Impact of Change

The future of hospitalizations.


August 2022 – The Journal of Healthcare Contracting


By Pete Mercer

The effects of the COVID-19 pandemic will be felt in the healthcare industry for years to come. With hospital resources still strained and healthcare workers still stretched too thin, the industry has been reshaped by the greater ramifications of the coronavirus, specifically in terms of long COVID and chronic conditions.

According to the annual Impact of Change Forecast from Vizient subsidiary Sg2, hospital resources will face an even greater strain as the volume of patient acuity rises in the next 10 years. The report says that while inpatient hospital admissions may slow down, there will be an increase in the length of adult inpatient stays by 8% over the next decade. This is in part because of the ongoing symptoms experienced by those with long COVID, as well as a rise in chronic conditions in the last couple of years.

“While case mix varies by hospital, it is likely this combination of increased inpatient volume, patient complexity and length of stay may require healthcare organizations to rethink service line prioritization, service distribution and investment in care at-home initiatives,” Maddie McDowell, MD, FAAP, senior principal and medical director of quality and strategy for Sg2, said in a media release.

Restructuring hospital operations and protocols

Because of these shifts in the healthcare industry, hospitals are looking for ways to restructure their operations and investment resources to stay above water in a challenging market. Tori Richie, Consulting Director, Intelligence at Sg2, said, “We have seen an increased focus on the diversification of a systems portfolio. For example, we’re looking at product differentiation. How do systems offer different types of services than they have in the past?”

Richie went further, saying, “There’s been increased emphasis in systems operating at the top of their license. That’s a conversation we often hear directed towards providers. We want to make sure providers are working at the top of their license. But now it’s taking a more system-level approach to really ensure that complex patients are staying put and we are disincentivizing them from seeking care elsewhere.”

Another reason hospitals are looking to restructure is the new consumer dynamics. Richie says that not only have consumers gotten smarter about how they are accessing care, but they are no longer loyal to a single healthcare system like before. This creates new hurdles for systems where they can no longer rely on their traditional revenue streams and historical customer base.

Some ways that health systems are looking to navigate these challenges are the commercialization of clinical assets, creating healthcare incubators, leveraging partnerships, and investing in their communities. Like with anything, when the customers start to make different purchasing decisions, the providers will have to adapt to keep up.

Accessibility is another huge component in how hospitals are restructuring their efforts for the future. Richie explained, “Over the last couple of years, we are increasingly seeing access and equity being topics that boards are not just thinking about but starting to execute on. Our hope is that the message has resonated.”

Unfortunately, the challenges faced by larger healthcare systems in adopting digital health, such as remote patient monitoring or AI, are amplified in smaller and rural markets. “It’s important to remember a system’s ability or desire to restructure is highly variable, but what’s difficult to adopt in a large system is even more difficult in smaller and rural markets,” she said. “Those smaller systems are fighting an uphill battle.”

The rise of chronic conditions in a pandemic

In the last couple of years, clinician visits have been down for a few reasons. For some, clinics have either been completely closed or severely limiting visits due to a shortage of staff. For others, people have been avoiding the clinics for fear of getting sick. Patients that suffer from chronic diseases were left largely unchecked for a two-year period.

Describing the rise in chronic illnesses, Richie said, “Unfortunately, we are seeing an increase in chronic disease incidence across the board. A huge one is diabetes. We see increased incidence in diabetes and then the exacerbation of patients with those conditions to a larger degree. A large subset of diabetic patients did not receive the care that they needed over the last two and a half years due to just avoiding going into a physical clinic or trying to save money, as the cost of goods and services has risen.”

In fact, there has been a slight uptick in diabetes in COVID patients, according to a study conducted for Diabetologia*. This data shows that patients who have recovered from COVID are more likely to be diagnosed with a subsequent diabetes diagnosis or even lead to further exacerbation of something like advanced liver disease. Richie said, “Endstage renal disease is another big one. This is a community that’s really feeling that the burden incidence is growing. Also, advanced liver disease and chronic lung disease are major players here too.”

Because a number of patients haven’t gone to the doctor in the last two and a half years, patients who have received new diagnoses require a more complex suite of services to treat these conditions. This, of course, creates an additional strain on health systems and providers at an already complicated time for the healthcare industry.

Factoring in home care and telehealth

While there has been an increase in home care adoption by health systems, it’s a difficult service to scale. Also, for the areas that could benefit from the convenience of home care, it’s much more difficult to roll these services out because of workforce constraints that are being felt everywhere else in the industry.

For those that are looking to adopt a home care strategy for their patients, Sg2 recommends a portfolio approach to building care at home. “What we mean by a portfolio approach is to really evaluate the different areas in which you want to get involved and start small before you start to scale,” Richie explained. “We want you to be intentional about it. We want you to consider, does it make sense for you to go at this alone? Or should you find a partner?”

Richie said that Sg2 has seen some really great short-term and rapid success with organizations that recognized they didn’t have the right processes, systems, or workforce in place to effectively execute a home care strategy. “Instead, they’ve partnered with a third-party company to outsource home care services.”

One of the few silver linings of the pandemic is the emergence and surge in use of telehealth, increasing healthcare access across the board for patients that were concerned with visiting physician offices and hospitals. Richie said, “At the start of the pandemic, we saw everything shut down in person and everything shifted to that virtual environment. Since then, we’ve seen a fairly rapid reversion back to in-person health visits. Others have stayed virtual, like behavioral health. The majority of those typical patient-to-provider visits are occurring virtually now, which is a huge gain in access compared to before the pandemic.”

As for best practices in telehealth, Sg2 recommends a solidified reporting structure with dedicated leaders in place. Leading institutions in this area have both top-down and bottom-up feedback loops, which allows for feedback from all parts of the organization to learn what processes are working well, which processes aren’t working well, and what the organization should pivot towards instead.

Rathmann, W., Kuss, O. & Kostev, K. Incidence of newly diagnosed diabetes after Covid-19. Diabetologia 65, 949–954 (2022). https://doi.org/10.1007/s00125-022-0567

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