Managing patient volumes and maximizing efficiency are the two focus points when planning a medical facility.

Hospitals and health systems are facing an era of uncertainty and disruption. The increasing number of high-deductible health plans and plan features that increase costs for consumers has caused patients to delay or avoid medical care. For many hospitals, there has been a shift in volume from inpatient to outpatient care, caused in part by a greater emphasis placed on cost containment and reducing unnecessary admissions. Outpatient volumes will continue to grow in the future, and planning for this shift is paramount to a hospital's and healthcare system's success.

Little Margin for Error

A hospital has complex patient circulation patterns and is in constant use. An inpatient environment must provide 24-hour care that involves a high level of complex medical services. Successful hospital planning must consider patient volumes over the long term and create a facility that supports the intensity and function required over what is often many decades of useful life. Outpatient or other service expansions could be completed in the hospital, on campus, or in one or more remote locations.

Hospitals do not want to pay facility costs for thousands of square feet that are not supported by patient revenue. On the flip side, hospitals cannot afford to under-build and realize later that they need more space, which means additional unplanned expenses. Any space that is constructed or modified must function efficiently.

Flexibility in Planning

The key issue is determining a facility's space needs both for when patient volume is high and when it is low. Many tertiary centers face capacity issues because of large referral volumes, changes in insurance coverage, and new referral patterns. At the same time, many small rural and critical access facilities are facing declining populations and subsequent patient volume. To address these types of needs, a new generation of flexible facilities is needed – facilities designed to grow in size with future inpatient needs, or those that can be flexibly used with declining volume, such as ambulatory care centers.

Strategies for all Scenarios of Space Planning

The strategies available to a hospital that is trying to match its space needs to projected patient volumes depend on a number of factors:

  • lWhether the hospital is just trying to maintain efficiencies with the physical plant it currently has;
  • lWhether the hospital is building to address future needs; and
  • lWhether the hospital has to address declining patient volumes.

Scenario 1: Continuing with an Aging Physical Plant. If a hospital is to maintain efficiency with its current physical plant, it should stay ahead of the curve – undertake analysis to see where efficiencies can be driven in the current system. This can be done at a system level or at a departmental level, often with the use of internal process improvement teams or external consulting groups. There may be a myriad of problems, but the key is to take a focused approach and address the major issues. It is important not to become resigned to the current reality, but rather to look forward and determine how to improve efficiencies.

For example, if a problem involves bed capacity, rather than just making sure that a transfer process is working correctly, it would be better for management to examine all processes and procedures involved to see if the overall model is functioning properly.

Some questions to ask in this situation:

  • lIs the patient at the right level of care?
  • lAre patients discharged in a timely manner?
  • lDoes a lot of bed shuffling happen?
  • lDo departmental transfers occur in a timely manner?

As another example, if the issue involves surgical capacity, rather than simply focusing on reducing turnover time (which can help), it is necessary to examine how the entire schedule is managed to balance physician preference against efficient use of resources. The objective should be to create an operationally viable system over the long term .

 Scenario 2: Building Anew to Meet Care Needs. Decisions about space planning must be multifaceted and take more into account than simple volume and utilization. Adjacencies, efficient utilization of current resources, and facility and service line strategies also factor into decisions to rebuild or remodel a space. Once a hospital has determined that it must add capacity, construction can take years. In the meantime, a short-term plan is needed that builds more efficiency into the current system, addressing current physical constraints and allowing for capacity until that new space is available. Combination short/long-term space planning should provide a clear road map for operational changes and space requirements.

Scenario 3: Getting Creative in the Face of Declining Volumes. Hospitals facing a decline in patient volume are facing a different set of issues. They may be deciding whether to maintain staffing levels or questioning whether to keep entire programs or service lines because they are not viable. It may be necessary to get creative, through staff cross-training or reductions in hours of operation.

The emphasis all too often in these cases can be on how to manage declining areas as opposed to determining which types of services would help the facility grow and become more viable. A facility may need to shift to an ambulatory strategy and become more of an outpatient service provider. It might partner with another healthcare facility on certain services. Rather than focusing on those declining areas, consider these options: Are there new services that can be offered, or unused space that can be utilized differently, such as for subacute, medical office, or outpatient services?

Steps to Analyze The Facility's Status

Whatever the facility's current situation, gaining a clearer understanding of opportunities in the market and at thefacility is paramount.

  • lConduct an overall market study and analyze the clinical needs of the population in a hospital's market. When building to address future needs, hospitals must undertake market analysis, which examines demographics, use rates, and other factors. While most facilities have robust planning activities in some form, they often lack integration with financial, operational, and facility factors. Key points to review include the following: use rates and projections by service line; departmental impact of volume increases/reductions; capacity analysis to accommodate growing services; acuity evaluations by key diagnosis groups (e.g., are more intensive resources needed?); Payor mix impact on strategic priorities; and review of geographic reach and referral patterns.
  • lCouple these with an operational audit – a systematic review of effectiveness, efficiency, and economy of operations – undertaken by an unbiased third party. An operational audit encompasses a review of operational policies and achievements related to organizational objectives. These are sometimes incorporated with throughput initiatives or master facility plans. As part of this step, a facility will audit the data from the marketing studies and analyses from step 1 and compare that data to operational realities to determine the most efficient way of building new space. The following are examples of operational factors to consider:
  • Will the new space work for staffing ratios and nurse assignments?
  • Should units be split because there are too many beds for staff to handle in a particular area?
  • How do we prioritize efficient use of space against efficient use of staffing resources? (e.g., flipping rooms in the OR)

Sample model for prioritizing space plans:

  • lConsider how other hospitals are handling similar situations. Innovation in hospital management can be difficult, as it takes time for reimbursement and financial models to adapt to new models of care management. As such, it often pays to see what similar facilities have successfully leveraged in their creative development and use of space. Look to key strategies and see if they can be adapted to your facility or system. For example, review the following:
  • Hub and spoke models for ambulatory care;
  • Development of referral and transfer centers; and
  • Adaptive use of space (e.g., flexible inpatient space that accounts for acuity, multispecialty clinics, etc.).
  • lUtilize experts to help examine different growth and operational models and see how operational efficiency can be driven through space planning. In terms of driving efficiency and improving patient flow, it is wise to reassess and evaluate key benchmarks such as utilization, turnover, throughput, and productivity. These markers should be modeled against proposed new care delivery practices and space plans to create an anticipated operational and financial ROI for new strategies.

Way Forward

Hospitals are facing a myriad financial and operational challenges. In most cases, profit margins are thin and bed management is essential. When trying to plan space needs against patient volumes, hospitals must leave no stone unturned in determining whether they should re-evaluate their care model, construct new physical capacity, or invest in a particular service line's growth.

This article is based on a white paper by Soyring Consulting.


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