Chapter 8 Inpatient Facilities and Services Learning Objectives

Chapter 8 Inpatient Facilities and Services

Learning Objectives • To get a functional perspective on the evolution of hospitals • To survey the factors that contributed to the growth of hospitals prior to the 1980 s • To understand the reasons for the subsequent decline of hospitals and their utilization • To learn some key measures pertaining to hospital operations and inpatient utilization • To differentiate among various types of hospitals

Learning Objectives • To learn how the Affordable Care Act affects physician-owned specialty hospitals and nonprofit hospitals • To comprehend some basic concepts in hospital governance • To understand differentiate between licensure, certification, and accreditation and the Magnet Recognition Program of the American Nurses Credentialing Center • To get a perspective on some key ethical issues

Introduction • Inpatient – requires an overnight stay in a health care facility • Hospital – an institution with at least 6 beds whose function is to deliver patient services that include diagnostics and treatment • must be licensed • have an organized physician staff • provide continuous nursing services supervised by RNs

Introduction Other Hospital Characteristics: – a governing body is legally responsible for hospital conduct – a CEO is responsible for operations – medical records on each patient – pharmacy services supervised by a registered pharmacist – food services to meet nutritional needs

Introduction Construction and operations of a hospital are governed by: – federal laws – state health regulations – city ordinances – Joint Commission standards – fire codes – sanitation standards

Introduction • “Medical Center” – hospitals that offer specialization and a large scope of services • Hospital / health system: – multihospital chain – provides a variety of health care services

Introduction • Hospitals consume the biggest share of national health spending; hence, were the first to be targeted with PPS • Subsequently, outpatient services mushroomed

Hospital Transformation in the US: Evolution of Five Dominant Functions 1. Social welfare – almshouses and pesthouses 2. Care for the sick – public and voluntary institutions 3. Medical practice – medical science and technology – hospital administration, organization, efficiency

Hospital Transformation in the US: Evolution of Five Dominant Functions 4. Medical training and research – collaboration between hospitals and universities 5. Consolidated systems – organizational integration – service diversification

Expansion of U. S. Hospitals: Late 1800 s to Mid-1980 s Six main factors in the growth of hospitals: 1) advances in medical science 2) development of specialized technology and surgical services 3) advances in medical education 4) development of professional nursing 5) growth of health insurance 6) role of government

Expansion of U. S. Hospitals • Development of Professional Nursing – Florence Nightingale transformed nursing – Efficiency of treatment; hygiene • Growth of Health Insurance – Great Depression closed many hospitals – Insurance allowed people to pay for health care – Increased the demand for health care

Expansion of U. S. Hospitals • Role of Government – Hospital Survey and Construction Act (Hill Burton Act), 1946 • Federal grants to build nonprofit community hospitals • Charitable care was a condition • Biggest factor to increase nation’s bed supply • By 1980, goal of 4. 5 beds per 1, 000 population reached – Public health insurance (Medicare and Medicaid)

Hospital Downsizing: Mid-1980 s Onward • Changes in Reimbursement – From cost-plus to PPS – Decrease in inpatient utilization • Impact of Managed Care – Emphasis on cost containment – Efficient utilization of resources (care in alternative settings)

Hospital Downsizing: Mid-1980 s Onward • Hospital Closures – Economic constraints – Many rural and urban hospitals had to close – Other hospitals closed wings or used them for alternative purposes

Utilization Measures and Operational Concepts • • • Discharges Inpatient Days Average Length of Stay Capacity Average Daily Census Occupancy Rate

Utilization Measures and Operational Concepts • Discharges – discharges per 1, 000 population • an indicator of access and utilization – number of overnight patients a hospital serves in a given time period – include newborns and deaths • Inpatient Day (patient day) – a night spent by a patient • Days of care – cumulative patient days over a time period

Utilization Patterns Higher utilization among: • The elderly • Children under one year of age • Women • People of lower socio-economic status • Medicare and Medicaid beneficiaries

Utilization Measures and Operational Concepts • Average Length of Stay (ALOS) – Days of care / Discharges – An indicator of severity of illness and resource use – Highest in federal hospitals, followed by state and local government hospitals – Private nonprofit and for profit hospitals had the same ALOS in 2010

Utilization Measures and Operational Concepts • Capacity – Size is determined by number of beds set up and staffed – 84% of community hospitals in U. S. have fewer than 300 beds – Average size of a community hospital is 161 beds • Average Daily Census – average number of beds occupied per day – days of care / number of days

Utilization Measures and Operational Concepts • Occupancy Rate – percent of capacity occupied – Calculation: average daily census / number of available beds (capacity) x 100 – a measure of performance

Hospital Utilization and Employment • Long-term factors that affect utilization and employment: – Size and nature of population (population growth, aging, health status) – Advances in medical technology, but certain pharmaceuticals have reduced hospitalizations – Changes in insurance status

Hospital Utilization and Employment • Starting around 1995, outpatient settings started employing more workers than hospitals • Declines in reimbursement can lead to staff cuts and hiring freezes • Employment growth in hospitals is countercyclical

Hospital Costs • 2010: Average cost per stay was $9, 700 • High cost incurred by those between ages 45 and 84 • Costs are average for age 85 and over • Medicare accounts for the greatest share of costs • Two main cost drivers: – Intensity of services – Population growth

Types of Hospitals • Over half are private nonprofit (voluntary) • State and local government owned are the next largest group • For-profit or investor-owned come next • Federal hospitals are the fewest in number • Numerous ways to classify • Classifications are not mutually exclusive

Hospital Classification by Ownership • Public (Government ownership) • Private nonprofit • Private for-profit (Proprietary)

Public Hospitals • First appeared when almshouses and pesthouses evolved into hospitals • Owned by federal, state or local governments • Federal hospitals are open to special groups only (native Americans, military, veterans) • VA runs the largest hospital system (federal)

Public Hospitals • States run mainly psychiatric hospitals • Local hospitals (county or city-owned) serve a high proportion of disadvantaged groups • Overall high utilization • ALOS highest in federal hospitals – The veteran population is aging

Private Nonprofit Hospitals • owned and operated by community associations or other nongovernment organizations • their mission is to benefit the community • largest group of hospitals

Private For-profit Hospitals • operated for the financial benefit of owners or stockholders • have gained market share, mainly as physician -owned specialty hospitals have grown in number • lower occupancy rates than nonprofits

Classification by Public Access: Community Hospitals – Nonfederal, short-stay • Serve the general public • Can be proprietary, voluntary or government owned (only state or local) • Can be a general or specialty hospital • 87% of US hospitals are community hospitals

Classification by Public Access: Noncommunity Hospitals – Federal hospitals – Hospital units of institutions (prisons, colleges) – Long-stay hospitals

Hospital Classifications: Multiunit Affiliation • Two or more hospitals (owned/ leased/ managed) • 2011: 61% of hospitals were affiliated with a multihospital system (52% in 2005) • Nonprofit chains dominate • Advantages: – economies of scale – wide spectrum of care; variety of markets – access to capital – ease of contracting with managed care – access to management resources and expertise

Hospital Classifications: Type of Service 1) general hospital 2) specialty hospital 3) psychiatric hospital 4) rehabilitation hospital 5) children’s hospital

General Hospitals Broad set of services for various conditions • general and specialized medical • obstetrics • diagnostics • treatment • surgery – Most hospitals in the U. S. are general

Specialty Hospitals Narrow range of services for specific conditions or patient types – Exceptions: psychiatric care or substance abuse – Examples: rehabilitation, children’s, women’s, orthopedic, cardiac, oncology, etc. – Many are physician-owned

Physician-owned Specialty Hospitals Physicians find efficiency and financial benefits, control, time flexibility, and higher incomes – Legal issues: Stark Laws (self-referral) – selfreferral to a “whole hospital” is permitted

Physician-owned Specialty Hospitals – Med. PAC findings: • Serve a lower share of Medicaid patients • Admit less severe, more profitable cases • Draw patients from community hospitals • Severity-adjusted costs are not lower • Provider-induced demand may be occurring – Other controversy • Cream skimming (no emergency services)

The ACA and Physician-Owned Hospitals • To participate in Medicare, new or existing hospitals had to be certified by December 31, 2010 • Restrictions on expansion of existing hospitals – viewed as an assault on the American entrepreneurial system • In response, these hospitals are expanding hours and services, and rejecting Medicare patients

Psychiatric Hospitals Provide psychiatric, psychological and social work services – state mental hospitals continue to treat people with severe and persistent mental illness

Rehabilitation Hospitals – therapeutic services to restore maximum function in patients – Medicare rule: 75% of the inpatients must require intensive rehabilitation (at least 3 hours of therapy per day) – PT, OT, Speech/language pathology – Approximately 80% are hospital-based units rather than freestanding

Children’s Hospitals Specialize in complex, severe, or chronic illnesses among children – Generally have neonatal and pediatric intensive care, trauma care, and transplant services – In most communities, general hospitals serve as de facto children’s hospitals

Hospital Classifications: Length of Stay • Short stay hospitals – ALOS of 25 days or less – Treat acute conditions • Long stay hospitals – ALOS > 25 days – Psychiatric; LTCHs; chronic care • LTCHs – Must meet Medicare guidelines – Patients with complex medical needs – Rapid growth has occurred

PPS Reimbursement for LTCHs • PPS is based on Medicare Severity Long-Term Care Diagnosis-Related Groups (MS-LTCDRGs)

Hospital Classification by Location – Urban hospitals • located in a metropolitan statistical area (MSA) • have higher costs: high salaries, competition, broader and complex services – Rural hospitals • not in a MSA • 40% of all community hospitals • Inner city urban and rural hospitals treat poor and elderly disproportionately

Rural Hospitals: Swing-bed Hospitals • Swing bed: A bed that can be used for acute care or skilled nursing care as needed • For SNF, a patient requires discharge from acute care (3 -day acute care stay is required) • SNF prospective payment applies

Rural Hospitals: Critical Access Hospitals Authorized under the Balanced Budget Act, 1997 • To save small rural hospitals from closure • Maximum 25 acute care or swing beds • Emergency services must be available • Must meet a distance test • Can have a 10 -bed psychiatric unit, a 10 -bed rehabilitation unit, and a SNF • Cost-plus reimbursement, not to exceed 101% of cost

Hospital Classification by Size – no standard classification by size – costs per adjusted patient day are significantly higher beyond 150 beds – medium and large hospitals • extensive and specialized services • technology • highly-trained personnel

Teaching Hospitals • AMA approved residency programs for physicians • Academic medical centers: Teaching hospitals organized around medical schools; heavily engage in research and clinical investigations • Approx. 400 are members of the Council of Teaching Hospitals and Health Systems (COTH)

Teaching Hospitals • Main characteristics – Medical training and research. Additional reimbursement from Medicare. – Broad and complex scope of services (often have tertiary care services) – Many located in economically depressed areas. Provide disproportionate share of uncompensated care. COTH members provide nearly half of charity care nationwide.

Church-affiliated Hospitals • • • First established by catholic sisterhoods Mostly community general hospitals Owned or influenced by church groups Do not discriminate in giving care Spiritual and dietary emphases are often present

Osteopathic Hospitals • Till about 1970, osteopaths operated their own hospitals • Subsequent acceptance by allopathic practitioners • Separate osteopathic hospitals are no longer needed; they are also more costly and less productive • Many have closed

Expectations from Nonprofit Hospitals • IRS Code: tax-exempt status – must provide some defined public good (service, education, welfare—charity care) – no distribution of profits to any individual – executive pay may not be deemed unreasonably high

Nonprofit Hospitals: Key Issues – They often compete head on with for-profit hospitals (institutional theory) – Mixed performance on charity care • IRS now requires documentation on community benefit expenditures – Tax exemption is controversial – Some debate over what constitutes a community benefit

The ACA and Nonprofit Institutions • Nonprofit hospitals must assess community health needs and implement plans to meet those needs • Establish written policies on financial assistance and emergency care • Limit charges according to financial assistance policy • Limit billing and collection actions • Report on community health needs and provide annual audited financial statements to the IRS, or face an excise tax

Management Concepts • Hospital governance: A tripartite structure – Board of Trustees • Governing body, board of directors – CEO • Administrator / President – Medical Staff • Chief of Staff heads the medical staff • Historical shift of power from the trustees, to physicians, to senior managers • Parallel operational structure (medical and administrative) creates opportunities for conflict

Board of Trustees – Legally responsible for operations – Establish mission and long-term direction – Evaluate major decisions and approve plans and budgets – Monitor performance – Appoint and evaluate the CEO – Approve appointment of medical staff – Committees (e. g. Executive Committee, Medical Staff Committee)

Chief Executive Officer – Carry out the mission and objectives – Responsible for day-to-day operations – Leadership – Receives delegated authority from the board

Medical Staff – Accountable to the board – Physicians are formally granted admitting privileges – Chief of staff (medical director) – Chiefs of service (for specialties) in major hospitals – Committees: Executive, Credentials, Medical records, Utilization review, Infection control, Quality improvement

Licensure, Certification and Accreditation • Licensure – A hospital must be licensed to operate – State government oversees w/ own set of standards – Emphasizes physical plant compliance with: • building codes • fire safety • climate control • space allocations • sanitation

Licensure, Certification and Accreditation • Certification – Not mandatory (required only if a hospital wants to participate in Medicare and Medicaid—most do) – A federal function – Hospitals must comply with the conditions of participation—federal standards for health, safety, and quality – Currently revised conditions focus on quality of care delivered and the outcomes of that care

Licensure, Certification and Accreditation • Accreditation – Joint Commission or American Osteopathic Association – Accreditation is a private undertaking – It is voluntary for the hospital – It confers deemed status on hospitals – Deemed status is not conferred on nursing homes

Magnet Recognition Program • Designation conferred by the American Nursing Credentialing Center • Recognizes quality of care, nursing excellence, and innovations in professional nursing practice • Organizational environment helps attract and retain well-qualified nurses • Visionary leadership, empowerment, and collaboration create healthy work environments, attract qualified nurses, and improve patient care

Ethical and Legal issues • Arise because of – Complex circumstances requiring advanced technology – Life and death issues – Research and experimental medicine

Principles of Ethics Used as guides for ethical decision making. • Respect for others – Autonomy: empowerment – Truth telling: honesty – Confidentiality: privacy – Fidelity: duty and promises • Beneficence—benefit to the patient • Non-maleficence—do no harm; benefits > potential harm • Justice—fairness and equality

Legal Rights Challenges arise in treating incompetent and comatose patients – Patient Self-Determination Act of 1990 – Inform patients of their rights upon admission – Main rights: • confidentiality • consent re: medical care • information on diagnosis and treatment • right to refuse treatment • formulation of advance directives

Informed Consent – Right to make an informed choice regarding medical treatment – Right to obtain complete current information on diagnosis, treatment, and prognosis – Patient-centered care: organizational culture that promotes patient involvement, respects preferences, solicits patient’s inputs, and furnishes needed information and education

Advance Directives – Patient’s wishes regarding continuation or withdrawal of treatment when patient lacks capacity to make end-of-life decisions

Advance Directives – Three types: 1) Do Not Resuscitate (DNR)—no CPR 2) Living will – Patient’s wishes are indicated in advance – Main drawback: Limited in scope 3) Durable power of attorney – Patient appoints someone else to make decisions – Main drawback: patient’s wishes may be bypassed

Mechanisms for Ethical Decision Making • Ethics committees – Develop guidelines and standards – Address ethics issues – Multidisciplinary • Moral agent – Health care managers – Moral responsibility to put patient needs above those of the organization – Ethics transcends compliance with the law