Fluctuating Demand for Hospital Beds

By Cynthia Hayward
BACKGROUND
Originally printed in the
SpaceMed Newsletter
Winter 2015
www.spacemed.com

Starting in the 1980s, healthcare strategists and policy experts encouraged

hospitals to reduce their surplus inpatient bed capacity in response to declining admissions, use rates, and lengths of stay as a result of the advent of Medicares diagnosis related groups (DRG) payment methodology in
the public sector and managed care in the private sector. Hospitals responded to changes in demand by shifting their resources. Between 1980
and 2003, community hospitals in the United States took 175,000 inpatient
beds out of service an 18 percent reduction through downsizings,
consolidations, and closures. At the same time, skilled nursing and subacute care facilities were developed to provide a less expensive and less
resource-intensive alternative for patients requiring a lengthy recuperation.
Home health agencies also proliferated. Since 2003, the number of hospital
beds has declined less dramatically a reduction of another 12,700 beds.
Although, nationally, inpatient admissions rose from 1992 to 2012, both the
rate of inpatient admissions per 1,000 population and the average length of
stay have declined to an all time low resulting in an overall decline in the
demand for inpatient beds.
CURRENT TREND

Hospitals today are at a crossroads that few anticipated years ago. In addition to reducing the number of uninsured Americans, a goal of the Affordable Care Act is to manage a populations health across the care continuum,
keeping patients healthy through preventive and primary care services, and
out of acute care facilities whenever possible. As healthcare transforms
from a hospital-centric to a population-centric model, supported by sophisticated diagnostics and minimally-invasive treatment, inpatient utilization may
continue to decline despite the needs of aging baby boomers and the newly
insured.
FACILITY IMPACT

U.S. healthcare providers have removed significant numbers of inpatient

beds from service over the past decade and minimized investments in upgrading and renovating their existing beds. However, in many parts of the
country, inpatient units are deteriorating and do not meet contemporary
standards relative to room size, support space, patient and family amenities, and appropriate infrastructure. When a replacement hospital is
planned, total bed need should be carefully scrutinized and acuityadaptable patient rooms planned to accommodate varying patient populations over the life of the facility. When bed expansion is planned on an existing campus, providers should develop a strategy to upgrade, and potentially

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Fluctuating Demand
For Hospital Beds
Continued

replace existing beds in conjunction with new bed expansion. In this case it
is advisable to build as many beds as financially feasible, such that if the
total new bed need is overestimated, replacement of existing beds can be
accelerated. The need for patient observation space should also be addressed as part of overall inpatient bed expansion and renewal.
Cynthia Hayward, AIA, is founder and principal of Hayward & Associates LLC.

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