Why one-third of hospitals will close by 2020
For centuries, hospitals have served as a cornerstone to the U.S. health care system. During various touch points in life, Americans connect with a hospital during their most intimate and extraordinary circumstances. Most Americans are born in hospitals. Hospitals provide care after serious injuries and during episodes of severe sickness or disease. Hospitals are predominately where our loved ones go to die. Across the nation, hospitals have become embedded into the sacred fabric of communities.
According to the American Hospital Association, in 2011 approximately 5,754 registered hospitals existed in the U.S., housing 942,000 hospital beds along with 36,915,331 admissions. More than 1 in 10 Americans were admitted to a hospital last year.
Hospitals make a substantial imprint on local economies. In many communities, hospitals represent one of the largest employers and economic drivers. Of the total annual American health care dollars spent, hospitals are responsible for more than $750 billion.
Despite a history of strength and stature in America, the hospital institution is in the midst of massive and disruptive change. Such change will be so transformational that by 2020 one in three hospitals will close or reorganize into an entirely different type of health care service provider. Several significant forces and factors are driving this inevitable and historical shift.
First, America must bring down its crippling health care costs. The average American worker costs their employer $12,000 annually for health care benefits and this figure is increasing more than 10 percent every year. U.S. businesses cannot compete in a globally competitive market place at this level of spending. Federal and state budgets are getting crushed by the costs of health care entitlement programs, such as Medicare and Medicaid. Given this cost problem, hospitals are vulnerable as they are generally regarded as the most expensive part of the delivery system for health care in America.
Second, statistically speaking hospitals are just about the most dangerous places to be in the United States. Three times as many people die every year due to medical errors in hospitals as die on our highways — 100,000 deaths compared to 34,000. The Journal of the American Medical Association reports that nearly 100,000 people die annually in hospitals from medical errors. Of this group, 80,000 die from hospital acquired infections, many of which can be prevented. Given the above number of admissions that means that 1 out of every 370 people admitted to a hospital dies due to medical errors. So hospitals are very dangerous places.
It would take about 200 747 airplanes to crash annually to equal 100,000 preventable deaths. Imagine the American outcry if one 747 crashed every day for 200 consecutive days in the U.S. The airlines would stand before the nation and the world in disgrace. Currently in our non-transparent health care delivery system, Americans have no way of knowing which hospitals are the most dangerous. We simply take uninformed chances with our lives at stake.
Third, hospital customer care is abysmal. Recent studies reveal that the average wait time in American hospital emergency rooms is approximately 4 hours. Name one other business where Americans would tolerate this low level of value and service.
Fourth, health care reform will make connectivity, electronic medical records, and transparency commonplace in health care. This means that in several years, and certainly before 2020, any American considering a hospital stay will simply go on-line to compare hospitals relative to infection rates, degrees of surgical success, and many other metrics. Isn’t this what we do in America, comparison shop? Our health is our greatest and most important asset. Would we not want to compare performance relative to any health and medical care the way we compare roofers or carpet installers? Inevitably when we are able to do this, hospitals will be driven by quality, service, and cost — all of which will be necessary to compete.
What hospitals are about to enter is the place Americans, particularly conservative Americans cherish: the open competitive market. We know what happens in this environment. There are winners and losers.
A third of hospitals now in existence in the United States will not cross the 2020 finish line as winners.
David Houle is a futurist, advisor and speaker and Jonathan Fleece is a health care attorney, advisor, and speaker. They are the authors of The New Health Age: The Future of Health Care in America.