population ages.
Some hospitals have simply taken beds out of circulation. The beds exist on paper, but the hospital has converted the space for other use.
The state is pushing them to shut down more. When Sentara sought state permission to renovate the newly acquired Bayside, the company had to agree to pitch 92 beds.
State officials also persuaded Children's Hospital of The King's Daughters to reduce the number of new beds - from 56 to 34 - in its $72 million renovation. Almost all of the new beds are in critical-care units, which had unusually high occupancy rates.
Will new services be enough?
For hospitals to survive these shifts in the business, they must do more than streamline and develop new services, Rossiter said. They must ally themselves with one of the forces that have emptied their beds - insurance companies.
Sentara Health System is a good example. The company owns four hospitals in Hampton Roads. But it gets its financial strength from its two managed-care insurance plans. Money that Sentara loses from unused beds is money saved in insurance reimbursement.
Tidewater Health Care, owner of Virginia Beach and Portsmouth General hospitals, also owns HMOs with Trigon Blue Cross Blue Shield. Riverside Health System owns a managed-care plan with Trigon, and DePaul is working on forging a closer relationship with the insurer.
``What you need to do is get to a position where you can walk up and down the halls of the hospital and celebrate the empty beds,'' said David L. Bernd, Sentara's chief executive officer.
So what's the future for hospitals?
People will always need hospitals for an emergency room, intensive care and some complicated, high-tech surgery. But general care will be consolidated in fewer hospitals.
You may have to drive farther for specialized treatment - as much as 60 miles for some services. But that's not necessarily a bad thing, Rossiter said.
The remaining hospitals will see a higher volume of patients. Generally, the more often a procedure is done at a hospital, the better the success rate.
``If you want someone to fuse your spinal cord because you've been in a horse (riding) accident, you want someone who does it more than once a month,'' Rossiter said.
If the remaining hospitals shut down, they likely won't close their doors and sit dark.
Instead, they'll probably have to sell out to bigger companies, Rossiter said. These companies likely will switch them over to other uses, like inpatient mental health or substance-abuse treatment.
``It depends on what you call a hospital,'' said Tidewater Health Care president Johnson. ILLUSTRATION: Graphic
OCCUPANCY RATES OF HAMPTON ROADS HOSPITALS
JOHN EARLE/Staff
SOURCE: Virginia Health Services Cost Review Council
[For complete graphic, please see microfilm]
by CNB