Thursday, December 15, 2011

The Future of Hospitals

It may seem a strange principle to enunciate as the very first principle in a Hospital that it should do the sick no harm.

Florence Nightingale (1820-1910), Notes on Hospitals (1859)

Hospitals in their present form will not disappear, but their role will change dramatically.


December 15, 2011 - A world without hospitals as they now exist is an improbable thought. Yet it is well underway.

The health system is shifting from expensive hospital specialist-dominated care to more affordable primary care and to home-based self-care. General hospitals will, of course, continue to exist as bedrock large employers in most communities and as providers of the last resort, but they are shedding their brick and mortar mentalities and facilities.

Powerful Centrifugal Forces

Powerful centrifugal forces are pulling patients out of hospitals and ERs. These forces are economic,sociological,and technological. They are turning hospitals inside out. They are shrinking centralized facilities and enlarging outpatient outreach activities.

The forces are focusing on cardiovascular and oncological diseases. They are being unfurled under the health reform banner, but there is more to it than that. It is survival of the fittest and the biggest. Government at all levels is driving change. Hospitals are moving aggressively into outpatient and retail arenas. Large and small employers are seeking refuge from high costs; physicians are searching for autonomy; and consumers are questing after lower costs, more convenience, more empowerment, more personal care.

Fear of hospital-acquired infections and other hospital safety hazards are factors as well. All parties are focusing on simpler solutions to reduce complexities of care. People want more care outside of institutions. They prefer to walk-in rather than be carried-in for care.

Christensen's Disruptive Innovations

Here's how Clayton Christensen, a Harvard Business School professor who wrote The Innovator’s Dilemma in 1997 and who coined the term “disruptive innovation,” describes events. Christensen considers himself an innovator. He co-founded Innosight, the Innosight Institute, Innosight Ventures, and Rose Park Advisors and Venture Capital Group.

Christensen views the fundamentals and sequence of transformational events this way.

• Its essential change elements are: 1) investments in diagnostic technologies that simplify care outside hospitals, e.g. ultrasound in hands of doctors in their offices; 2) business model innovations, such as retail and walk-in clinics; 3) creation of more integrated fixed-fee health systems along the lines of Intermountain Healthcare, Kaiser, and Geisinger, while phasing out of variable and traditional fee-for-service care.

• A transition to simpler care aided by technologies and provided by less sophisticated personnel outside of hospitals – in doctors’ offices, outpatient settings, retail clinics, and in patients homes using telemedicine monitoring and communication.

In the Christensen scheme of things.

• Doctors would relinquish simpler tasks to allied health professionals.

• General hospitals would convert to integrated systems.

• Payers would merge with providers.

• HSAs with high deductible plans would gain ground, capturing as much as 50% of health plan market by 2014.

• Patients would take more responsibility for their own care – self-care would go mainstream.

According to John Peabody, MD, PhD, and Vice-President, of Sq2, a future- focused health care consulting firm, much of what Christensen is predicting and advocating for hospitals, is already taking place.

Peabod's Forecastes for Hospitals

From 2011 to 2021, Peabody projects for hospitals:

• Inpatient loads to drop 3% while outpatient work will increase 32%.

• Cardiovascular and cancer inpatient care, hospitals’ two profitable service lines, to decrease by 27% while outpatient care will go up by 19%.

• Outpatient work for pneumonia, the scourge of the elderly, to spike by 23% while inpatient care for pneumonia to plunge by 48%.

• Hospital outpatient outpatient and ambulatory visits to increase by 24% and 40% respectively.


1. Managed Care, A Conversation with Clayton Christenson, DBA, January 2010.

2. Sg2’s Disease-Based Forecast Predicts Dramatic Increase to Outpatient Health Care Services over the Next Decade, January 5, 2010.

Tweet: Health system will shift from costly hospital care to less costly outpatient care provided by integrated systems over the next decade.

1 comment:

beauty said...

I could tell that we’re on the same interest and obsession. Good to know someone I could share my ideas. Looking forward to know and learn some more from you. I'll be glad to share my own thoughts to you soon. Thank you for sharing such valuable articles. More power!