The 1989 movie Field of Dreams is one of my favorite baseball movies. In it, an Iowa farmer hears a mysterious voice tell him, “If you build it, he will come.” The voice is talking about building a baseball field in the middle of an Iowa cornfield to attract the ghosts of the Chicago White Sox players banned from baseball for throwing the 1919 World Series. The ghosts appear, including the farmer’s father, and so do thousands of spectators.
The movie is an allegory about believing in impossible things. Similarly, I think the healthcare industry has been buying into an increasingly impossible notion that if they build more hospitals, diagnostic centers and office buildings, more patients and physicians will come. Instead of volume, however, we have increasing evidence that spending money on buildings, unnecessary equipment and land is no longer the investment it once was. Having a large physical footprint is also no longer a guarantee of success. In fact, most healthcare markets today have an excess of empty beds with no practical plans to fill them.
My colleague, David Williams, has suggested that systems headed for a crash share three characteristics:
- They have duplicative services poorly distributed across markets.
- The have overbuilt and have so much unused capacity that real estate is a drag on cost, not an investment.
- They have incompatible offerings, often ignore market demands, and are unable to match patient acuity.
Our focus now should be delivering the appropriate care in the appropriate setting rather than competing to create the largest physical plant or the fanciest facilities in the neighborhood. I believe all healthcare organizations must review their existing property holdings, as well as every new capital expenditure from buildings to new equipment, with an eye to meeting patient needs and expectations. Managing fixed costs, including capital budgets is management's responsibility, and top leadership must evaluate new projects and develop plans to make existing facilities profitable.
Every new capital or property expenditure should be subject to a value analysis and a return-on-investment calculation. Top management should ask: What value does this bring to our patients? Does this expenditure provide better quality or lower cost? When will we recover the cost of our investment?
Often it is a better value to remodel existing facilities than to build new ones. Mobile equipment might be a better value than equipment that can only be used in one location. When you offer the convenience of mobile equipment, your patients don’t have to come to you; you can go to them. Mobility increases your ability to deliver appropriate care in the appropriate setting.
If your system is operating at around 50 percent capacity, you have problems with excess capacity, and developing alternative uses for unused beds should be high on your to-do list. Here are some out-of-the-box ideas for containing costs. I realize some of these may have legislative or legal hurdles and all of them may not be right for every organization, but they may spark new ways of thinking about solutions to the problem.
- Mothball a floor or wing. The military has been doing this for years. Shutting down a portion of the building reduces maintenance and utility costs. The beds, however, would be available in the event of high demand due to some catastrophic event.
- Convert patient rooms in an unused wing or floor into hotel rooms for patients’ family members. Any number of situations makes family involvement in patient care important, so your hospital could offer lodging to families during inpatient hospital stays or when families are referred from out of town.
- Convert beds to assisted living. These rooms, too, could be converted to hospital beds during an emergency.
However your system decides to address the issue of overcapacity, you must explore new ideas for repurposing your facilities to provide a better value to your patients and community. The future of your organization could be at risk.
For weekly insights into healthcare, please sign up here: