Case Study

Phasing a Feasible Transition to Population Health

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From waxing to waning, a black-and-white image of a moon in all its phases. Photo by Axel Sandoval via Pexels.

The Challenge: Creating a feasibility plan to nudge a struggling Critical Access Hospital toward a more flexible, more sustainable population health model – while still serving the current needs of an aging community.

The Background: Our client was a Critical Access Hospital with $20 million in patient revenue and an average daily census in the single digits. The hospital building, which dated back to Hill-Burton days, was far too big and expensive for current needs, with an OR that was out of date, an ER that was frequently overcrowded, and an inefficient floorplan that created unnecessary staffing challenges. Adding to the challenge was a location that discouraged primary care visits for a population that had long since shifted away from the town center with its vanishing industrial base.

Demographically, our client served a no-growth, low-income county, with an aging population and rising incidence of chronic disease and obesity. Many residents commuted out of the county for work – especially to the west, where a large, deep-pocketed competitor offered multiple healthcare facilities.

There was one additional problem on the horizon: Our client was grandfathered as a Critical Access Hospital though it didn’t meet current standards for distance and terrain. With CMS signaling its desire to recertify all CAHs, there was no guarantee that this facility would continue to enjoy cost-based reimbursement and other benefits of CAH status.

While our client realized that the current situation was untenable, its strategic options were somewhat limited by its place in a system that was operating at full capacity. Throughout the service area, inaccessible primary care led to overuse of strained emergency departments by patients who could have been treated in a lower-acuity setting.

Our Work: All parties agreed that the current building was a financial black hole that sucked up resources and prevented the organization from transitioning to a more appropriate and sustainable delivery model. Without neglecting the county’s current health needs, our task was to find the right model for the long term plus an incremental, financially feasible path toward that goal.

We started with a deep dive on bed capacity (inpatient, observation, and swing) for the local hospital and its larger system. Concurrently, we looked at ED trends systemwide as well as primary care utilization. With five-year projections that merged “traditional” and “transformative” healthcare assumptions, we arrived at Phase I service levels that would meet current needs while moving away from inefficient operations.

Our Findings: Notably, our Phase I model cut licensed beds in half while adding efficiency to operational beds by flexing between private and semi-private rooms. We eliminated all operating rooms but converted one to a procedure room capable of supporting rotating specialists in cardiology, orthopedics, and general surgery. We also added one new bay to an expanded ED that will be co-located with a primary care “pod” for more efficient staffing.

Beyond the five-year horizon of Phase I, we outlined a gradual move to population health and community-based care. In Phase II, with low-acuity patients shifting into more appropriate ambulatory or hospital at home settings, inpatient and swing beds are eliminated, leaving just a few observation beds to support the ED.

Looking still further out, as payment models evolve and primary care becomes more robust (in line with our vision for Primary Care Done Right), Phase III comes into play. In this phase, a distributed PCMH network plus expanded use of virtual care has vastly reduced inappropriate ED utilization, so the fairly low volume of true emergency care is redirected to other facilities within the system. Without the need for an ED, patient beds can be eliminated completely – and that, in turn, creates space for community and population health services such as a food pharmacy, community paramedic, senior center, and mobile integrated health hub.

From the outset, the board was clear in its desire for a better facility, purpose-built to meet the community’s changing needs across all three phases. After researching population trends, commuting patterns, and highway plans, we recommended a nearby location with up to 15x the average daily traffic of the current facility. To support a shift to population health, the main campus will feature a large primary care medical home, with four additional PCMH extensions located throughout the service area.

The Outcome: Our plan was enthusiastically adopted by the client’s board, and architects have designed innovative floorplans that include co-located services for better staffing plus adjacencies that allow patients to be redirected to the appropriate level of care. Surgical suites are being eliminated, while minor procedures such as colonoscopies will be performed in a dedicated, flexible space.

Because the client has planned for gradual changes in its core services, the new building is designed to evolve accordingly. Flexibility is key: Even many of the walls are mobile so that interior spaces can be repurposed without major construction or renovation costs.

Within five years, this small community could have one of the most innovative – and sustainable – hospitals anywhere.

The Takeaway: In many communities, the business of healthcare will look significantly different in five years and fundamentally different in ten. The best feasibility plans will build in transition points for the shift to population health. Flexibility is key.

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