The Future of Health Care Delivery: Homes not Hospitals

VCU hospital. The future of health care delivery… or the past?

“The days of the hospital, as we know it,” may be numbered,” declares Laura Landro in a Wall Street Journal article today.

In a shift away from their traditional inpatient facilities, health-care providers are investing in outpatient clinics, same-day surgery centers, free-standing emergency rooms and microhospitals, which offer as few as eight beds for overnight stays. They are setting up programs that monitor people 24/7 in their own homes. And they are turning to digital technology to treat and keep tabs on patients remotely from a high-tech hub.

For the most part, the investments in outside treatment are driven by simple economics: Traditional hospital care is too costly and inefficient for many medical issues. Inpatient pneumonia treatment, for example, can cost 15 to 25 times more, yet many low-risk patients who could be safely treated as outpatients are hospitalized, studies have shown.

That’s what’s happening nationally. But I don’t see many signs of it happening here in Virginia. Indeed, when a rural hospital in Patrick County goes out of business, everyone’s instinct is to think about how to revive it so someone else can take it over rather than rethink how health care in a rural county might delivered more effectively and efficiently.

I’m old enough to remember when the Virginia legislature back in the 1980s moved too slowly to deregulate the banking industry. North Carolina got the jump on us, allowing its banks to merge with one another and then acquire out-of-state banks before our banks had a chance to merge, grow and acquire. The Carolina banks ate up the Virginia banks, and the top banking jobs and financial clout shifted from Richmond and Norfolk to Charlotte and Atlanta.

I’m worried that something similar is happening today with the health care sector. The problem is not that Virginia hospitals haven’t merged — to the contrary, huge health care systems have swallowed up competitors in every metropolitan area in the state. The problem is that the General Assembly hews to an outmoded model of the health care industry. By clinging to that model, more appropriate to the 1960s than the 2010s, we run the risk that Virginia healthcare providers will stifle innovation, thwart productivity, and burden the population with an obsolete health care system.

The underlying assumption is that health care should be organized around something called “hospitals,” which are medical complexes in which scores, even hundreds, of medical services are bundled under one roof under common ownership. State policy buttresses this arrangement by requiring providers to obtain a Certificate of Public Necessity (COPN) in order to build a new facility, thus protecting hospitals from competition by free-standing entities. State policy also perpetuates the status quo by allowing nonprofit hospitals to go untaxed, giving them a huge competitive advantage over for-profit competitors organized by physicians or entrepreneurs.

I have long railed against this arrangement without benefit of knowledge of what’s happening in other states. The Wall Street Journal, however, makes it vividly clear how healthcare enterprises in other states are innovating.

Perhaps the biggest drawback to hospitals is that they are germ factories. With the rise in antibiotic-resistant bacteria, any patient entering a hospital runs the risk of infection. Indeed, at any time, reports the WSJ, one in 25 patients in the U.S. is battling a hospital-acquired infection.

It’s also becoming apparent that health care providers often can deliver care at lower cost and better outcomes in independent facilities or at home. Studies, says the WSJ, show that “hospital-level care at home for certain conditions can be provided for 30% to 50% less than inpatient care with fewer complications, lower mortality rates, and higher patient satisfaction.”

Acute care hospitals will always be necessary to deal with medical conditions requiring highly specialized, highly technical, or highly intensive care. But hospitals are clearly not the best setting for chronic or non-intensive conditions.

New York’s Mount Sinai Hospital has developed a hospital-at-home program, HaH-plus, for patents who show up at the emergency room or are referred by primary care physicians. A mobile acute-care team provides staffing, medical equipment, medications and lab tests at home, and is on call around the clock if a condition worsens, says the WSJ. Mount Sinai estimates that nationally, 575,000 cases yearly could qualify for the program. Treating just 20% of them could save Medicare $45 million annually.

Another new concept — potentially well adapted to rural counties — is the microhospital, sometimes referred to as the neighborhood hospital. Typically, says the Journal, 92% of microhospital patients are treated and sent home in an average of 90 minutes, and 8% are admitted overnight for care such as intravenous-medication administration. Says the CEO of Lousiana-based Ochsner Health Systems, 80% of its capital expenditures are going to outpatient clinics. “I don’t see us building new hospitals.”

The primary justification for maintaining COPN in Virginia is that preserving hospitals’ monopoly status enabled them to generate the profits they need to cover charity care, bad debts and money-losing Medicaid. If the General Assembly enacts Medicaid expansion, thus relieving hospitals of a significant charity care/bad debt burden, it will kick the props from under COPN.

I would argue that eliminating COPN would be worth the price of expanding the entitlement state. Competition in Virginia would lead to more innovative healthcare delivery systems. If the health care systems didn’t introduce the innovations, local physicians or out-of-state enterprises would. Potential savings for Virginia patients would run into the billions of dollars.

It’s time for an innovation-driven healthcare system. Let’s do it.

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6 responses to “The Future of Health Care Delivery: Homes not Hospitals”

  1. LocalGovGuy Avatar

    This all sounds nice in theory, and there’s probably some practical application…however, please don’t mix apples and oranges.

    The reality is that nothing, whether you want to select from the left or right side of the policy spectrum, is going to help rural areas in terms of health care.

    I recently saw a report, which will probably hit the media in the next 2-3 weeks, that provides very stark stats on rural America. In summary, it’s even worse than you could imagine when it comes to 18-35 y.o. outmigration. One of the “masks” that has been used to make rural America stats seem better than reality is the inclusion of college towns. In Virginia, it’s likely that a lot of studies might throw Blacksburg, Charlottesville, Lexington, and Harrisonburg in with “rural” areas. This report basically did a deep dive and pulled out all college towns from a number of rural socioeconomic indicators. The picture in rural America, once the college towns are pulled out, is beyond bleak. Economic activity in America’s rural areas has contracted in almost every year since 2008.

    So, while your proposed reforms do have some merit on a broader scale, I don’t think it’s any more realistic to expect a “microhospital” in Patrick County than its already existing hospital.

    1. Let’s put it this way: Patrick County has a better chance of sustaining a micro-hospital than a community hospital. It has an even better chance of sustaining an urgent care center and a couple of outpatient centers. Very sad. But economic reality.

  2. LarrytheG Avatar

    The “hospital” that is behind the ER.. IS changing and it should – but the ER itself is where you bring people who have been in auto accidents or have heart attacks or other life threatening conditions.

    this is no “modern” substitute for the ER. It’s a very expensive facility that requires very expensive nurses and doctors who specialize in life-saving procedures of which we don’t have any real substitute. Timely access to a full-up ER saves lives… when that ER is no longer there… people die.

    COPN is basically how many hospitals subsidize the ERs.

    Taking away COPN will not save money if in the end – you still have to fund the ERs… If I heard Conservatives actually admit that and along with their calls to reform COPN, they ADMIT that it will result in taxpayer subsidies to keep some ERs open.. then it would be a more honest conversation.

    When you close a rural hospital – you close the ER and in turn people are effectively moved further away from life-saving care – unless you’re going to serve them with helicopters.

    We don’t walk away from people because they are poor or they live in rural areas or both. Maybe the folks who decry the costs and COPN, and all – really think that paying for the poor and the rural folks is too costly and closing the rural hospitals is a good way to reduce costs but the conversation never really gets to that point..

    Sometimes it’s just hard to understand exactly where Conservatives are really coming from on the cost issue. They don’t really come right out and say that we can’t afford to provide life-saving care to the rural and poor but they essentially argue that way on whether rural hospitals should close or not.

    It’s really hard to understand exactly what they are actually arguing for – in the name of “lowering costs”.

  3. Maybe the option is that people eat better, exercise, on their own, taking some responsibility for their own health, there would be dollars left over for stabilization areas to get folks to bigger hospitals. I’d say something like a small ER like area that can stabilize and then send to Richmond.

    COPN is an issue that is slightly less of a problem because 2018 Gen. Assm. members did was to simply put a bill up for their “baby” and then get it passed. That way they circumvented doing anything to COPN.

  4. LarrytheG Avatar

    Not opposed to smaller scale ERs as long as they are “real” ERs that can save lives but how will they be paid for -that’s the issue.

    We don’t want a state where where you live can mean a higher death rate.

    Every industrialized country on the planet – takes care of ALL of it’s citizens health-care wise. We, on the other hand, insist that we want to be more like the 3rd world countries under the guise of being “less costly”.

    Why don’t we set the goal that we will be not more costly than the other industrialized countries – AND we have a competitive life-expectancy also.

    Does anyone here – seriously believe – that other countries “poor” people take care of themselves and in this country the “poor” don’t and THAT’s the reason for the disparity in life expectancy between the US and the other 30 industrialized countries?


    Sometimes, it’s hard to really understand what Conservatives are really after in this country… cuz it’s ain’t really lower costs and better life expectancy!!! more like some tortured moralistic blather about folks who don’t take care of themselves.. therefore don’t deserve a nearby ER!!!

  5. Home health can’t happen without high-speed broadband. Who do you propose should pay for that?

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