The Second Revolution in Hospital Systems
From the most recent crop of articles, lectures and industry chatter, it seems that hospital planners are beginning to look beyond evidence-based design for a new focus. Yet we remain perhaps too narrowly attuned to micro-process changes in healthcare—such as room design, department throughput, single hospital or campus. This is all good and necessary work.
But what is missing in the healthcare industry is a national dialogue about the parallels between the economic and political changes of the 90s with what is happening today, and the effect both “revolutions” are having on the healthcare industry.
There is a need to ramp up our contribution to the dialogue concerning healthcare system-wide structure, service distribution, and facility development implications—what I call macro-organizational design. It might help to remember the 1990s, when the first revolution of hospital mergers and the growth of multi-campus systems and program re-organization peaked. Many of us who specialize in hospital design went on ice (and many never returned, the subject of another blog) while policy debates over reimbursement changes, universal coverage, and managed care as well as a recession effectively stalled capital development plans.
As we approach the fifteenth year since the ill-fated Clinton healthcare reform plan was launched, we should note that all these forces encouraged the growth of multi-hospital systems as providers struggled to become more efficient. Yet the baseline drivers of yesterday—cost reduction, staffing, access, and physician integration—are all still with us as we are in a virtual recession, with severe capital finance hurdles, while dealing with continued labor shortages and rapid construction cost inflation due to growing global demand. Whoever prevails in the upcoming election, healthcare will be at the top of the national debate. In 10 years, healthcare spending may reach $4.3 trillion, or 20% of U.S. GDP. Where is the breaking point, and what changes will it force?
The formation of most hospitals into a handful of regional and national systems in the 1990s made business sense—broad scale contracting for supplies, services, physician practice alliances and other efficiencies. But as healthcare planners, we remain amazed at how much more might be done to integrate these systems in terms of services distribution. For example, we see a lot of “systems” that are really just confederations of silo hospitals still struggling internally with how and where to organize services. The second revolution may be to take better advantage of the systems that were established in the 1980s through the early 2000s by crafting a new model to meet today’s facility capital requirements.
How? Perhaps enhancements to the earlier facility-service ideas of regional reference laboratories, pharmaceutical processing and distribution centers, and materials management hubs. Perhaps we need to think more deeply and broadly about Lean operational modeling for system-wide, multi-facility processes and not just single hospital processes? Should there be even greater centralization of tertiary services or other specialized service product lines; if so, how do we design larger-scale central departments that facilitate the integration of all related inter-disciplinary functions in the delivery process?
The ever-present debate on the inpatient-outpatient shift gets more complicated, as we look beyond just decanting added functions out of the expensive hospital building; for example, creating an integrated orthopedics service without duplication of physician time, staff and equipment resources through awkward facility separations.
The list of questions is much longer but the point is to get us thinking much more imaginatively and on a broader scale to design the infrastructure of whole systems. Kaiser Permanente and many other systems have explored many new ways of meeting these challenges—but I feel there is a world more to be done.
Jim Hannon leads the national health practice of SmithGroup, a leading healthcare architecture and engineering firm. He also is the managing director of the firm’s San Francisco office.