Hospital demand falls, industry groups differ on whether to embrace trend

SURPLUS: With most Rhode Island hospitals experiencing a decline in patients since 2006, and falling demand for inpatient services, the state has a surplus of hospital beds. Shown above is a patient room from The Miriam Hospital in Providence. / COURTESY ­LIFESPAN CORP.
SURPLUS: With most Rhode Island hospitals experiencing a decline in patients since 2006, and falling demand for inpatient services, the state has a surplus of hospital beds. Shown above is a patient room from The Miriam Hospital in Providence, part of the Lifespan hospital network, which has seen a trend-bucking uptick in demand for hospital beds. / COURTESY ­LIFESPAN CORP.

Officials and an expert analysis agree Rhode Island has a hospital-bed surplus coupled with a trend toward diminishing demand for inpatient services, but local groups differ on what that means for state health care, and what action might be necessary as a result.

According to a report by The Lewin Group commissioned by the R.I. Executive Office of Health and Human Services and the R.I. Department of Health released in 2013, the state hospital system has between 193 and 338 surplus beds.

“The cost of this excess capacity would range from $4.9 million to $21.1 million in 2017, based on the marginal fixed cost of an unoccupied bed,” the report stated.

The report also identified factors driving the surplus, including underutilization of inpatient capacity, excess inpatient beds, the distinction between staffed and licensed beds, the adoption of accountable care organizations and moving Medicare-Medicaid enrollees into managed care, changing demographics and a long-term diminishing need for hospital care, as the Affordable Care Act prevents hospitalizations through earlier medical interventions of problems before they become chronic.

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From 2006 to 2010, according to the report, hospital occupancy rates dropped from 75 percent to 67 percent.

Al Charbonneau, executive director for the Rhode Island Business Group on Health, thinks that rate needs to increase by about 20 percentage points, which he said would increase the system’s efficiency and reduce health care premiums, making the state more attractive to companies seeking to move operations here.

So, he said, rather than worry about the shuttering of Memorial Hospital in Pawtucket, announced by Care New England Oct. 16, he sees it as a painful but necessary contraction of the state’s hospital market.

CNE said the 294-bed hospital has averaged a daily inpatient census of just 15 to 20 patients, resulting in a $23 million operating loss in the last fiscal year.

According to RIDOH, Memorial’s discharge rate per calendar year had dropped from a high of 7,239 patients in 2005 to 3,723 in 2016, down about 46 percent.

Rhode Island hospitals have experienced a decline in patients since 2006, according to RIDOH figures. Outliers were Rhode Island Hospital, which saw 26,762 discharges in 2016, 7.3 percent more than 2005’s 24,782, The Miriam Hospital, which saw 15,708 discharges in 2016, 19 percent more than its 12,647 discharges in 2005, and South County Hospital, which saw 6,069 discharges in 2016, 3.5 percent more than 2005’s 5,856, though its discharges had been dropping in the years between.

Bradley Hospital and Butler Hospital each saw a steady increase in discharge numbers during that period, up 28 percent at 1,193 and 45 percent at 6,892, respectively.

Memorial Hospital’s impending closure and a 2015 study have Theresa Paiva Weed, president of the Hospital Association of Rhode Island, and Amanda Barney, senior association vice president, more cautious about whether there are enough hospital beds in the state.

On the one hand, Barney noted, readmission is falling, a positive development that is cutting demand for hospital beds.

But seasonal changes can spike need for hospital beds, such as during an unusually severe flu season, said Paiva Weed.

The 2015 Wakely Consulting Group report on the Rhode Island health care system, commissioned by the General Assembly in 2013, offers evidence that hospitals are not the primary drivers of increasing medical expenses.

“Pharmaceutical cost is the leading driver” cited in the report, Paiva Weed said.

Paiva Weed noted the difference between licensed beds, the legal number of beds a hospital can serve, and staffed beds, the number of licensed beds for which staff is on-hand to attend to the patient.

Maintaining the state’s licensed beds is important, Paiva Weed said, so that hospitals can respond to an emergency and call in more staff to treat people during high demand.

“We think an honest conversation among all the stakeholders is needed,” Paiva Weed said.

Lifespan Corp. hospitals are bucking the trend, said Dr. John Murphy, executive vice president of physician affairs. Since 2013, Lifespan’s system-wide hospital discharge numbers per fiscal year have risen annually. This year, the number of patients discharged from all Lifespan facilities was 60,932, compared to 53,390 in 2013, a 12.3 percent increase.

Sen. Joshua Miller, D-Cranston, chairman of the Senate Committee on Health & Human Services, said the closing of Memorial Hospital is being looked at by state officials as an isolated incident, which is a mistake.

“The state is small enough that there definitely should be more of a holistic approach,” he said.

An assessment of the state’s health care system’s ability to meet demand is more important now than ever, he said, considering the number of mergers.

Rhode Island is overdue for an assessment of what it really needs out of its health care system, how much of each service it’s providing and whether changes should be made, Miller said.

“I don’t think the state has ever had an outlook that’s that comprehensive,” he said.