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Strategic Change and the Built Environment of Health Care

By Ian Morrison

Editor's note: Renowned author and futurist Ian Morrison, PhD, understands the changes to the health care delivery system and how they affect the built environment. Morrison, who returns as moderator for this year's International Summit & Exhibition on Health Facility Planning, Design & Construction™, will present insightful messages at the PDC Summit and provide practical messages you can incorporate into your next project. Don't miss this exciting and important opportunity to learn about the future of our industry.

The health care delivery system is moving to a new future. The progress is evident everywhere. Hospitals are making big moves to align with their physicians and expand their range of offerings across the continuum of care. Hospitals are also anticipating a new set of incentives that reward value over volume, that will require higher levels of quality and consistency in performance, and that will transform the work of caregivers to encourage better coordination of care.

Much of the change has been spurred by the health reform agenda nationally and the provisions of PPACA (the national health reform legislation). But make no mistake, even if the entire health legislation was undone by Supreme Court challenges or tectonic political shifts in Washington, the health care delivery system is changing no matter what.

Why will health care delivery change no matter what, and what does it mean for those charged with leading the redesign and stewardship of the built environment of health care?

Key Drivers of Change

The provisions of health care reform shook up the box, to be true, but they reflect a stronger set of environmental drivers that are relentlessly changing health care:

• Affordability. While the increase in health care costs nationally is slowing in nominal terms to the lowest level of increase in decades, health care is still growing faster than the economy by 2 to 4 percent each year. More important is the disproportionate burden that falls on government (because of the rapid growth in Medicaid through the economic downturn and because of increasing number of Medicare eligibles). Similarly, individuals are being asked to pay a higher share of a rising health care bill through co-payments, deductibles and premium contributions, this is against a backdrop of declining incomes for all but the top echelons of the income distribution. Business has not been spared; they would argue that cost shifting from providers has exacerbated the costs of health care delivery for them and their patience is wearing thin, as they face global competitive challenges and lackluster demand. Making health care delivery more affordable is the central policy challenge of our age. If we don’t figure this out we could look like Greece on a grand scale, and the Germans won’t be bailing us out.
• Rising Uninsured. As health care becomes progressively unaffordable, small businesses and individuals who either lost their job or cannot afford COBRA or individual coverage abandon health insurance. A recent Gallup/Healthways tracking poll showed the highest uninsured rate among adults, 17.7 percent in December 2011, since the tracking poll started in 2008, when only 14.8 percent reported being uninsured. The only bright spot was a slight reduction in young adults aged 18-25 being uninsured (a result of PPACA provisions to allow parents to keep children on family plans until they reach 27). But even among this group, a full quarter of young adults remain uninsured. If health care reform is fully implemented, these numbers would be reduced but not eliminated, and if, as we might expect, the politics favor lower taxes and spending than anticipated by PPACA, the reduction in the number of uninsured by some 30+ million may not happen. No matter what, we will still have tens of millions of uninsured and they will be disproportionately concentrated in California, Texas, Florida, and throughout the South.
• Shift to Chronic Care. The disease burden is increasingly a chronic care disease burden. Even in Medicare, the research shows that the burden of chronic care accounted for most of the spending increase in 2000-2010. Hospitals tend to build and invest for acute care interventions: cardiovascular, orthopedic, oncology, and neurosurgery. These have been the historic moneymakers, and have commanded the lion’s share of physical capital investment. This may have to change.
• Shift to the Ambulatory Environment and the Home. Hospitals have seen the shift in the locus of procedures from inpatient to outpatient. This has been underway for a half century. But the combination of technology and economics will drive more and more care to the outpatient environment, including alternate site environments, and to the home. If we ever got the technology and incentives right, patients with congestive heart failure would be managed at home by their iPad, not hooked up to machines in an ICU.
• Massive Integration with Physicians. There is a cavalry charge of hospitals and doctors running towards each other, hoping to huddle together for warmth in the new future. It may all end badly, but the momentum behind this shift is huge and will have major consequences for the planning and design of facilities.
• Fierce Competition for Fewer Patients with Margin. As pressures intensify on Medicare and Medicaid because of the fiscal situation, as large employers relentlessly globalize, and as small businesses and individuals are increasingly in a retail, high deductible world for health insurance where they have significant incentives to forego care, there will be fierce competition both locally and globally for patients with generous insurance coverage that can deliver margins to providers. Corporate America is in no mood to continue to subsidize profligacy in the health care sector. Their patience is wearing thin. Most hospitals are planning for expansion and regional domination particularly in privately insured patients needing cardiovascular, orthopedic, oncology, and neurosurgery services. Maybe they can’t all win.
• A Culture of Accountability. There is a growing sense that the health care system will be held to account through measurement, monitoring, and transparent public reporting. This genie is not going back in the bottle, no matter what happens in Washington or the state capitals.
• Regional Variation. This is a big, diverse country. Despite national health reform, there will still be considerable regional variation across the country. And under many plausible political scenarios regional variation may increase, so check your local market environment, and be diligent in filtering the national megatrends through the lens of your regional situation.

Implications For The Built Environment

Big changes are underway and this makes for a challenging environment for those charged with designing and managing the built environment for health care.

Here are some takeaways:

• Design for Flexibility. Even futurists have no clue what is going to happen next, so the best advice is be flexible. When you are building massive edifices, that is not particularly comforting, so designing in flexibility is a key starting point.
• Think about Portfolios. The built environment portfolio is expanding. It is no longer just about bed towers and operating facilities. Physicians have to be integrated, physically as well as organizationally. Alternate site assets need to be developed and managed. Regionalization strategies may bring small satellites in your portfolio.
• Play Out Alternate Scenarios. Testing your master plans against alternate political and market scenarios will help you stress test your assumptions. But in the final analysis you have to pick a path, and design for contingencies.
• Support Clinical Redesign. What is the ideal built environment for a reformed health system that focuses on highly integrated, coordinated chronic care? Kaiser has developed some interesting models to look at, but we need a wide range of alternatives to pursue.
• Identify High Yield Features. Depending on the organization’s strategy, there may be built environment elements that have particularly high yield. For example, a large children’s hospital with national and international referral aspirations may identify that residential facilities for parents and families would be a high yield feature. Similarly, a large integrated system may see high quality 50 bed step down units as a key part of their regional hub and spoke network. And they may not want to own them; they may be looking for someone to develop and run them in strategic partnership.
• Bring Your Long Vision to the Strategy Table. Planning and design professionals are trained to take the long view. You need to be at the strategy table and bring that perspective. In a time of high change, hospital leaders need all the help they can get.

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