Managed Care Digest Series®

Key Findings

Hospitals Executive Summary

Hospital Demographics

From 2006 (4,911) to 2008 (5,148), the overall short-term, acute-care hospital count in the U.S. rose 4.8%. Small hospitals (those with fewer than 50 beds) drove this increase, as their count grew 12.7% between 2006 (1,662) and 2008 (1,873).
Not-for-profit facilities accounted for a notable 60.2% of hospitals nationwide in 2008. However, this percentage has steadily eroded in recent years, owing to a revived focus on the for-profit health care sector.

Hospital Medical Utilization

Hospital outpatient visits per day rose a substantial 13.1% between 2005 (187.0) and 2008 (211.5). During this period, the number of ER visits increased a comparatively minor 8.3%, to 69.5 from 64.2 in 2005.
MHS-owned facilities, which tend to be larger hospitals that often treat more complicated cases, had higher utilization rates (patient-days and occupancy rates alike) than non-MHS facilities in both CCU and ICU settings.
In spite of a sharp rise in ICU occupancy rates at non-MHS facilities between 2004 (52.2%) and 2005 (61.3%), these hospitals still had notably lower ICU occupancy than their MHS-owned counterparts, a trend that persisted in 2008.

Hospital Expenditures

In 2008, MHS-affiliated hospitals reported lower costs per admission than their non-MHS counterparts, a reflection of the cost efficiencies these hospitals have perhaps gained through economies of scale.
Hospitals with fewer than 50 beds averaged pharmaceutical costs of $1,375 per discharge in 2008, the highest, by bed size, by a considerable margin. Due to relative advantages in terms of access to technology and other resources, large hospitals are often able to achieve greater efficiencies in their pharmacy operations.

Hospitals in Multihospital Systems with HMOs

Hospitals in MHSs that own HMOs relied more heavily on outpatient sources of revenue to drive business. For example, outpatient revenue climbed 8.0% at hospitals in MHSs owning HMOs in 2008, to $193.9 million from $179.5 million the year before, accounting for nearly 40% of total revenue.
Between 2007 and 2008, total full-time-equivalent (FTE) staffing ratios rose for all U.S. hospitals, regardless of MHS affiliation. Over this time, the number of registered nurses (RNs) per occupied bed grew at hospitals in HMO-owning MHSs (to 2.21 from 2.09 in 2007) and at hospitals in MHSs not owning HMOs (to 2.21 from 2.10).

Inpatients with Chronic Diseases

Between 2006 and 2008, the numbers of cardiovascular disease-related (ACS, angina and atrial fibrillation) hospital inpatient cases fell, while the number of inpatient diabetes cases rose slightly.
Of hospital inpatient cases that treated patients diagnosed with atrial fibrillation in 2008, more than three-quarters (78.6%) were paid for by Medicare, the highest Medicare payer share, by disease state, by a considerable margin.
In six of 10 disease states, average length of stay per hospital inpatient case was higher at MHS hospitals than at non-MHS facilities.

The integrated system count continued its downward trend in 2009, as the number of such systems fell for a third straight year. Due to acquisitions and mergers among these systems, the number of integrated systems has dropped substantially between 2001 (574) and 2009 (453).
By comparison, the number of highly integrated systems in the U.S. grew to 329 in 2009 from 325 the year before, the highest such total since 2005 (331).
While physician practices (64.8%) and hospitals (16.2%) still continued to account for the vast majority of facilities in highly integrated systems in 2009, specialized facilities such as freestanding outpatient surgery centers (FOSCs) and diagnostic imaging centers (DICs) managed to report moderate growth. For example, between 2008 (277) and 2009 (298) the number of DICs affiliated with integrated systems in the top 20 MSAs increased 7.6%.

Integrated System Utilization

System hospital discharges accounted for a notable 62.7% of all discharges at facilities operating in 20 selected MSAs in 2008, a percentage that has increased steadily since 2005 (60.1%).
At 4.7 days, total average length of stay (ALOS) at system-affiliated hospitals in 20 selected MSAs was lower than the corresponding ALOS for nonsystem facilities in these leading markets (4.9).
Compared with their system-affiliated counterparts, nonsystem facilities reported lower average occupancy rates in 14 of 20 selected MSAs tracked in this Digest. In 2008, nonsystem hospitals in the 20 MSAs profiled operated at an average occupancy of 60.7%, versus 66.5% for hospitals belonging to systems.

Hospitals/HMOs in Systems

The number of hospitals owned by, or contracted to, highly integrated systems in the U.S. rose 6.8% in 2009, to 2,045 from 1,914 in 2008.
Average occupancy at system-tied hospitals rose 7.4 percentage points in the 10-year period between 1998 (49.6%) to 2008 (57.0%).
The percentage of HMOs that were a part of highly integrated systems was 18.0% in 2008, down slightly from 18.7% in 2007. Although this share has declined by more than three percentage points since 2004 (21.3%), most of this drop occurred between 2004 and 2005 (19.1%).

Medical Group Practices

The number of medical group practices tied to integrated systems grew slightly in 2009, to 3,241 from 3,159 in 2008. Since 2003 (2,647), the number of groups belonging to systems has increased a substantial 22.4%.
Although the number of single-specialty groups has climbed by 15% since 2004, that growth has slowed considerably since 2007.

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US.NMH.10.04.063 Last Update: August 2010