Finding the Right Equation for Hospital Capacity Management

Optimized Hospital Capacity + Workforce = High Quality Patient Care

When valuable resources are in a limited supply, we find the best ways to maximize them and reduce the chances of wasting them.  We do this with tangible resources like water and energy, as well as intangibles like time and influence.  For example, an idling car consumes fuel just like a moving car; but only one of those cars achieves its intended purpose of reaching a destination.

Healthcare delivery is resource intensive―and one where an inordinate amount of waste occurs.  Research from the Institute of Medicine suggests that over half a trillion dollars are wasted in the United States alone from sources such as unnecessary services, improper pricing, excessive administration and inefficient service delivery[1]. The United States spends more on healthcare than many other nations, but our outcomes fall well behind those other nations.  There are plenty of reasons as to why this occurs, including complex insurance structures, medication costs, and rapidly evolving, inconsistent regulations to name a few. 

And while the patient population grows, there is a simultaneous decline in the number of available care providers.  Over half of the current nursing staff will be reaching retirement age in the next few years with an estimated 1.2 million needed just to maintain current levels through 2022[2].

Most recently, the 2017/ 2018 flu season revealed hospital capacity management challenges.  By no means a trivial event, this strain hospitalized more people than ever recorded in history[3].  Hospitals were on diversion, some patients were boarded in “holding areas”, and all patients experienced heightened wait times[4].  It’s a sobering reminder that the systems in place are delicate and may be unable to quickly respond to rapidly changing needs.

There are two healthcare resources that can be both balanced and optimized to ensure that patients receive the care they need―hospital capacity management (beds) and workforce (staff).

Managing capacity by optimizing patient flow is recognized as the operational standard that health systems rely on to deliver timely care.  Transparency, visibility and communication are its primary tools.  Knowing where patients are, where they are going, and which beds are, or will be, free streamlines the tide of patients. The other component that impacts flow is workforce availability.  Having a bed for a patient in need is not enough―there must also be the appropriate staff to care for the patient. By working together more closely, capacity teams and staff teams can ensure that there are both beds and staff to deliver care.

The knowledge of staffing levels for patient units are often unknown by capacity teams.  They can see that a bed will be available but frequently do not know if that bed will be staffed without relying on manual communication.  At the same time, staffing teams are probably relying on outdated information when looking at census information.  They may be making staffing decisions for upcoming shifts based on information that is hours old.

While staff schedules are by design less volatile and established in advance, they are juxtaposed with the more variable flow of patients.  A successful hospital capacity management strategy helps reduce the variability of patient flow and adds a modicum of prediction for near-term capacity trending.  Hospital capacity management leaders like to follow the practice that requires discharge planning to begin at admission.  With that approach, there can be reasonable predictions on what a hospital’s capacity might be over the next 12 to 36 hours. Shared with staffing teams, this information can help them adjust staffing well in advance of situations where waste occurs from overstaffing, or conversely where patients encounter waits due to understaffing.  If staffing volumes could proactively and reasonably adjust in tandem with capacity to meet patient needs, what benefits would that provide?

Staff satisfaction –The cost of turnover is $42,000 per medical/ surgical RN and $64,000 per specialty nurse[5],and often volatile schedules where there is unforeseen overtime, last-minute reassignments or canceled shifts create challenging conditions. Reduction in volatility and advanced, justified notice of shift changes can help to keep employee turnover rates to a minimum.

• Productivity gains – If current rates of productivity remain as they are today, hospitals will begin operating at a loss by 2025[6]. How could small productivity gains have an impact?
  • The United States spent 3.6 Billion dollars on healthcare in 2017
  • Of that, 32% or 1.2 Billion Dollars are spent in hospitals[7]
  • 60% of that (650 Million) goes to hospital labor spend (see graphic)
  • And finally, 68% of the labor spend (442 Million) is for clinical staff. (see graphic)
    If productivity improvements can reduce that by just 2%, that’s a difference of 8.8 million dollars.  And this is strictly looking at the impact to hospitals. Healthcare overall includes delivery spaces that are not hospital based.  Gains will increase when settings such as post-acute and ambulatory are also optimized with proactive capacity and workforce management practices.
• Patient Outcomes – The most important metric of all. Patients who have access to the care they need through effective hospital capacity planning will have better outcomes.  An estimated 1.2 million patients annually face an 80% or greater increase in the risk of death because they spent 12 or more hours waiting for an appropriate inpatient bed. [8]
• Reduced waste and increased revenue – Adapting hospital capacity planning and staffing in a proactive manner means that both resources are optimized to reduce waste. And, this creates the ability to serve additional patients, allowing a health system to remain financially viable.

The next frontier of efficiency in healthcare is approaching capacity management and workforce management in a collaborative way; blending both to optimize capacity and clinical labor resources for optimum performance and increased access to care.

Ready to learn even more about hospital capacity planning?  Check out the stories in our Patient Flow Quarterly or Patient Flow Podcasts to read about / listen to health systems that are improving both capacity and patient care.

[1] https://www.vox.com/2014/9/2/6089693/health-care-facts-whats-wrong-american-insurance

[2] https://www.theatlantic.com/health/archive/2016/02/nursing-shortage/459741/

[3] http://www.businessinsider.com/2017-2018-flu-season-brakes-cdc-hospitalization-record-2018-2

[4] https://www.statnews.com/2018/01/15/flu-hospital-pandemics/

[5] https://www.afscme.org/news/publications/health-care/solving-the-nursing-shortage/the-cost-of-failure

[6] https://www.cbo.gov/publication/51920

[7] https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/highlights.pdf

[8] Singer, A.J. Thode, Jr, H.C., Viccellio, & Pines, J.M. (2011).  The association between length of emergency department boarding and mortality.  Academic Emergency Medicine, 18 (12), 1324-1329.