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Why Capacity Management Is Critical To Hospitals’ ACA-Era Success

December 17th, 2012

If you ask any hospital executive to talk about their top five priorities, he or she will likely reply that reducing expenses and increasing efficiency is one of them. Interestingly, though, a large percentage of these executives consider effective capacity management to be a lesser priority, when in fact it is one of the bigger levers that can be pulled to get cost out, while also having positive impact on physician relations, the patient experience, and quality of care. And with an estimated 32 million new patients entering the system under the Affordable Care Act, the organizations that get their operations in order now will be positioned not only to handle any undesirable consequences, but also to capitalize on strategic growth, versus being a victim of what comes in the door.

Recent survey data shows 54 percent of hospital executives report that existing patient flow feels congested and that they expect their organizations to grow over the next five years. Yet, nearly the same percentage (48 percent) say they are comfortable with their current number and mix of beds. One problem is that many organizations aren’t in the habit of understanding the root causes of bottlenecks that occur in daily operations: surgical schedules blocked but not utilized; delays in appointment times that equate to loss in market share; and clinicians swamped one day and standing around the next. Understanding these questions are a logical first step in building a foundation to both accommodate and ultimately seek out the right kind of future growth.

About 70 percent of U.S. hospitals don’t make the best use of existing resources, including physical space, infrastructure, staff, and equipment, according to a GE Healthcare Performance Solutions analysis using the Institute for Healthcare Improvement’s Flow Diagnostic tool. This essentially means that hospitals “feel full” when they aren’t — symptoms of congestion that potentially lead to costly mistakes like building new facilities or opening expanded treatment space that may not be necessary. Most experts estimate individual hospitals are missing out on between $2 million and $20 million in cost opportunity, and a significant percentage of this can be achieved through efficient capacity management.

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