Overcapacity in Inpatient Business

In a recent conversation I had with Bill Anderson, Chairman and CEO of Medhost, he made this really insightful observation, “We have overcapacity in the inpatient business.”

I’m sure there are some exceptions in certain areas, but I believe that Bill is right about the healthcare system on the whole. We have overcapacity in the inpatient business. Unlike other businesses, where you want to drive more demand for a product or service, healthcare is somewhat unique in that we want to try and continue to decrease demand for healthcare services that a hospital provides.

This reminds me of all the people that say, “we need to cut costs in healthcare.” The numbers are clear that the US pays too much for the results we’re getting and that the costs of healthcare are a major problem for the US budget and for many large corporations budgets as well. It’s clear why we need to drive healthcare costs down. However, what they don’t say is that lower cost healthcare means that someone is getting paid less. This someone is often the hospitals.

One way you could look at all these efforts to decrease the cost of healthcare is that they are decreasing the demand for the inpatient business. If we have an overcapacity in inpatient healthcare already, these cost cutting measures will likely increase the overcapacity problem even more.

Those aren’t the only things that are driving down the demand for inpatient services. ACOs and value based care will drive the demand for inpatient services down even farther. High deductible plans will force patients to not do inpatient services that they would have done in the past. All of this will work to accentuate the overcapacity problem in inpatient healthcare.

How does a hospital combat the overcapacity problem? One idea is through digital differentiation. In some areas hospitals have a monopoly on services, but even they are competing with the hospital the next town over (even if it’s a 3 hour drive). However, the majority of healthcare organizations work in an environment that is incredibly competitive. Could unique digital services help a hospital be in more demand from patients than their competitors?

Hospitals are going to be around for as long as I’m alive. There’s certain services they offer that you can’t get other places. However, the demand for the services they offer is going to drastically change. How are you approaching this change in demand? Do digital services offer one solution to this problem?

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

1 Comment

  • Some hospitals are hotbeds of inefficiency. Poor scheduling of treatments, long delays in tests and an abundance of paper work in SOME can keep patients in hospitals much longer then they otherwise would need to be. EHR can help but it needs to be matched up by using its data to make the hospital more efficient. One Montreal hospital, for instance, is using analytics to get more patients through its OR’s for a given amount of staff and space.


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