The fundamental assumptions underpinning traditional acute care strategy are becoming increasingly weaker—which means current hospitals aren't suitable for future market demands.

To achieve acute care sustainability, organizations have to shift focus from labor, supply cost, and clinical variation to the challenge with the greatest savings potential: fixed costs.

This white paper shares tactics for significantly restructuring fixed costs by reallocating services across the system and rightsizing excess inpatient capacity.

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1. Establish a unified acute care service distribution strategy

A lack of cohesion across the enterprise results in a host of problems, most notably intra-system competition between local leaders, physicians, and staff. A fully integrated strategy helps to avoid this discord. Read more

2. Consolidate by service line or acuity

There are a host of problems that can be solved by eliminating unnecessary duplication, ranging from decreased operational efficiency to higher costs per case. We've identified two primary models for successfully eliminating unnecessary duplication: consolidation by service line and consolidation by acuity. Read more

3. Form multi-provider clinical partnerships

Even as service rationalization stabilizes the core business, health systems must continue to protect service access for their patients. To do that, organizations must first determine the most appropriate services on which to partner. Read more

4. Redirect patients to the appropriate sites

Following service redistribution, organizations need a contingency plan to redirect patients to the appropriate sites. Without strategies to send patients to the correct sites, the benefits achieved through service rationalization will be overridden by patient confusion. Read more

5. Ensure flexibility in acute care site design

Many institutions struggle to balance the necessity for high occupancy with the need for capacity to meet unpredictable surges in demand. Organizations focused on rightsizing fixed costs must introduce flexibility into the design of acute care sites. Read more

6. Gradually reduce bed capacity

In some situations, adding flexibility is inadequate to solve a facility's problem of excess space. Some organizations, such as Banner Health, have turned to gradual bed reduction to slowly rightsize facilities' fixed costs. Read more

7. Convert hospitals into ambulatory facilities

When incremental change is not enough, health systems must make more significant changes, many of which involve reconfiguring the inpatient space altogether to better suit a community's needs. Read more

8. Hand over real estate management to a third party

Leasing property to real estate investment trusts (REITs) is already commonplace in the hotel and airline industry, and it is starting to emerge in the acute care space as well. Read more

9. Open a micro-hospital

For organizations trying to enter new markets, a full-scale hospital is often a large and risky investment, while freestanding EDs and urgent care centers do not have the range of services necessary to solve all patients' health needs. Read more

10. Try the "hospital-without-beds" model

Technology has made it possible for many previously inpatient procedures to now be performed on an outpatient basis, and elivering an improved patient experience is increasingly a priority for many leaders. Enter the hospital-without-beds. Read more

11. Substitute acute care with alternative methods when necessary

Many patients with an acute care need do not necessarily require full-service hospitals, but rather clinical supervision or short-term recovery from a procedure. Progressive systems looking to support their acute care business need to find new, lower-cost methods to treat these cases. Read more

12. Manage elderly patients with a hospital-at-home strategy

For a number of ailing Medicare patients, the hospital may not necessarily be the right place for them to receive care. It's expensive, and hospitals can still be unsafe places for elderly patients, leading some organizations to revisit the idea of provider services in the patient's home. Read more

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