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Hospitals May Start to Disappear in New Health Care Age

June 3, 2020 | Staff Writers

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hospital-closedHospitals have not always been where people go to get their medical care. In the 18th century, hospitals were mainly were the sick were sent to isolate them when they had contagious diseases, or for the mentally ill. Most regular people had medical care at home.

Hospitals were built as medical care became more complex. In the 1900s, traveling to hospitals was slow so it made sense to build one in every town. These days, there are about 5700 hospitals in the US, but many are struggling to stay in business as more outpatient services are being ordered that do not involve hospital stays.

That is why more and more hospitals are consolidating and are joining a health system. That is starting to happen more as Obamacare is implemented.

Spending on care at hospitals is 30% of total costs of health care. That is far more than any other area of healthcare. It is not a surprise that the government is trying to limit care at expensive hospitals.

With innovative technologies, ambulatory surgical centers are now doing many of the more expensive procedures that once were done only in hospitals. These days, ASCs can do many surgeries cheaper, and many of them are owned by doctors, so the shift toward them is happening faster.

In response to the new financial pressure, some hospitals are being very aggressive in buying up these doctor practices. The hope is to make sure there is a strong supply of patients and to get higher revenues that come with doing procedures under the license of a hospital. This strategy tends to work well today, as insurers have been reluctant in the past to exclude local doctors and hospitals from networks locally.

Given what is happening in the industry overall, it is not a surprise that smaller hospitals are starting to disappear. However, what is not as easy to predict is that overall quality is starting to improve.

Distance used to be a serious barrier to getting medical care, but now it does not matter as much. If you want to fly from CA to NY, it takes only a few hours, and it does not cost nearly as much as staying for a few hours in an ICU.

The argument for increasing this trend is that if there are fewer hospitals with a higher volume, the quality overall should go up and the overall spending on hospital services will drop. Of course, this is not easy and the transition will be difficult, but once it is finished, many think that patients will not miss going to the hospital that was just down the street.

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