Tony Chen at the Hospital Impact blog has a great post on the tsunami of recent deals in health care. These deals are changing the health care industry. Outsiders in the form of private equity investors and insider hospital M&A are gobbling up failing organizations or those weakened by market changes for which they have ineffective responses. Newly recast ventures that are successful will reward effective change which will drive additional change.

The change required is not the simple head count reduction, and trying to figure out how to do the same old thing with fewer people. What is needed are fundamental changes to the way that care is delivered. These are the changes that will reduce length of stay and improve both patient safety and outcomes. Hospitals today are stuck between a rock and hard place - the rock is the inexorable reduction in reimbursement, and the hard place is the increased visibility and transparency surrounding patient safety and outcomes.

Here are a couple quick examples of the change I'm referring to. Almost every hospital boards patients in the emergency department (ED) to a greater or lesser degree. These patients, shuffled off to out of the way halls awaiting admission, are cared for by off-service nurses (ED nurses) at ever worsening - and sometimes hair raising - nurse to patient ratios. A few heretical hospitals have started boarding those patients awaiting beds up on the floors, on their service. Consequently, each nursing unit could have 1 or 2 extra patients - receiving appropriate care (because they're in the appropriate unit) and at a nurse to patient ratio that is only slightly impacted by a couple extra patients. To someone from another industry this makes admirable sense. From my peers, I've heard excuses ranging from “it's jut not done” to “we can't do it because of fire codes (or department of health regs, etc.)”.

The other example is variable acuity care delivery. Hospitals are organized into units that are specialized based on the level of care, nursing vigilance, therapies that can be delivered, and staff training. This regimented organization was used in manufacturing 20 years ago. Like manufacturing in general, manufacturing healthy patients is not a steady state process. Consequently, census in units varies wildly from unit to unit and day to day. Some units are habitually over capacity, and represent the most common patient flow bottleneck found in hospitals - those over capacity units are critical care units with patient monitoring. Variable acuity units are an analog to manufacturing clusters or pods where the physical environment is quickly modified to adjust to new requirements. Rather than transferring patients because of needed patient monitoring, or a more sophisticated therapy, those patients are kept in their unit and those resources are brought to them. Monitoring patients outside traditional monitored units is a growing trend - half of the telemetry transmitters in hospitals are used on non-cardiology patients. Implementing variable acuity care units is not easy; it requires some pretty fundamental changes.

So, how do you accommodate falling reimbursement and demands to improve patient safety and outcomes? The opportunities to improve operations are many, almost as many as the excuses used to avoid substantive change. As private equity and M&A roils the health care industry, smart people will ask the hard questions with increasing fequency, and change will come.

Pictured right, “resistance is futile.”