Maryland hospitals saw more empty beds than usual this spring and summer, raising concern among industry executives. Some hospital executives cautioned that the sharp drop might not be permanent, however, and say it is too soon to conclude that managed care and health care reforms are to blame.
Statewide, occupancy dropped 5.1 percent for the quarter that ended June 30 compared with the same period last year, prompting at least two hospitals to lay off employees. Fewer patients, shorter stays, and drops in emergency room use were among the reasons. For the period, Maryland hospitals were 67.1 percent full on average.
Many hospital officials reported similar drops in July and August in telephone interviews. Complete figures won't be available until after the quarter ends Sept. 30.
Occupancy rates reflect both how many patients are admitted to a hospital and how long they stay. Ever shorter hospital stays are a major factor in the lower occupancy rates.
The occupancy rates directly affect hospital revenues and billing rates. Under the state's regulatory system, hospitals can pass on the cost of empty beds for some time by raising their billing rates. But eventually the system forces them to close the beds or forgo annual rate increases.
In the year that ended June 30, "We saw a steady decline based on, as we expected, more and more care being provided outside traditional hospital walls," said Nancy M. Fiedler, senior vice president for the Maryland Hospital Association.
The MHA and officials of several hospitals downplayed the losses in interviews, saying it was too soon to call the falloff a trend, and few hospitals appear to have activated a contingency plan.
"What accounts for the latest blip -- and it could just be a blip -- is being discussed here," said Ms. Fiedler of the MHA, noting that Maryland's occupancy rate is still better than that of hospitals in the rest of the country.
Others attributed it directly to managed care, citing a surge in HMO membership this spring, and predicted health care reform could prompt further drops.
Managed care, through health maintenance organizations or other methods, seeks to control costs in a number of ways, including minimizing patients' hospital stays by using less costly alternatives.
"Managed care is forcing [the hospitals] to discharge patients earlier and earlier and do more and more on an outpatient basis," said Robert G. Vaughan, senior consultant for MacLeod Associates, health care consultants in Hunt Valley. "So, the same number of patients is still being treated, but they are being treated more quickly and at a slightly lower cost per patient," he said.
Mr. Vaughan predicted there could be "a real snowball effect" if President Clinton's health care reform program promotes more managed care. "Then, hospital occupancy will drop even more."
Yesterday, citing a reduction in the length of stay for patients, Franklin Square Hospital Center said it would lay off about 35 employees next week to reduce costs.
The hospital in eastern Baltimore County said it would also eliminate 45 other openings, for a total savings of about $4 million a year. Franklin Square has about 2,500 employees.
Charles D. Mross, president of the hospital, said the cutbacks were needed because doctors and insurance companies are reducing the length of stay for patients. The average stay was 5.6 days a year ago, but is down to 4.9 days now, he said.
For the 12 months that ended June 30, occupancy in Maryland hospitals dropped 3 percent. The figure was largely influenced by the spring quarter. Hospital stays often drop in warm weather months, but this year's drop was steeper than expected at many institutions, including 20.6 percent at Frostburg Hospital in Garrett County, 14.6 percent at Church Hospital in East Baltimore and 12.8 percent at Harbor Hospital Center in South Baltimore.
Patricia Stevens, Frostburg Hospital assistant administrator, said the decline at her hospital reflects less emergency room activity and more outpatient services and home care. "Patients are being taken care of more in the community," she said.
Church and Harbor are among the hospitals opening or expanding extended care units or other facilities to compensate for fewer acute care patients. Hospitals also have opened for-profit subsidiaries and their own outpatient or home-care services to capture some of the business created by the move to alternative sources of health care.
At least two hospitals, Church and Francis Scott Key Medical Center, which is part of the Johns Hopkins Health System, attributed losses to last year's decision by state regulators to reduce Medicaid funding for detoxification programs.
NB Church Hospital laid off about 100 people through early retire
ments in March in response to the closing of its detoxification unit, said Jan Emerick, Church Hospital spokeswoman. She said the drop in admissions resulted in a revenue loss of less than 5 percent. It also has restructured its staffing to better respond to swings in volume or patient needs on a daily basis, she said.
In some cases, hospital statistics reflected gains and losses.
Admissions to the Greater Baltimore Medical Center were down 2 percent in July and up 2 percent in August. But occupancy was off 1.1 percent in July and 7.4 percent in August.
It's possible for admissions to be higher and occupancy lower because many patients can be sent home before midnight, when occupancy is measured. Nevertheless, GBMC ended a record-breaking year for admissions in June, said hospital spokeswoman Vivienne Stearns-Elliott.