News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

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News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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With patient care shifting to outpatient clinics and home-based medical care, clinical laboratory managers should beef up outreach lab testing services

Declining patient volume is shuttering hospitals across the United States as hospitals lose patients to ambulatory care centers and home-based medical care. This trend directly impacts the pathologists and medical technologists who work in the clinical laboratories of these hospitals.

Empty Beds Indicator of Failing Hospitals

Most pathologists are unaware that, between 2008 and 2013, nearly 130 community hospitals closed. That left 4,974 hospitals operating in the United States, according to American Hospital Association (AHA) 2015 Hospital Statistics, which are based on data from the 2013 AHA Annual Survey.

It is no surprise that below-average occupancy rates are a common denominator of most failed hospital, noted the Medicare Payment Advisory Commission (MedPAC). The 14 hospitals that closed in 2013 had an average occupancy rate of 34%. This is lower than the 48% average occupancy rate of the hospital nearest to the closing hospital, MedPAC stated in its March 2015 report to Congress.

Going forward, there is no indication that the survival rate will improve for hospitals saddled with empty beds. Lakewood Hospital in Lakewood, Ohio is the latest example of a low-occupancy-rate hospital shutting its doors and shifting care to outpatient clinics. Earlier this year, in January, Cleveland Clinic announced plans to close the 200-bed hospital and replace it with a $34 million, 62,000-square-foot family heath center and emergency department.

“Healthcare in America is in the midst of an unprecedented transformation and the way care is delivered to patients is rapidly shifting,” said Toby Cosgrove, M.D., President and CEO of Cleveland Clinic, in a statement. “Our goal is to best meet the medical needs of the Lakewood community for today and the future.”

Toby Cosgrove, M.D.

Toby Cosgrove, M.D., President and CEO of Cleveland Clinic, announced that Cleveland Clinic’s plans to close Lakewood Hospital in Ohio and replace it with an outpatient family health center and emergency department. (Photo copyright of Cleveland Clinic.)

Rural Hospitals at Greater Risk

In rural areas, hospitals are closing at an even faster clip, with 33 closures since 2013, including two so far this year, according to statistics from the National Rural Health Research Program at the University of North Carolina. Pathologists whose pathology groups serve rural hospitals are watching how healthcare’s ongoing transformation is making it tougher for these institutions to attract patients.

In a Modern Healthcare article, reporter Melanie Evans points out that hospitals are seeing their bottom lines squeezed by “high deductibles, better technology, more case management, and shrinking reimbursement.”

Policy changes fueled by the Affordable Care Act, such as the impending implementation of the “two-midnight” rule under which Centers for Medicare and Medicaid Services (CMS) will consider an admission inpatient only if the patient’s stay crosses “two midnights,” also are taking a toll on hospitals still recovering from the Great Recession of 2007 to 2009.

Most clinical laboratory managers know that hospital admissions have been declining in recent years. Inpatient days fell from 179,043,949 to 169,860,722 between 2008 and 2012 while occupancy rates slipped steadily, from 77% in 1980 to 64% in 2008 to 60% in 2013, according to Modern Healthcare.

“Numerous markets across the country now have more hospital beds than they need,” Evans writes. “Given the intense pressure on hospitals to reduce costs, many healthcare organizations are driven to participate in narrow-network health plans as a way of outflanking the growing competition.”

Mergers and Acquisitions Are Probably Biggest Threat to Smaller Hospitals

Overcapacity—inpatient beds that go unused—is fueling a wave of mergers and acquisitions while also causing major academic medical centers to shed beds. As an example, the University of Pittsburgh Medical Center plans to eliminate 410 beds or roughly 8.5% of its capacity, Modern Healthcare reports. “For academic medical centers, the high cost of their education, research, and specialty services makes them less competitive as occupancy rates fall,” Evans writes.

Yet small hospitals in rural areas may be the most at risk. Community hospitals often have fewer options for cost cutting since clinical laboratories, pharmacies, pathology labs, and other departments already may operate with only a handful of employees, making reductions in overhead difficult. In addition, they may not be attractive acquisition targets.

“The stand-alone, community hospital is going the way of the dinosaur,” declared Angela Mattie, Chairwoman of the health care management and organizational leadership department at Quinnipiac University, in a USA Today article.

Angela Mattie

Angela Mattie, Associate Professor of Management and Chair Health Care Management & Organizational Leadership at Quinnipiac University School of Business and Engineering, predicts, “The stand-alone, community hospital is going the way of the dinosaur.” (Photo copyright of Quinnipiac University.)

Home Healthcare Adds Pressure to Hospitals

In the future, the financial pressures on hospitals may only increase as competition grows to include hospital-at-home care. reports that the “Hospital-at-Home” program, developed by the Johns Hopkins School of Medicine, provides “hospital-level care in a patient’s home as a substitute for inpatient hospital care and has been utilized by health systems across the country and is being covered by several health insurance plans as well.”

A yearlong study of the program’s effectiveness within a New Mexico health system showed the hospital-at-home program reduced costs by 19% and provided equal or better outcomes than for hospital inpatients. Dark Daily has written about the hospital-in-the-home care model and early successes recorded by such a project in Australia (2011) as well as the ongoing project in New Mexico (2012).

Like accountable care organizations and patient-centered medical homes, the model of hospital-in-the-home has the potential to reduce the total cost of a patient health encounter while contributing to improved outcomes. However, because these new care models are organized to keep patients out of hospitals, the cumulative effect will be to reduce the number of inpatients. In turn, this will mean a declining volume of medical laboratory testing in these hospitals. The growing number of closed hospitals in recent years is evidence that the trend of declining inpatient usage will be ongoing.

—Andrea Downing Peck

Related Information:

Lakewood Hospital Association, Lakewood Hospital Foundation and Cleveland Clinic Announce Partnership to Transform Healthcare in Lakewood

Hospitals Face Closures as A ‘New Day In Healthcare’ Dawns

Managing for Better Health: Fewer Patients Does Not Have to Be Recipe for Disaster

Hospitals Continue to Shutdown in Rural America

Taking the Hospital Out of Hospital Care

Hospital Closures Loom as More Patients Seek Care in Other Venues

5 Statistics About Hospital Capacity Over Time

John Hopkins’ Hospital at Home Program Improves Patient Outcomes While Lowering Health Care Costs

Rural Hospitals in Critical Condition 

Many Hospitals and Health Systems Report Flat or Falling Rates of Inpatient Admissions, a Trend that Causes Hospital Laboratory Budgets to Shrink 

Ratings Agencies Go Negative on Not-for-Profit Hospitals for 2014; Their Projections Signal Fewer Resources for Hospital-based Clinical Laboratories 

In 2013, Healthcare Experienced Largest Drop in Job Growth Since 1990 and Hospitals Are Shedding Jobs; These Trends Are Likely to Mean Less Resources for Hospital Laboratories

Australia’s ‘Hospital in the Home’ Care Model Demonstrates Major Cost Savings and Comparable Patient Outcomes

Two U.S. Studies Show Home-based Hospital Care Lowers Costs while Improving Outcomes and Patient Satisfaction