HOSPITALS WILL CONTINUE TO CHANGE, CONSULTANT SAYS

It's safe to predict that hospitals will change in the 21st century, Bradley Engel says.

Just how they'll change and what their role will be is anybody's guess, said Engel, a health-care consultant with William M. Mercer, Inc.'s Chicago office.

"The only thing that I can predict with a great deal of confidence is that they're going to change and continue to change," he said at Wednesday's "Moving Ahead with Managed Care" seminar, sponsored by the Southeast Missouri Business Group on Health.

As employers and insurers continue to demand increased value and controlled costs, "emerging care structures" will develop to deliver health care, Engel said.

Hospital administrators need to decide whether they want to be the agency that organizes the health-care delivery structure or act as vendors of services within that structure, he said.

As more and more insurers and employers move toward managed care, hospitals and physicians group will have to become competitive in order to attract patients and practitioners, Engel said. The question of who will shape the health-care delivery system is also up in the air.

"The concern about the perceived lack of relationship between what is spent (for health care) and the services received is nothing new," he said. What is new, Engel said, is that insurance companies and employers are willing to "buy from less than all providers" as they choose HMOs and other managed-care options.

Until recently, the hospital has functioned as a central location for a wide variety of acute-care services, he said. But the increasing cost of technology, decreasing amounts of capital and employers' desire to cut health-care costs is forcing further change as surgery centers and ambulatory care centers develop. Fewer people stay in the hospital, and their stays are much shorter, Engel said.

In addition, more and more physicians are opting to group together rather than work within the hospital structure, he said.

If the market has changed fundamentally and the payer and the government as a payer are offering a fixed amount of money and are negotiating for services, then there is going to be an entrepreneurial response to that offer, Engel said.

Physicians in private practice, hospitals and other agencies will be competing.

Hospital administrators will have to determine what changes they will need to make in order be competitive in that marketplace, Engel said. To operate within fixed-cost parameters, insurers, physicians and hospitals will team up to provide different types of services.

"It may not be a marriage made in heaven, but it will be a marriage of convenience," Engel said.

Whatever role they fill, hospitals will need to become "cost centers," providing competitively-priced services within the health care system, he said.

The hospital's role has already changed dramatically since the turn of the century, Engel said. Until the 1920s or 1930s, the hospital was "probably the same sort of institution that it was 100 years ago. Probably 200 years ago," he said.

The hospital's role was essentially to provide nursing care for chronically ill patients who couldn't afford to be treated in their own homes. Lack of technology meant very little acute care was done, and expectations for recovery were low.

"You went to the hospital as part of the process of preparing to die. You probably died there," Engel said.

In this century, advances in anesthesia made surgery more viable, changing its role and the hospital's role. In addition, advances in pharmacology meant medications were developed to treat long-term chronic illnesses like tuberculosis, and hospitals became a place for acute care.

The hospital's image also improved as it shifted from a place to die to a place to get well, Engel said.

Blue Cross came on the market in 1930, making health-care coverage available for the first time, and through World War II and the 1950s, employers offered health-care coverage as a way to attract and retain workers.