AN ANALYSIS OF FACTORS TO BE CONSIDERED IN PLANNING A REGIONAL HOSPITAL SYSTEM . Thesis for the Degree M M. U. P. MICHiGAN STATE UNIVERSITY ROBERT ERNST SAUR ‘ 1969 .— ‘MAY 25 2003 ABSTRACT AN ANALYSIS OF FACTORS TO CONSIDER IN PLANNING A SHORT TERM HOSPITAL SYSTEM By Robert Ernst Saur The past two decades has witnessed increased private and public concern for the delivery of health services to the nation's citizenery. Piecemeal federal legislation has been largely ineffective in correcting the disparities in access to health services for particlar economic groups within one society. One major mechanism for eroding these barriers as well as improving the out- put of the health care system is comprehensive health planning. Such an impetus was established by P.L. 89-7U9. Major deterrents to a comprehensive health planning process are: (1) lack of effective mechanisms within the political and private realms to plan and implement; and (2) the complexity and lack of clear conceptualization of the health care system. Overcoming these deficiencies is prerequisite to comprehensive health planning, and is the general concern of this thesis. The complexity of the health care system can become more manageable through the application of a descriptive system methodology. Such a process requires that Robert E. Saur recognizable subsystems and elements be isolated and described by input, process, and output. While sub- system identification can only be generalized and intuitive, it provides insights into how components are structured to make up the health care system. System synthesis is the innovative process whereby the health planner can restructure existing components, or develop new components in order to achieve a health objective. The use of system methodology as well as a conceptual framework is proposed within the thesis. A major component in the delivery of medical services is the short-term hospital facility. The thesis further proposes that the short-term hospital be analysed using a system methodology. The product of such an analysis is the development of standards for a three-level hierarchical short—term hospital service system. Each level hospital prototype is described by size (using number of beds) and service structure. The structual relation between the various prototypes is based on percentage of capture of regional demand for short-term hospital services. Preliminary standards are recommended for such a structuring. Predicting demand for short-term hospital facilities is a question which has yet to be answered. Many varia- bles effect the "need" and "demand" for short-term hospital facilities. The thesis further suggests varia— bles which may have a profound effect on hospital Robert E. Saur utilization in the future. It becomes the responsi- bility of the planner to recognize the influence of these variables and rationally inject them into the prediction process. AN ANALYSIS OF FACTORS TO BE CONSIDERED IN PLANNING A REGIONAL HOSPITAL SYSTEM BV L Robert Ernst Saur A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of Master in Urban Planning Department of Urban Planning and Landscape Architecture August 1969 ACKNOWLEDGMENTS I would like to dedicate the work contained in the following manuscript to my parents, 4arie L. Saur and Louis C. Saur, without whose financial assistance, dedication, and encouragement, the completion of my education would not have been possible. ii TABLE OF CONTENTS Page ACKNOWLEDGMENTS . . . . . . . . . . . . ii LIST OF TABLES . . . . . . . . . . . . v INTRODUCTION . . . . . . . . . . . . . 1 Chapter I. AN OVERVIEW OF THE HOSPITAL AND HEALTH PLANNING MOVEMENT . . . . . . . . A Introduction. . . . . . . . . . . 5 The Economics of Hospitals and Health Care. . . . . . . . . . . . . 16 Trends in Federal Legislation . . . . . 28 The States Role in Hospital Planning Through Legislation. . . . . . . . 31 Voluntary Areawide Hospital Councils. . . 36 Urban Planning and Hospital Planning Interface Present and Future: The Inherited Hospital System. . . . “7 Summary and Conclusions . . . . . . . 50 II. SHORT-TERM HOSPITAL SYSTEM PLANNING Introduction. . . . . . . . . . . 5A The Planning Problem and Why a System . . 55 The Short—Term Hospital Defined as a Component of the Health Care System . . 61 Characteristics of Short~Term Hospitals. . 68 Minimum, Maximum, and Scale and Economics in Hospital Operation . . . . . . . 75 Structuring A System of Hospitals by Services . . . . . . . . . 86 Summary and Conclusions . . . . . . .107 iii Chapter Page III PREDICTING THE FUTURE DEMAND FOR SHORT- TERM HOSPITAL FACILITIES Introduction . . . . . . . . . . . . . . . 113 Need vs. Demand for Hospital Services. . . 11A National Trend in Hospital Utilization . . 116 Factors which Affect the Demand for Hospital Facilities. . . . . . . . . . . 120 Standard for Predicting Future Bed Needs Analyzed . . . . . . . . . . . . . . . . 131 Summary and Conclusions. . . . . . . . . . 151 IV HOSPITAL SYSTEM PLANNING: CONCLUSIONS AND RECOMMENDATIONS . . . . . . . . . . 15A Introduction . . . . . . . . . . . . . . . 15A Factors to be Considered in Planning a Hospital System: Summary and Conclusions. . . . . . . . . . . . . . . 155 Recommendations to Improve Hospital System Planning . . . . . . . . . . . . . . . . 165 General Areas for Further Study. . . . . . 170 BIBLIOGRAPHY. . . . . . . . . . . . . . . . . . . . 173 iv Table 10 ll 12 13 LIST OF TABLES, CHARTS, AND FIGURES Health and Medical Care Expenditures in Relation to GNP, United States, 1929- 196A . . . . . . . . . . . . . . . . . . Expenditures for Hospital Construction by Ownership, United States, 1930-196“ Figure 1: Private and Public Expenditures for Hospital Construction, United States, 1930-196“ . . . . . . . . . . . . . . . . Distribution of Tax Funds Spent for Hospital Care by Level of Government, by Location of Outlay and source of Funds, United States, 1963 o o o o o o o o o o o c o o a State Distribution of Funds to Local Units of Government for Hospitals, 1967 Per-Capita Expenditure for Hospitals by City Size for 1957 and 196A . General Hospitals: Projects Approved by Size of Community, July I, 19A7—June 30, 1967 Planning Agencies Involvement in Planning for Health Services and Facilities Organizational Relationships Between Planning Agencies and Health Departments . . . Exchange of Information Between Planning Agencies and Health Organizations Health Care Services and Facilities and the General Plan . . . . . . . . . . . . Reasons Why Health Has Not Been Adequately Covered in the General Plan . . . . . . Figure: Simplified System Concept V Page ll 13 1A 15 21 38 A0 40 A2 A3 55 1A 15 l6 17 18 19 2O 21 22 23 2A 25 26 Figure: Simplified System Theory Figure: Simplified Diagram of the Health Care System . . . . . . . . . Short Term Hospitals in the United States by Number and Size . . . . . . . . . . Selected Minimum and Maximum Hospital Size Standards . . . . . . . . . . . . . . . . . Occupancy of Short—Term Hospitals in the United States by Size . . . . . . . . Hospital District Bed Standards . . . . . . Percent of General Short-Term Hospitals with Specified Services, by Hospital Size, 1966 Hospital Service Analysis by Sets Percent Demand Captured by Each Hospital Pro- totype . . . . . . . . Summation of Preposed Hospital System Planning Standards . . . . . . . . . . Growth of Facilities and Utilization of Non- Federal Short-Term General and Special Hospitals in the United States l9A6-l96l Hill-Burton Bed Distribution Standards Summary of Bed Standards for Short-Term Hospital Facilities vi 68 73 77 81 9A 98 10A 108 109 117 1A5 1A8 INTRODUCTION The United States, in several pieces of major leg— islation,has made a national commitment to the health of its citizenry. Good health is a right, not a privilege. Similarly, all state planning enabling legislation makes reference to health as a basic value for justifying the use and extension of social controls. Yet the United States ranks low in health standards in relation to other less affluent nations. The major reasons most often cited for this gap in the health care system are: (1) lack of a strong health care movement; (2) the complexity of the health care system; and, (3) the lack of techniques and standards for planning. The deficits in the system has resulted in a vague public awareness that not all is right, the movement is in its infancy, and a series of piecemeal legislation has largely been the governmental response. Yet the need to overcome the complexity of the system and deveIOp tech— niques and standards for planning remain as barriers. Urban and regional planning have largely ignored health in their formal and informal activities. The purpose of this thesis is twofold. First, and foremost, it prOposes that a generalized system methodol— ogy be applied to the health care system. The benefit is to tame the complexity and allow for orderly planning and rational decisions. Because the detailed application of this technique to the overall health care system is beyond the limitations of this thesis, a single recognizable sub- system, and finally a single component, is seperated out for detailed analysis. The second purpose of the thesis is to use system methodology to develop standards for the general or short-term hospital component. Short-term hospitals represent a major and long-term community investment. Any improvement in their quality represents a major input in the total health care system. Chapter I represents a broad overview of hOSpital and health planning in the United States. The purpose of this chapter is to familiarize the reader with past trends, legislation, and problems in relation to hos— pitals and health. The intent is to provide a background of information for the following analysis. Chapter II begins by attacking the complex problem of applying system methodology to health care. First the entire system is broadly conceptualized, with each suc— cessive step singling out the short-term hospital com— ponent for analysis. Finally, standards are proposed for planning a regional system of short-term hospital facil— ities. Chapter III becomes still more definitive in anal- yzing the complex problem of prediction. A broad analy- sis is made of the many forces at work on the hospital system and how they can affect future patterns of hospit- alization. In addition, various standards and techniques for predicting future bed needs are presented and summarized. A critical analysis of past standards and recommendations for improvement is also contained in the chapter. The purpose of Chapter IV is one of summary and recommendation. The first section provides a brief sum- mary of the previous chapters. Following is a list of recommendations which are broadly classified as applying to either the hospital planning process, or hospital planning techniques. In addition, recommendations are made for generalized areas which merit further study. CHAPTER I AN OVERVIEW OF THE HOSPITAL AND THE HEALTH PLANNING MOVEMENT Introduction Hospital planning is not a familiar subject to most city and regional planners. Before discussing aspects which are relevant to planning a regional hospital system, it is important to present an overview of background infor- mation which has major relevance to the topic. The pre- sentation is not meant to be exhaustive, but this chapter attempts to set down background material on hospitals and health planning in the United States. Therefore, its con— tents will hopefully provide a touchstone for the follow~ ing chapters. It is important to note that much conceptual dif— ficulty exists between "hospital planning" and "health planning"=which can be contributed largely to the his- torical evolution of the topic. Early interpretation of health planning dealt largely with the provision of hos— pital facilities. Present interpretation is "comprehen— sive health planning" which includes health facilities as only one component of a broader service system. For A this reason, reference is often made to "health care” and the "health system” in the following chapters. Only in the larger context is the hospital facilities component relevant. The following presentation deals with four general areas in the health care system. Namely: The role of hospitals and health in the economic structure; the past import and future potential of major federal and state legislation; the effectiveness of administrative mechanisms for hospital planning; and, problems within the inherited hospital system. The Economics of Hospitals and Health Care Health as a Consumer Good The aggregate expenditure for health and medical care in the United States was 3.6 billion in fiscal 1929, which accounted for 3.6% of the GNP. See Table 1). Through 19A0 the aggregated expenditure showed only slight variation, although as a percent of the GNP it rose slightly due to the depressed economy. By 19A5 it had risen to 7.9 billion, by 1950 it reached 12.2 billion, by 1960 it reached 26.8 billion, and by 196“ it had reached 35.” billion in aggregate expenditure. Since 19A5, there has been a steady increase in the percent of the nation's GNP devoted to health and medical care. 6 TABLE l.——Hea1th and Medical Care Expenditures in Relation to GNP, United States, 1929—1964 (Billions of Dollars) Health and Medical Average* Care Expenditures Per Capita (Dollars) Fiscal in 1960 Year GNP Amount % GNP Prices 1929 $101.6 $ 3.6 3.6 1935 68.7 3.1 4.6 1940 95.9 3.9 4.0 1945 212.5 7.9 3 7 100.46 1950 264.0 12.2 4.6 ' 119.00 1955 377-5 17.9 4 7 130.07 1960 493.9 26 5.4 146.67 1961 504.6 28.9 5.7 1962 539.2 30 8 5.7 1963 568.8 32.9 5.8 1964 603.8 35.4 5.9 Source: Ida C. Merriom, "Social Welfare Expenditures, Social Security Bulletin, 27, No. 10 (October, 1964), 374, Tables 2 and 5. *Source: Robert E. Coughlin, Hospital Complex Analysis: An Approach for Planning a Metropolitan System of Services (unpublished Ph.D. Dissertation, University of Pennsylvania, 1964), p. 9. "Three sets of forces can be identified in analyzing an increase in expenditure for a commodity or service: 1) an increase in income; 2) a reduction in the price of this commodity relative to prices of other goods; and 3) a favorable shift in consumer's tastes or preferences "1 towards this good. The percent of a familiy's income devoted to health and medical care is fairly constant for all economic classes of families.2 While the prices of medical goods and services have increased faster than other goods, the increased use of voluntary medical insur- ance has made it possible to reduce out-of—the—pocket expenditures. Under this condition there is a tendency to substitute medical services for other goods. The most relevant force in the changing consumption pattern of medical services is a shift in preference, including those reflecting changes in the social and demographic characteristics of the population. Given these consid- erations, it is plausible to conclude that there has been an increase in per—capita consumption of medical services which is reflected in aggregate expenditures and that the force behind this change is a shift in consumer preference. 1National Commission on Community Health Services, Financing Community Health Services and Facilities (Wash— ington, D. 0.: Public Affairs Press, 1967), p. 27. 2Given the substitution of social services for lower income groups. The proportion of our nation's resource devoted to health and medical care is likely to continue to increase as the social and demographic variables reflecting the nation's composition change, and as society increases in affluence. A projection of past trends indicates that by 1975 health and medical expenditures will represent from 7.0 to 7.5 percent of the GNP.3 As factors important in the past continue to operate and new ones come into play, higher expenditures can be eXpected. Among new variables which will affect future expenditures are: larger expen- ditures for the poor,for the mentally ill, and for envi- ronmental problems. Expenditures for Hospital Construction That part of expenditures on health and medical care which went into the construction of hospitals also shows a sharp rise from 1935 to 1964. (See Table 2). However, the rise was not steady and consistent. In dollar amounts, a peak in 1930 of $227,000,000 was followed by a drop to $35,000,000 in 1935. Between 1945 and 1950, following the passage of the Hill-Burton Act, construction expenditure: jumped to an unprecedented level. Minor declines from 1950 to 1955 were followed by a steady rise 3National Commission on Community Health Services, op. cit., p. 30. TABLE 2.--Expenditures for Hospital Construction By Owner- ship, United States, 1930-1964 (Millions) Year Total Public Private 1930 $ 227 $118 $ 109 1935 48 38 10 1940 87 54 33 1945 122 85 37 1950 843 499 344 1955 651 300 351 1960 1,006 401 605 1961 1,140 367 771 1962 1,267 397 870 1963 1,510 454 1,056 1964 1,900 600 1,300 Source: National Commission on Community Health Services, Financing Community Health Services and Facil- ities (Washington, D. C.: Public Affairs Press, 1967). p. 125. 10 over the following nine years. Both current dollars total” and percent of GNP for hospital construction has been higher than any previous year since 1955. Another remarkable fact stands out from Table 3. In 1930 the percentage of investment from public and private sources was approximately equal. From 1930 to 1950 the percentage of public funds showed a steady increase over private sources. Since 1950 this trend has reversed, with private sources representing over 68% of the construction funds by 1964. One major explanation for this change is the matching funds concept of the Hill-Burton program. Since public Hill—Burton grants are matched by private funds, the government has a direct input in hospital construction whose total value is 3 times as great as the original grant. Another basic change has occurred since 1929. A large percentage of the public expenditures in 1930 was for the construction of government hospitals. These hos- pitals were for the long-term treatment of a very small fraction of the pOpulation and were administered by the federal government. By 1960, through Hill—Burton, the government was involved in providing construction funds for private short-term hospitals. The involvement of the ”For discussion of problems of using current dollars rather than constant dollars, see: ibid., p. 124. 11 TABLE 3 Private and Public Expenditures For Health Construction, United States, 1930-6h ”W1 . ZUU . , ”U” I HUN ‘ mm 4 Millions n1 Dollars 4m: .. 2‘)“ 1 I Private: I I'uhlu' '-'----’ ‘4‘. 193” I V 1 V V Y W 193:3 1:140 H43 19:.» I933 Imm hm: Yea r Source: National Commission on Community Health Services, Financing Community Health Services and Facilities, (Washington, D.C. Press, 1967), pp. 126. federal government in hospital construction has been steady and increasing, and is likely to continue. Federal inputs and policy will have a major effect on the develop- ment of a national hospital system in the future. Distribution of Health Expenditures by Governmental Unit Table 4 indicates the distribution of tax funds spent for hospital care by level of government, by loca— tion of outlay, and by source of funds for the United States in 1963. It is important to note that the state— local combination provides 59.3% of the funds,and 65% of the public expenditures on hospital care. The state government expenditures for hospitals are larger than any other levels of government. In addition to this, state governments usually devote a larger proportion of their overall expenditures to hospitals than do other govern— mental units. Table 5 indicates the relative distribution of state funds for health care to local units of government for 1967. The decreasing amount of expenditure paralled with the relative size of the governmental unit reflects the fact that the use of and responsibility for hospitals is an "areawide" or regional phenomenon. Table 6 demonstrates the per—capita expenditure for hospital care relative to city size. In general, the expenditures for hospital care decrease regularly with decreasing city size. When comparing 1957 data to 1964 13 TABLE 4.--Distribution of Tax Funds Spent for Hospital Care By Level of Government, By Location of Outlay and Source of Funds, United States, 1963 Level of Government Location of Outlay Source of Funds Amount Percent Amount Percent (Millions) (Hillions) Total $4,326 100.0 $4,326 100 Federal 1,513 35.0 1,763 40.7 State—Local 2,813 65.0 2,563 59.3 State 1,683 38.9 1,533 35.4 Local 1,130 26.1 1,030 23.9 Source: National Commission on Community Health Services, Financing Community Health Services and Facil- ities (Washington, D. C.: Public Affairs Press, 1957), p. 109. 14 TABLE 5.-—State Distribution of Funds to Local Units of Government for Hospitals, 1967 Amount % Unit: (ODO) of State Funds All States 115,758 100.0 Counties 86,195 74.5 Municipalities 16,498 14.2 Townships 64 .1 School Districts —- -— Special Districts 13,001 11.2 Source: U. S. Bureau of the Census, Compendium of Govern- ment Finances, Vol. VI Topical Study No. 4 (Census of Governments, 1967), p. 8. TABLE 6.-—Per Capita Expenditures for Hospitals by City Size for 1957 and 1964 City Size Per Capita Per Capita 1957 1964 1,000,000 + 13.85 20.44 500,000 - 999,999 7.92 11.80 300,000 - 499,999 4.79 250,000 - 499,999 7.52 200,000 - 299,999 4.27 100,000 - 249,999 6.93 100,000 - 199,999 7.19 50,000 — 99,999 4.57 4.17 Less than 50,000 7.10 7.29‘ (V Source: U. 0. Bureau of the Census, Local Government Finances in Standard Metropolitan Areas, Vol. 111, No. 6 (Government Finance, Census of Governments, 1957). U. S. Bureau of the Census, Compendium of Govern- ment Finances, Vol. III, No. 5 (Government Finance, Census of Governments, 1964). 16 data, where possible, only cities with a population larger than 1,030,000 showed a significant increase. Many smaller classed cities showed a slight decline in expen— diture. This further supports the "metropolitan regional phenomenon" of hospital care. One can conclude that in cities less than 500,000 population, many of the hospital services are being provided by a larger governmental unit, usually the county or state. Trends in Federal Legislation A substantial number of federal programs enacted during the past three decades deal directly or indirectly with health and health—related problems. The trend in this legislation has been from the unitary approach of providing funds for hospital construction to a multi—level approach of "comprehensive" health planning. One of the major by-products of an increased federal involvement in attacking the nation's health problems with "comprehensive" programs has been an impetus for increased interaction between health planning and urban planning functions. It will be difficult for urban planners to continue to ignore the fact that provision of adequate health care is becoming an increasingly important problem of community life. Federal legislation can and will have a profound affect on both the supply and demand for medical facil- ities in the nation's future. For this reason, it becomes l7 essential that those involved in health program and facil— ities planning develop a better understanding of major past and present federal legislation and the resultant impact on planning the health care system. Hill—Burton Act The years following World War II witnessed a growing demand for all medical services. This was accompanied by rising levels of living and increasing pressures on existing limited facilities. Because of the depression in 1929, followed by the war, the previous two decades experienced little national investment in the nation's hospital system. As a result, a serious gap existed between the supply of and demand for health facilities. In 1944 a Commission on Hospital Care was estab— lished under a joint action of the American Hospital Association and the U. S. Public Health Service. This group was charged with the responsibility to study the national need for medical services and particularly for hospital facilities. The recommendations of this com— mittee were incorporated into formal legislation and filed in 1945. This legislation was enacted into law in August, 1946 as the Hospital Survey and Construction (Hill-Burton) Act. 18 The original law authorized grants to states for:5 l. A survey of existing facilities and needs and developing a state-wide plan for the construc- tion and improvement of health facilities. 2. Providing funds to assist in construction and equipping needed public and voluntary nonprofit general, mental, tuberculosis, and cronic dis— ease hospitals, and public health centers. The 1954 amendment to the Act broadened the program to include nursing homes, diagnostic and treat- ment centers, and rehabilitation facilities. The original Act and subsequent amendments had a profound effect on hospital planning procedures and tech— niques, as well as increasing the rate of hospital con- struction. The most significant aspect of the Act was its emphasis on "comprehensive" facilities planning as a pre- requisite for state eligibility for construction grants. This resulted in the establishment in each state of a single Hill—Burton agency which was responsible for coor— dinating the plans for allocation of funds within the state. These fundswere to be allocated according to priorities whichwere'developed in the master plan for the state. The 5U. S. Department of Health, Education, and Welfare, Hill- Burton Program Progress Report July 1, 1947- June 30, 1967 (Washington, D. C.: U. S. Government Printing Office, 1967). p. 3. 19 priorities as established are supposedly designed to encourage equalized distribution of facilities and ser— vices within the state. Another basic concept which emerged from the Hill— Burton program is "that the health of the Nation is a national resource and that federal leadership and finan- cial encouragment are warranted and necessary in estab- lishing a systematic network of facilities for hospitals "6 and medical services. Thus, the Hill—Burton Act gave rise to the federal government's commitment and involve— ment in the nation's health, and that planning was to establish a systematic network of facilities. This was a definite reversal of previous federal programs which gave grants—in-aid to single hospital institutions. The empha— sis now switched to the interrelation between facilities as a state and federal health system. The Hill-Burton Act is characterized not only by its impetus to hospital planning, but also by its develop- ment and use of planning and construction standards. Con— struction standards for the design of facilities were established that set minimum requirements for safety and efficiency. Quality standards were established for the 6L. M. Abbe and A. B. Barney, The Nation's Health Facilities: Ten Years of Hill-Burton Hospital and Medical Facilities Program (Washington, D. C.: U. 8. Government Printing Office, 1961), p. 15. 20 maintenance and operation of the hospitals. And finally, standards were established for the quantity and distribu- tion of facilities on a national basis. It is important to note that the standard of quantity as defined in the Act is based on medical need rather than on a community's ability to pay. However, the actual procedures of gov— erning the allocation of funds is based on demand because the local community must provide local initiative and provide matching funds, and because the responsibility of Operation and maintenance remain with the local community. Therefore, construction priorities reflect demand, not need. As of June 30, 1967, construction of 388,918 gen- eral hospital beds Imxi been approved under the Hill- Burton program. This represented 7A% of all beds approved and 73% of Hill-Burton funds allocated to date. Of this, the largest allocation of 33.2% of the funds were to com— munities between 10,000 and 50,000 population. The next largest allocation is 1A.2% of the funds to communities with a pOpulation larger than 250,000. Table 7 indicates the percentage of total funds allocated for general hos— pitals by community size. A definite emphasis has been 21 given to communities under 50,000 population.7 This dem- onstrates Hill—Burton's past emphasis on development of rural health facilities. TABLE 7.——General Hospitals: Projects Approved by Size of Community, July 1, 19U7—June 30, 1967 Total % Hill—Burton Under - 2,500 8.6--1 2,500 - “,999 9.0 —-6H.2% for communities 5,000 - 9,999 13.u less than 50,000 10,000 — u9,999 33.2_ 50,000 - 99,999 10.4 100,000 - 2M9,999 11.2 250,000 - over 1u.2 Source: U. S. Department of Health, Education and Wel— fare, Hill-Burton Program Progress Report July 1, 19U7—June 30, 1967 (Washington, D. C.: U. 8. Government Printing Office, 1967), p. 30. Public Law 89—749 Public Law 89—749, the Comprehensive Health Planning Act, was passed by Congress in 1966. There are four major reasons why an accelerated interest in comprehensive 7Above statistics were from: U. S. Department of Health, Education, and Welfare, Hill—Burton Program Pro- gress Report July 1, 1947—June 30, 1957 (Washington, D. C.: U. S. Government Printing Office, 1967). 22 health planning has finally culminated in the passage of this law.8 First, many health planners and professionals have accepted the fact that existing piecemeal and frag— mented planning approaches have not attacked the problems of delivery of medical services and inefficient use of limited resources and facilities. Second, during the mid-sixties more significant health legislation was enacted than the previous two decades: heart disease, cancer and stroke, Medicare, OEO health centers, etc. This new legislation was an effort to create a mechanism for inte- grating and coordinating these programs. Third, the public was becoming more and more concerned and aware of the serious health problems. Fourth, planning was becoming an acceptable and desirable governmental func- tion. Hence, there was much impetus to apply the planning process to the health field. Public Law 89-7U9, the comprehensive health planning act, futher establishes a national commitment to health. The preamble of the Act states:9 The Congress declares that fulfillment of our national purpose depends on promoting and assuring 8U. S. Department of Health, Education, and Wel— fare, The Urban Planner in Health Planning (Washington, D. C.: U. 8. Government Printing Office, 1968), p. 2“. 989th Congress, 3. 3008, Public Law 89—7u9, The Comprehensive Health Act (Washington, D. C.: U. S. Government Printing Office, 1968). 23 the highest level of health attainable for every person, in an environment which contributes posi- tively to healthful individual and family living; that attainment of this goal depends on an effec— tive partnership involving close intergovernmental collaboration, official and voluntary efforts, and participation of individuals and organizations, that Federal financial assistance must be directed to support the marshalling of all health resources -—national, state, and 1ocal--to assure comprehen- sive health services of high quality for every person but without interference with existing pat— terms of private professional practice of medicine, dentistry, and related healing arts." The passage of the Comprehensive Health Act is sig— nificant for three reasons. First, it provides for the establishment of state and regional health planning agencies. These agencies are to be charged with the responsibility of planning for the whole gamut of health components. Second, rather than the traditional piece- meal crisis approach, comprehensive health planning calls for greater emphasis on alternative solutions for preven— tive measures rather than remediation. Third, it changed Federal policy away from grants based on categories and problems towards a bloc grant approach to be used flexibly at the state and local level. The bloc grant approach to funding health planning will supposedly allow greater freedom and flexibility at the local level. Under section 31A(a) of P. L. 89-7A9, the Governor of each state is charged with the responsibility of des— ignating a single agency to conduct comprehensive health planning. In order to broaden the views of this agency, 2A the governor is to appoint a state health planning council. The majority of the members of this council are to be lay citizens who do not make their living in the provision of health services. The legislation further recognizes that a variety of health planning is already being carried out at the state level, and it is the responsibility of the new agency to coordinate these activities. Each state agency is also required to pre- pare and periodically revise a "comprehensive" state health plan. Section 314(b) of P. L. 89—7U9 supports the creation of "comprehensive" areawide health planning agencies subject to review and approval of the state health planning agency. Under the law, two kinds of grants are to be provided to these agencies: one for preliminary organizational development and the other for carrying out approved health programs. While section 31A(b) allows for local self deter- mination in health planning, it spells out several impor— tant performance criteria. These are: the agency must be regional and its boundaries should correspond to other political and regional districts; the new agency must be recognized by other local agencies involved in health; it must be comprehensive; and its efforts must involve local participation. Like the state agency, the local agencies are required to perform a variety of functions: encourage 25 individual institutions to plan; collect and analyze data; prepare and revise a regional plan; coordinate efforts with the state agency; and review local appli— cations for grants. An amendment to P. L. 89—7U9 in 1967 added a new responsibility to the state agency. It required that the State Commission develop a capital expenditure program consistent with an overall state plan for health facilities, which would meet the need for such facilities, equipment, and services without costly dupli- cation. While this responsibility was usually assigned to the existing Hill-Burton agencies, it will be dele— gated to the areawide agencies as they gain competence. P. L. 89—7A9 has expanded the scope of health planning beyond the efforts which have gone into health facility planning over the past few decades under Hill- Burton. Therefore,the planning of a regional system of adequate hospitals and health facilities now becomes a potential reality because of the new organization structure at the local level. The impetus provided by P. L. 89—7U9 has set the stage for planning a true regional system of facilities. For this reason it is important that health planners and urban planners begin to develop techniques to plan such a system. Miscellaneous Federal Legislation In addition to the Hill-Burton program and P. L. 89-749, a substantial number of additional federal 26 legislation and programs enacted during the past decade deal directly with the provision of health facilities and service. The application of these laws in the future will have a profound effect on planning a hospital and health care system. The Demonstration Cities and Metropolitan Develop— ment Act of 1966 (Public Law 89-75“) indicates further Federal impetus to the provision of health facilities. The Model Neighborhood section of the Act attempts to solve social problems by the provision of a wide range of public services and facilities within a single area. Within the content of potential facilities is a direct emphasis on the elimination of ill health by the pro— vision of health facilities. Section 20A of Title II of the same Act provides for a more direct participation in the provision of health facilities. As of June 30 1967, all applications for loans or grants for the purpose of hospital construction must be submitted for review to a regional agency that has been approved by the Department of Housing and Urban Development (HUD). Section 205 of title II authorizes the Secretary of HUD to make special grants to metrOpolitan agencies which have developed an organizational structure which can implement the development of a regional system of health facilities. This section provides increased 27 impetus for public and voluntary health and hospital planning agencies to work closely with regional planning agencies. Title II gives a potential role to regional planning agencies in planning the future health facility system. The Neighborhood Facility program established by the Housing and Urban Development Act of 1965 is another piece of Federal legislation which has a health facility component. One of the purposes of the program is to pro- vide multi-purpose community centers within areas of need. These centers are to provide health, recreation, and social services to low- and moderate—income community residents. The above 1965 and 1966 acts are but two of many examples of federal legislation which deal with the pro— vision of health facilities. During 1965 alone, some 25 major pieces of health legislation were signed into law.10 These laws will have a direct affect an the supply-demand relation of health facilities and services in the future. Examples of other legislation are: Medicare and Medicade; the Mental Health Centers program; Community Renewal program; and the Neighborhood Health Center Program sponsored by the Office of Economic Oppor- tunity. 10U. S. Department of Health, Education, and Wel— fare, 1965: The Year of Legislative Achievements (Wash— ington, D. C.: U. S. Government Printing Office, 1965). Trends in federal legislation indicate an inter— disciplinary approach similar to that of the Demonstration Cities Act. History has proven that the categorical grant approach of past years has fallen short of achieving desired objectives. The movement is to a broader-based, umbrella type of legislation which provides an integrated attack on social problems. Whenever necessary, these laws will include a hospital or health facilities com— ponent. The States Hole In Hospital Plannipg Through Legislation Many states have developed laws which have a direct impact on planning and developing a hospital system. These laws generally can be classified in two categories: the first group deals primarily with the administrative powers and controls to be exercised by the state in reviewing hospital plans and the development of hospital planning agencies; the second set deals primarily with the provision of financial aid for the construction, expansion, and modernization of hOSpitals and related facilities. The development of hospital planning laws at the state level has been sporadic and inconsistent. Laws for financing hospital construction, maintenance, and operation have followed a national pattern and can be categorized by purpose and intent. 29 Three types of hospital planning legislation, the Massachusetts Bill and the Maryland and New York Laws, run the gamut in principle of state legislation.11 The major differences witnessed in these legislation is its emphasis on the degree of compulsory control over the development of the hospital system. The Maryland law enacted in 1964 is purely voluntary. Its major mechanism of control is through the issuance of state funds only on the basis of state plan review. The Massachusetts bill creates state and regional councils for regional hospital planning. Hospitals are required to file plans with the regional council and it may approve or disap— prove them. The decision of the council is not a binding force upon the hospital involved. The New York law rep- resents the most compulsory form of state legislation. It requires that in order for an institution to obtain a license it must demonstrate a "need'' to a designated public agency.12 A failure to comply with the New York law (Metcalf-McCloskey Law) is considered a misdemeanor and subject to court action. 11American Medical Association, Proceedings 1st. National Conference of Areawide Planning, November 28— 29, 196H (Florida: American Medical Association, 1963), p. 88. 2 This form of legislation has met with strong opposition from the American Medical Association. 30 Many states have laws or statutes which in one way or another provide a mechanism for obtaining financial aid for the construction, expansion, or improvement of hospitals and health facilities. A general classifica— tion of these laws by purpose and intent are:13 (1) those statutes which establish hOSpital districts; (2) laws which deal with the provision of state funds; (3) laws which deal with the relatL)n of ficilities con— structed with public funds and Operated by non-profit groups; and, (A) laws which allow various governmental units to develop an administrative mechanism for the purpose of financing hospital construction.114 Traditionally, the state role in hospital planning through legislation has been weak and ineffective. Com- pulsory legislation such as exists in New York has not much opposition from the A.%.A. and other professional medical societies. Voluntary legislation has been ineffective due to lack of operational mechanisms for implementation of planning decisions. In the past, the major effort at the state level has been through State 130. s. Department of Health, Education, and Wel- fare, Areawide Planning for Hospitals and Related Health Facilities (Washington, D. C.: U. S. Government Printing Office, 1961), p. 32. 1”For examples of these Laws, see: Michigan Statutes Anotated, Sections, 5.2U56 (l-ll); 13.1221- lfl.l229; 1U.1181; Constitutional Act VIII, Sec. 11: 14.1221-lu.l225. 31 Hill-Burton agencies and their control over federal funds. In the future, the role of the state in planning is to be broadened under Public Law 89—7u9. The state level of government offers a potential mechanism for dealing with the regional problems of hospital planning. Its potential is yet to be realized. Many statutes which exist at the state level repre— sent a virtually untapped source for implementing plans related to hospital construction. The urban planner and hospital planner should make it a policy to become famil- iar with the respective state laws and use them as effective implementing tools when possible. Voluntary Areawide Hospital Councils The various organizations, both voluntary and pub— lic, which are involved directly or peripherally in health planning are numerous. However, the voluntary hos- pital councils which have developed in major metropolitan areas throughout the country, have by their actions and decisions been the most instrumental in planning the char— acter of the hospital system. A basic understanding of their methods, concerns, and biases is fundamental to planning for the system. "Health facility planning councils are voluntary, non-profit associations whose primary purpose is to achieve economy through more effective use of health 32 facilities and personnel."15 The first of such councils was established in New York in the mid thirties. It was followed in 19U6 by the Columbus Hospital Federation. Since then, additional such groups have been established in Detroit, Kansas City, Chicago, St. Louis, etc. Cur— rently there are about 70 such councils existing in met— ropolitan areas throughout the United States.16 The impetus for improved coordination in hospital planning was witnessed as early as 19“? in the United 17 States. The commission on HOSpital Care prOposed that voluntary groups working together could do much to improve the standards and quality of hospital services. In 1959, the Public Health Service and the American Hospital Asso- ciation jointly sponsored four regional conferences which were assigned the task of exploring new ways to improve the health facility planning process.18 A major recommendation of the conferences was that hospitals serve as a focal point of community health services in a 15The Urban Planner in Health Planning, Op. cit., p. 25. 16Ibid. 17Commission on Hospital Care, Hospital Care in the United States (New York: The Common Wealth Fund, 19U7). 180. s. Department of Health, Education, and Wel- fare, Principles for Planning_the Future Hospital System (Washington, D. C.: U. S. Government Printing Office, 1959). 33 coordinated system to be developed by a voluntary areawide planning agency with a paid staff. The areawide planning movement won further support by the House of Delegates of the American Medical Association. In 1962, a reso- lution was adopted which recognized areawide planning on a voluntary basis as an effective means to reduce medical costs and improve services. Since then, the American Medical Association has traditionally supported voluntary regulations and Opposed any form of compulsory control over the health system. A great acceleration in the numbers of planning agencies occurred after establishment of the research grant program authorized by the Community Health Service and Facilities Act of 1961, which later became an amend- ment to the Hill—Burton Act. This program distributed federal funds in the form of demonstration grants for the purpose of developing local and regional hospital planning agencies. The report, Areawide Planning for Hospitals and Related Health Facilities, which was developed jointly by the Public Health Service and the American Hospital Association, defines the intended focus of the hospital planning agencies. The intended role is: data collec- tion and research of existing facilities; education of the public in health matters; coordination of services between existing and new facilities; developing health 34 goals; and developing and preparing a health facilities and manpower plan for the region. However, most agencies have concentrated mainly on the construction of new facil- ities. Only the larger and more established agencies have had any success within the above intended framework. Most voluntary planning councils have no legal power to implement regional plans.19 The major mechanisms of control are through regulation of private funds, publicity, and persuasion. Banks and other charitable institutions often ask the opinion of the local agency as to need before lending money for health facility construction. Often the success of a local agency in implementing its plan further depends on the dynamism of the individual directing the effort. Additional influence comes from developing a close working relationship with the state Hill-Burton Agency. The Hill-Burton offices in many states rely heavily on the judgment of local agencies in deciding the allocation of federal funds. Much valid criticism has been voiced against volun— tary agencies because of their emphasis on health insti— tutional goals. Often the programs of such agencies reflect health intereste rather than the public or con— sumer need. While in theory the areawide health planning 19New York is an exception. See the Hetcalf- McCloskey Law.. 35 commission is supposed to have lay representation, they are often biased towards over-representation by medical interests. Because such agencies are so much a part of the hospital establishment, their effectiveness in making major changes (such as elimination of an outmoded facil— ity) is limited. This inability of councils to clearly identify their clients has frequently handicapped their work. In 1965, Cavanaugh undertook a survey of an existing 35 areawide health facility planning agencies.2O Two types of agencies were considered: hospital planning associations which were devoted exclusively to planning and those agencies which were engaged in planning as well as other activities. Of the 35 agencies interviewed, 86.8% or 33 of the questionaires were returned. Some conclusions as to the status of these agencies were: 75% of the 33 agencies were organized after 1960; nearly one— third of the nation's hospitals are located within existing planning regions; and that the agencies' major source of finance was Federal funds. The most frequent problems facing these agencies, as indicated by the survey in ranked order, were: 2OJ. H. Cavanaugh, "The Rise of the Areawide Planning Agency: A Survey Report," Hospitals, J.A.H.A., 39 (15), 1965. l. obtaining an understanding and acceptance of areawide planning from hospital administrators and trustees 2. education of the public 3. acceptance by physicians A. lack of adaquate controls and influence 5. development of long—term financing of the agency 6. defining what constitutes a planning region The future of voluntary councils is open to question as a result of the enactment of Public Law 89-7H9. Some of them may broaden their scope and become the regional :3tat6221germnl. HHOO HOOHLOOOOOO OOH OO OO OO --mO4 HH Om OH O .EO .Omm .LOOouOOOO OO HO OO HO OO.-.MO;.HOO OH O Eoom ODOOOOOEO OOH OO OO OOH OO OO HO“ HO O OOH HOOHOHHO OOH OOH OOH OO OO HO HO _ OO O oxm H zoom OOHHOHOOO OOH OOH OOH OOH OOH OO OO H mm H .OOHO Ompux Om>o OOO OOO OOO OOH OO O: mm mm OOOH>OOO on Loos: xcmm OOO OOH OOO OOm OOH OO Om OOH>OOO HOOOO .ozv OOOH .ONHO HOOHOOOO mo .mmOH>me Umfimfioodm szz mampfidmo: Epmenppocm Hmpocoo mo ucoopmmal.om mqmpmm .oom OHHHHOOO HOOcOO pHCD opmo o>Hmcmch .OOOO OOOHOOOOOO 0mm Oompmse EsHomm mammpsz manmeoLm uwchpcoollom,mqmHHOO HOOHHOOOOOO x m x O .EO .OOO .HOOO .Omm x oH x : .Em accompwem x x O OOH HOOHOHHO H OH x m OOO .EO OOHOOOOOO x x H .OOHO OOpnx meOEmm .me .>me .>Lom .>me .Umz .me .pmz cm mOH>pmm .wom .EEoo .oOmm< .omom .omam .cou .cmo .02 OO mm mm OO OO . OO «O .OOO mumm an memHmc< m0H>nmm HmpHQmomll.Hm mqm4 ><><>< mm mm :m mm mm Hm om OH mH OH wH mH :H mH Empwonm opmo mEom OHOO OOHOOOHO OHHEOO pHca coHpOuHHHnmcom .U< co OOLIH pmmno Odmpmce pHmooo Oompmce HmcoHpOQ:ooo ucmHumch QHHHOHcozmm .pde .>me .oom OOHHHoOO HOOOOO uHca opmo m>Hmcoch .OOOO OOOHOOOOOO cmm Oompmnfi Esvam hawmnzz manmeopm vmchpCOOII.HN mqm<9 106 combination of various service "sets," certain service requirements can be established for particular hospital prototypes. l The services which are desirable for a community hospital are those which are both general and community oriented. That "set" represents the elements which are common to sets, SA’ SB, and SF' They are: S community = 81+ 82+ 83+ Su+ 85+ 36+ 87+ 38 S10+ S11+ S16+ S23- Those services which are desirable for a "district" hospital are those above, plus those services which are common to both specialized and community oriented sets. These are common elements to SC, SD, and SF. They are: 8 district = S community + 812+ 813+ 817+ 818. Those services which are desirable for a medical center are those above, plus those services which are common to specialized and regional oriented service sets. These are common elements to SC, SD, and SG. They are: 5 medical center = 8 district + sg+-slu+ 315+-319, 321+ 322+ S2144. 825+ S26. 107 The final requirement in developing standards for planning a regional system of hospitals is in structuring the relation between the various hospital prototypes. This can be interpreted as the need to specify what per- centage of the total regional demand should be met by each level in the system. Table 22 indicates the past percentage of admissions,which is indicative of demand, and that has been met by the suggested hospital proto- types. These are compared to the standards suggested by the Pennsylvania Economic League. The suggested standards for percentage of demand by the various hos— pital prototypes is also presented. These are given as ranges because of the flexibility of sizes within the various hospital prototypes. The percentage of demand which is to be met by the community hospital will increase towards the standard suggested due to the gradual elimination of the small, less-efficient hos- pital units. Table 23 represents a summary of the standards pro- posed in this section. Summary and Conclusions "System theory" represents a methodological tech- ILique for solving complex problems. Prerequisite to its application are certain conceptual requirements. These are: (1) system identification, (2) component identifi- cation, (3) structuring the relation between components, 108 .O .O .OOOH .OOOOOH OOO .OOHOHHHOOO HOOHOOO OHOOHOOOO OOO OOOz O.OHCO>HOm::om wcHocmch cam wchHEmemQ .mswmmq OEocoOm O.OHCO>HOmccmm m .m:: .Q .HOOOH .umsws< OOOH HOO OOOH HOO OOOH HOO AHVmCOHmmHEUHH AvahmD o‘cwfipmm AHVmUmm mpcmmsocu CH mconmHEpm new .mmmp pcmHuOQ .mpmn mo pmnEszHHv meHlmamH "mmpmum UOHHCD on» CH mHmuHQmom HmHoQO cam Hahmcmw Epmeuppozm Hapmvmmlcoz mo :oHumNHHHpD Ucm mmHUHHHomm mo £930holl.zm mHmles can be articulated into precise measurements of denuirui, their acknowledgement is extremely important. 120 Only through consideration of these variables can a planner rationally predict the demand for short—term hospital facilities. Factors Which Affect the Demand for Hospital Facilities .There are two basic sets Of factors which influence the demand for short—term hospital facilities, and indeed, for all medical services. First are those fac- tors which fall under the general heading of sub-systems of the overall medical care system. Of primary impor- tance in the first set is the influence of medical man— power, medical programs, and the organizational structure of the health facilities system. The second set of fac- tors that influence the demand for short-term hospital facilities falls under the heading of the characteristics of the consumer of hospital services. This set would include cultural factors, sociodemographic factors, and economic characteristics. Of primary importance in influencing the demand for short-term hospital facilities is the physician. It is a characteristic of the medical care system that once a consumer enters the market by visiting a physician, most decisions affecting the demand for medical services are influenced by the physician rather than by the consumer 121 alone.3 In this way, the physician makes major decisions which affect the demand for particular types of medical services; and in the final analysis decisions reflect both the preference of the physician and consumer. The past fity years has witnessed major changes in physician—patient relationships. The classic ideal of an authoritarian physician who provided total medical care to two or three family generations is no longer realistic in the present medical care system. Two major factors have influenced this idealistic concept. First Vis the tremendous expansion in medical knowledge. The physician can no longer hold all the necessary equipment in his black bag, just as his mind can no longer hold all the necessary medical knowledge. The modern doctor is, and has to be, a specialist; his services are supported by the services of a host of paramedical personnel. Because of the continual shortage Of doctors, he has to increase his level of productivity and, therefore, has little time for the idealistic patient-doctor relationship. Advances in medical know— ledge have been coupled with advances in medical tech- nology. This has resulted in the demand for more 3This is similar to the medical activity systems discussed in Chapter II. A major factor in generating demand is the interfare relationship between the physician and the consumer. sophisticated and costly modern equipment and facilities. Many of the new medical services require equipment and supporting personnel which is only available at the short—term hospital. Resulting from this is a trend towards the short-term hospital as a major point for the delivery of general medical services. Another factor which has influenced the physician- patient relationship is the changing affluence of the consumer. The average middle class patient today is better educated and has a higher income. He has a higher level of medical knowledge and often questions his doc- tors advice. In addition, he has a higher level of mobility and no longer desires the everlasting doctor- patient relationship of previous decades. During any one particular malady, he will usually seek the service of one or several specialists. The types and numbers of medical programs which exist also have a major impact on the demand for medical services. Medical programs can generally be classified 4 The first group consists of into three major groups. programs for the protection, preservation, and promotion Of the health of the citizenry. Public health is con- cerned with programs for the control of communicable “U.S. Department of Health, Education, and Welfare, The Urban Planner in Health Planning (Washington, D. C.: U.S. Government Printing Office, 1968), p. 16 123 disease, with research into areas such as heart disease and cancer, and in environmental health including sanita— tion and air and water pollution. These types of pro- grams are carried out at local, regional, state, and national governmental levels. The major potential impact of such programs is towards the elimination of disease and illness, and thus reducing the demand for particular types Of medical services. The second major classification of medical programs are those which establish standards and regulations which affect health and medical care. Governmental agencies set minimum standards for water and air quality, restaurant sanitation, hospitals, nursing homes, and industrial safety requirements. The level and degree of such stand— ards all affect illness and thus the demand for medical services. The third major group of medical programs are those which are concerned with the provision of direct medical services to certain groups of people. These types of programs often include specialized hospitals such as mental institutions or tuberculosis hospitals which are generally provided by the state government. In addition, cities and major metropolitan areas often support short— term hospital institutions out of tax funds for the pur— pose Of providing free or low-cost services to residents. 124 Additional programs in this group are designed to increase a person's ability to purchase medical services through economic assistance. Examples of such programs are evidenced in recent trends in federal legislation related to the provision of medical services. Medicare and Medicade are both federal programs designed to improve the delivery of medical services to the older and poorer segments of the nation's population. An entire host of other federal, state, and local programs which provide economic assistance to certain population groups both directly and indirectly affect the demand for medical services and thus short-term hospital facil- ities. Another potentially significant aspect which influ— ences demand for short-term hospital services is the organizational strucutre of the health facilities sub- system. The availability of substitutes or alternatives for hospital services can have a major impact on the demand for facilities. Areas which contain adequate nursing homes, home care programs, and other types of medical services might be quite different from areas without these services, even in the absence of other differentiating features. However, this relation is not axiomatic, since relatively little is known about the actual degree to which other facilities can substitute for short-term hospital services. 125 The definition of the scope and types Of services provided by the general hospital affects the demand for these facilities. For example, a demand for psychiatric care would only be realized in an institution where this service is provided. In an area where psychiatric care is provided by another institution, no demand for this service would be felt by the short—term hospital system. In addition, internal hospital management consid- erations indirectly affect the demand for additional facilities. When internal management decisions are able to improve the output of necessary medical services for any particular institution, that institutions capture of total regional demand is increased, and thus the need for additional facilities is reduced. For example, many expensive hospital services are only provided on an 8 hour a day, 40 hour a week basis. Management decisions to utilize such services on a 16 or 24 hour basis, and on week-ends and holidays, and during other periods of low utilization could greatly improve the output, and thus reduce the demand for additional facilities.5 The structural relationship and communication between the various short-term hospital units can also 5National Commission on Community Health Services, Health Care Facilities the Community Bridge to Effective Health Services (Washington, D. C.: Public Affairs Press, 1967), p. 54. 126 be develOped in order to improve the output of the entire hospital system. The use of an adequate patient referral system between various institutions can switch excessive demand from one institution to another under utilized hospital facilities. Thus the demand for the expansion of existing facilities or new units can be reduced. In addition, many hospital services can achieve maximum economies through centralization of particular functions. Through use of this technique the output of particular services can be increased. For example, centralized lab~ oratories, centralized record systems, etc.6 The second major set of factors which influence the demand for short-term hospital facilities can be classified as characteristics of the consumers of hos— pital services. This set generally includes: (1) cul— tural factors, (2) sociodemographic factors, and (3) economic considerations. A publication by Benjamin in 1955 brought together case studies on health problems around the world in order to illustrate how various facets of the community process affect the strucutre of the health care system.7 He grouped the studies into six major categories with respect 6Ibid. 7Paul Benjamin, ed., Health, Culture, and the 99mmunity (New York: Russell Sage Foundation, 1955). 127 to how culture directly affects the supply demand rela- tionship for community health services. The categories are: re-educating the community on health matters, com- munity reaction to health crisis, sex patterns and popu- lation problems, effects on social segmentation vehicles of health administration, and the combining of services and research. Another host of medical studies have attempted to relate the degree and frequency of different types of medical maladies to particular cultures and sub-cultures in the United States. Although these studies can offer insight into planning medical services, their major‘ area of application has been in medical research. A study by the Public Health Service in 1953 indicated significant differences in demand and utiliza— tion of short-term hospital facilities for different major geographical regions within the United States.8 While much Of the variations can be contributed to other variables such as income, several inconsistancies exist. For example, a major difference in hospital utilization exists between New York and Oregon, although both have relatively equal incomes. The report suggests that var- ious regional sub-cultures have different requirements for medical services. 8How Many General Hospital Beds are Needed?, pp. cit. . 128 One of the most often cited and studied factors with respect to the demand for short—term hospital facilities has been the sociodemographic characteristics of the con- sumer. Rose suggests that in order to understand and deal with social service problems such as health care, one must know something of the major elements of the changing society and its structure.9 He proposes that the demand for medical services-is strongly influenced by its struc— ture within the broader social service system. Therefore, any study of health services should begin within this broader perspective. Both Cook and Morris suggest that an analysis of the demographic characteristics of a community is prerequisite to planning for health services.lo’ 1} They propose that the demographic structure of a community, state, region, or nation gives the clue to present and future need in all phases of planning. Thus, a detailed demographic inven- tory is the initial step in planning a comprehensive com- munity health program. 9Albert Rose, "The Social Services in the Modern Metropolis," Social Service Review, Vol. 37, No. 4 (Decem— ber, 1963), 10Robert C. Cook, "Demographic Factors in Community Health Planning," Population Bulletin, Vol. 17, No. 1 (February, 1961). 11Robert Morris, "Effect of Demographic Changes on Community Fact-Finding," Public Health Reports, Vol. 77, NO. 2 (February, 1962), pp. 124-128. —— b] 129 The work of Rosenthal represents the most ambitious attempt to structurally relate a community's demographic characteristics to its demand for general hospital facil- ities.l2 He attempts to analyze the effect of ten demo— graphic variables through multiple regression, by correla- ting past demand with a community's pOpulation and econ- omic characteristics. Rosenthal suggests that no single variable can predict demand for hospital services, but only through the consideration of the interaction of many variables can adequate predictions be achieved. The ten variables used are: age distribution, marital status, sex distribution, degree of urbanization, distribution by race, educational level, pOpulation per dwelling unit, price variations, income distribution, and proportion with insurance. The final set of factors which have been given attention in relating hospital demand to consumer char- acteristics are economic variables. Although these var— iables should theoretically be grouped with socidemo— graphic variables, they have continually received special attention in the literature. In general, the relation between hospital charges and demand has been ignored except in discussions relating to insurance, which is an implicit price variable. The 12Gerald D. Rosenthal, The Demand for General Hos- pital Facilities, American Hospital Association, 1964. 130 non—profit nature of most hospitals, coupled with the myth that all who need hospital care will receive it, has pre— cluded any detailed examination of the effect of price on demand. However, economic theory would dictate that the relationship between price and utilization would be neg- ative.13 The relationship between income and hospital util— ization has received a great deal of attention in the lit— erature. Income is considered by many hospital planners as the greatest single determinant of hospital demand. The basic implication is that a strong positive relation— ship exists between income and demand. A number of other studies have suggested that an opposite effect might be true. These studies postulate that public recipients receive more medical care than the population as a whole.lu No other single characteristic related to hospital demand has been studied in as much detail as health insur- ace. There are many studies which attribute much of the increase in hospital utilization to changes in demand gen— erated by increasing insurance coverage.15 Still other 131bid., p. 29. ,. 1“M. I. Roemer et. al., "Medical Care for the Indigent of Saskatchewan," Canadian Journal of Public Health (November, 1964), pp. 460-470. 15F. M. Densen, et. al., Prepaid Medical Care and Hospital Utilization, American Hospital Association, 1958. 131 studies argue that insurance does not affect the util- ization Of hospitals. These studies basically argue that insurance is associated with other variables such as income and education, which themselves show a strong correlation with utilization,and that this fact accounts for the observed association between insurance and util- ization. As indicated from the previous section, the demand for hoppital services is not something which can be meas- ured or predicted with exactness. It is a result of the state Of medical knowledge, the attitudes and customs of physcians and the public, the structure of the hos- pital within the medical schema Of things, demographic factors of the community, economics, and a whole host of other variables. Nevertheless, the demand or product of these intan- gibles must be measured and predicted in order to plan. Invariably the process of prediction involves estimating the number of beds required by the population in order to provide a necessary volume of hospital service. Standards for Predictipg Future Bed Needs Analyzed The following discussion reviews various tech- niques and standards which have been developed in the past for predicting the need or demand for short-term hospital facilities. Invariably, the standards are 132 expressed in terms of the number of beds which will be required at a future date. The importance of predicting demand is obvious for any planning process; therefore, a brief review of the major writings on this subject is necessary. Two conceptually different approaches can be recog- nized. The first puts emphasis on the derivation Of a normative estimate of the beds which a planning area should have. The direction of this method is towards a measurement of medical pppd, from which a set of stand- ards for beds can be developed. The second approach is to describe the demand for hospital services. The tech- nique is to use various sociodemographic characteristics of the population as proxy variables to predict future demand, without consideration of normative standards for medical service. Prior to the 1920's, no attempts were made to develop standards which relate hospital facilities to the requirements of the areas which they were to serve. However, as early as 1912, the president of the American Hospital association made reference to the need for ade- quate planning to reduce unnecessary duplication of costly facilities, a theme which continued in studies that followed. The first attempt to make a quantitive estimate of need was undertaken in 1920 by the New York Academy of Medicine in a study of 180 hospitals in the 133 New York Region.16 The study concluded that there was one hospital bed available for every 200 persons, or 5.0 beds per thousand. By estimating the incidence of mor- bidity, the researchers further concluded that this repre- sents a ratio of one bed to every four sick persons. The report also suggested that a centralized hospital bureau to disseminate information concerning available hospital beds could increase utilization above the average 70% occupancy rate which existed in the region. In a report presented by the Committee on County Hospitals at the 1927 Convention of the American Hospital Association, additional quantitative standards for bed needs were presented.17 A figure of 5.0 general hospital beds per 1,000 pOpulation was suggested as a desirable standard for general hospital services. No details of the rationale used in developing this standard were pre- sented in the report. The study does, however, attempt to warn against blind acceptance of the standard in all communities. It suggested that a standard of 5.0 beds per 1,000 would undoubtedly be high in a community where people have not been encouraged to use hospital facilities 16New York Academy of Medicine, Public Health Com- mittee, "Summary of Findings of Hospital Study," Medical Records, 100:1136-39, December 24, 1921. 17Report of the Committee on County Hospitals for 1927, Transactions of the American Hospital Association (Chicago: 29th Annual Convention, 1927), pp. 214-2161 134 or where there has been nO Opportunity to do so. The committee states: The precise need in any community can be determined only by first-hand study of local needs, but we believe that few communities can offer adequate hospital care to all types of sick without main- taining a 5 bed per 1,000 pOpulation standard.18 The report fails to clarify if the standard is for the sum of short-term and long-term bed requirements. It does not make any estimates to long-term bed standards. The Duke Endowment, in February 1928, issued a report which contained quantitative standards for bed to population ratios.19 The ratios as presented were based on studies of authoritative literature on the subject which existed at the time. The study was the first to recognize and suggest the use of different bed to popula- tion ratios for urban and rural communities. As the report states: The average number of beds per 1,000 people in our larger cities is approximately 5, and hospital authorities regard that number as a normal supply. An occupancy of 75 percent of the beds is consid- ered a normal use. This would leave a reserve of 25 percent for expected fluctuations in the prevalence of disease.20 18Ibid., p. 21h. 19w. s. Rankin, H. E. Hanford, and H. P. Van Arsdall, The Small General Hospital, the Duke Endowment, 1928, pp. 10-120 20Ibid., p. 11. 135 In addition to the supply of 5 general hospital beds, authorities should consider the need of hospital beds for special conditions as follows: 0.5 beds per 1000 popu- lation for contagious diseases; 0.5 bed per 1000 popula— tion for children; 0.45 bed per 1000 pOpulation for maternity cases; and, as many tuberculosis beds as the average annual deaths in the community over the last 5- year-period. The Duke Endowment study provides some rationale for the 5.0 bed standard based on an analysis of variOus sickness surveys. This report adds a provision for a lower ratio of 2.0 to 3.0 beds per 1000 population for rural areas. It justifies this assumption on two Observations. First, there historically exists a lower incidence of hospital- izable morbidity in rural areas, and second, those in rural areas would continue to seek medical service else— where. The study also suggests that an average occupancy rate of 66 percent should be expected in rural areas. Dr. Haven Emerson,in 1930, prOposed a set of stand- ards for the provision of adequate hospital care for the 21 Emerson sick in urban communities of 50,000 or larger. based his standards on average stay of 14 days, and on an average level of 80 percent occupancy. His estimates so '21Haven Emerson, "Estimating Adequate Provision for Organized Care of the Sick," The Modern Hospital, Vol. 35, No. 3 (September, 1930), pp. 49—51. 136 derived are as follows: 5.0 beds per 1000 population for general medical, surgical, children, and maternity patients; 0.5 beds per 1000 for communicable diseases; 2.0 beds per 1000 for chronic sick; and 0.75 beds per 1000 for convalescent patients. Summarizing the above, Emerson estimated that 8.25 beds per 1000 was required in a com- munity above 50,000 for adequate hospital service. The basic technique used by Emerson to develOp his standards was an analysis of past utilization studies of various medical services. Emerson, like the Duke Endowment study, also draws a dicotomy between bed standards for urban and rural hospital systems. The major reasons for lower bed ratios in rural areas suggested by Emerson are: many rural areas do not have serious occupational hazards, and they do not have the congested housing which exists in larger cities. A low rate Of 2.0 beds per 1000 population is suggested as adequate in rural communities. The Lee—Jones report of 1933 is one of early and most widely used studies of standards for planning medical needs.22 Annual disease expectancy rates were derived from studies of morbidity surveys for various pOpulation 22Rodger I. Lee and Lewis Webster Jones, The Funda- mentals of Good Medical Care, Committee on the Cost of Medical Care Publication No. 22, University of Chicago Press, 1933. 137 groups. Through analysis of Opinions and records of 125 practicing physicians, the Jones report indicates the amount of service23 in terms of medical personnel and facilities necessary in each disease catagory. The average number of bed-days required for each disease catagory were then translated into the number of hos— pital beds per 1000 population based on average occu— pancy rate of 80%. By this method, the following number of general beds required to serve a pOpulation of 1000 was cal- culated: a total of 4.62 beds, of which 0.68 beds for maternity, 2.10 beds for medical ward, 1.71 beds for surgical ward, and, 0.13 beds for psychiatric ward. A following article of Michael M. Davis suggested that the Lee-Jones Report allows for the hospitalization of a much larger proportion of communicable disease cases than is normally hospitalized in general hospitals.2u Davis proposes that a standard of 4.0 per 1000, with an occupancy rate of 80% is more reasonable. 23This is the first and most rigorous attempt to relate need and services to predicting bed requirements. In fact, many recent reports are modified forms of standards develOped in this study. 2"Michael M. Davis, "Are There Enough Beds? Or TOO Many?", The Modern Hospital, Vol 48, No. 5 (May, 1937). pp. 49-52. 138 'In 1935, the need for general hospital beds was the target of a study by Alden and Patsy Mills.25 The proce— dure was to undertake a systematic analysis of all types Of local or community hospitals for acute conditions, and excluding hospitals for long—term treatment. Hospital service centers, whcih were defined as hospitals within 50 miles of a city and containing more than 250 beds, were indicated on rural county maps.26 Counties not served by the hospital centers were then to be grouped in terms of compactness, homogeneity, and natural trade patterns. To determine the number of additional beds required in poorly served rural areas, a ratio of 2 beds per 1000 population was suggested as a minimum. This was the basis of an average estimate of the ratio Of 1.0 bed per 1000 suggested in the Duke Endowment study, and 3.0 beds per 1000 proposed in succeeding studies. In the study, the Mills warned that before actually using any standard, consideration must be given to a whole host of other economic and demographic factors. Factors suggested for consideration are: size of pOpulation; size of service area; density of population; number Of training physi— cians available in the area; the impact of the hospital 2SAlden B. and Patsy Mills, "The Need for More Hos- pitals in Rural Areas," The Modern Hospital, Vol. 44, No. 3 (March, 1935), pp. 50-54. 26This is one Of the first attempts to associate "service area" concepts to hospital planning. 139 on the delivery of medical services; distance to other hospitals; road conditions, summer and winter; health knowledge of the people; suitability of home conditions for medical care; financial resources of the population; and the potential impact of new methods of paying for medical services on hospital utilization. In 1935, a report of the American Hospital Asso— ciation's Committee on Hospital Planning contained quantitative recommendations concerning general hospital bed requirements.27 The report states that for years bed quotas have been adopted on the basis of two gen- erally accepted formulae. These are: first, that from 2 to 3 percent of the population are incompacitated by accident or illness at any one point in time, and that on the average, 10 percent of these require hospitaliza- tion in acute beds. Second, that in urban communities, 5 beds per 1000 population and in rural districts 1 to 3 beds are necessary for adequate medical care. The report suggests that the present situation in the hos- pital field indicates that both formulae,and the way they are used are in need of revision. The report went on to state that a falling birth rate and the extension of good maternity home nursing 27Report of the Committee on Hospital Planning and Equipment, Transactions of the American Hospital Asso- ciapions, 37th. Annual Convention, Chicago, 1935, pp. 740-752. IUO would reduce the demand for maternity care and thus reduce the number of acute beds required for this purpose. In addition, standards should be tempered by the fact that there has been a steady decline in the average length of stay in general hospitals, as well as the impact of trends in preventive medicine in keeping people well. "To intelligently determine how many beds a given com— munity needs," the report states, "requires that many conditions be analyzed far in advance of the first archi— tectural sketch."28 The report further indicates the potential impact of various social and demographic com- munity characteristics on bed need. In light of the above observations, the Committee made the following recommendations for acute beds per 1000 population. The rationale was based on an analysis of conditions found throughout the country. Bed ratio standards are related to a hierarchial concept of city size. Implied, is that smaller communities rely on large cities to supply additional medical services. The standards as proposed are:29 (1) For large metropolitan centers having general multiple housing, extensive suburbs and 28 29 Ibid., p. 743. Ibid., p. 750. 1u1 nationwide medical prestige--5 beds per 1000 of the city's population. (2) For cities which serve as medical centers for extensive districts and suburbs not adequately self—hospitalized—-H to 5 beds per 1000. (3) For smaller cities--3-U beds per 1000. (h) For rural districts-—up to 1 bed per 1000. A Technical Committee on Medical Care of the Inter- departmental Committee to Coordinate Health and Welfare Activities proposed a professional standard of adequacy for general hospital beds a ratio of “.6 beds per 1000 population.30 The rationale for the standard was not given; however, it was indicated that the standard was based on the earlier Lee-Jones Study. The Public Health Service in 19u5 develOped a ratio of 4.5 beds per 1000 population for use as a standard for non—Federal general hospital requirements in health ser- vice areas.31 The technique of the PHS study was similar to previous studies in that it predicted utilization for each area from past utilization patterns. However, the 3OInterdepartmental Committee to Coordinate Health and Welfare Activities, The Need for A National Health Program (WAshington, D. C.: U.S. Government Printing Office, 1938). 31Mountin, Pennell, and Hoge, Health Service Areas—- Requirements for General Hospitals and Health Centers (Washington, D. C.: ‘Federal Security Agency, 1935). 1U2 development of the health service concept was of major significance towards developing a mechanism for treating the hospitals of the United States as a system in fact as well as in title. Each state was to be divided into medical service regions, which were further divided into primary and secondary districts according to the types of hospitals in them. Primary districts have hospitals which offer a wider or more extensive range of services and the secondary districts having hospitals offering basic ser— vces. The concept proposes that the hospitals of the primary district subsidize the service role of secondary districts. This concept of a flow of services from the core to outlying districts marks a major transition from local orientation which characterized previous hospital studies. The distribution of beds within each health service area was structured to the proposed hierarchial system concept. The overall ratio of “.5 beds per 1000 popula- tion was to be maintained for the total region, but each primary district should have “.5 beds per 1000 population in its district, plus 0.5 beds per 1000 of the population in each secondary district served. Secondary districts would maintain a ratio of “.0 beds per 1000 population. l“3 In the report it was stated that the “.5 bed standard was a compromise between the theoretical ideal of earlier reports and practical achievement of bed distributions within the states. The report proposes an 80% occupancy rate as desirable. A report of the Commission on.Hospital Care in 19“? developed a new technique for estimating bed needs from utilization.32 The method, known as the bed— death ratio, is based on the relationship between pre- dictability of death rates and an estimation of what prOportion of deaths will occur in the hospital. Using these two variables, it is possible to predict, with necessary accuracy, the general hospital bed requirement for a particular population. Using this technique, the Commission estimated that at the 19““ occupancy level of 7“.8%, “.96 general and special hospital beds would be needed per 1000 of the nation's population. An important variation in the bed-death ratio from previous standards is that the elements from which it is composed reflects the characteristics of the area in question. This implicit acknowledgment that the charac— teristics of a particular area are important in estim— ating bed needs constitutes a significant step from 32Commission on Hospital Care, Hospital Care in the United States (New York: The Commonwealth Fund, l9“7). 1““ previous ratio standards. The bed—death ratio has been used by a number of states to estimate bed needs (e.g. Michigan), but for the most part, it has not received wide acceptance. The Commission emphasized that the bed-death for- mula is unique from previous standards because it is based entirely on need and vital statistics rather than the general population. This does not, however, reduce the problem of predicting to a simple analytical process, but should be used and tempered with Judgement. It should be considered as a first approximation with due consideration of many other local factors. The Hospital Survey and Construction Act and Program provided hospital bed standards to be used in developing state Hill-Burton plans for hospital construction.33 These were set forth as ceilings on the number of beds beyond which Federal aid for construction would not be available. The standards used were sensitive to two var- iables. First, they varied with the classification of the hospital areas in relation to the system concept pre- sented in the l9“5 PHS study. lSecond, they varied in relation to the population of the perspective states 33L. M. Abbe and A. B. Barney, The Nation's Health Facilities: Ten Years of Hill-Burton Hospital and Medical Facilities Program, l9“6—l956 (Washington, D. C.: U.S. Government Pringting Office, 1961). - E‘ l“5 specified in the number of persons per square mile. Resulting, was a definite national emphasis on devel— oping hospital facilities in sparsely settled areas in the United States (See Table 7). The standards thus arrived at and specified in the regulations were as follows: TABLE 25.-—Hi11-Burton Bed Distribution Standards Hospital Beds per 1000 pOpulation in States with specified persons per square Type of Area mile. 12.0 or more 6.1 - 11.9 6.0 and less persons persons persons Base u.5 5.0' 5 5 Intermediate “.0 “.5 5.0 Rural _ 2.5 3.0 3.5 The standards of bed needs set forth in Table 25 under the Hill-Burton act have greatly influenced hos- pital planning since 19“7. These standards or estimates represented the concensus among hospital authorities at the time of their adoption and deserve strong recognition in this review of past estimates of bed needs. They, more than any other standard, have influenced the distri- bution of beds during the past two decades. 1“6 A study of Reed and Hollingsworth proposed that by observing the days of hospital care per 1000 population received by groups which are believed to be getting ade— quate health service,is the key to setting hospital bed standards.3l4 They identified adequate numbers of days of hospital care by examining 5 groups—-states with nearly all births in hospitals, states with highest per capita incomes, persons covered by Blue Cross insurance, persons under the Saskatchewan hospital service program, and per- sons under the British Columbia hospital insurance pro- gram. Using an average occupancy rate of 75%, they derived the number of beds required to achieve the desired normative level of service. Estimation of effective demand on the amount of ser— vice people ordinarily use was the subject of an exhaus- tive investigation by Rosenthal.35 He ran a multiple regression correlation of an area's economic and demon graphic characteristics with its history of demand for hospital services. From this, he developed demand equa- tion for predicting patient days per 1000, admissions per 1000, and length of stay, for each state using demo- graphic characteristics of the state as proxy variables. 3“Louis S. Reed and Helen Hollingsworth, How Many HOspital Beds are Needed? (Washington, D. C.: U S Government Printing Office, 1953). 35The Demand for General Hospital Facilities, op. cit. l“? Demanded patient days of service are then translated into bed capacity following a standard that a hospital should be completely filled no more frequently than one day out of every 100. Although Rosenthal's analysis provides insight into how various variables structurally affect demand for hospital services, no consideration is given to a normative measurement of medical need. Therefore, the demand equations are economic rather than medical. Table 26 represents a summary f the various bed standards reviewed in the previous text. Two of the most interesting aspects of these studies are: the lack of consistency in methodology and the wide range of esti— mates that can be derived for similar and even identical populations. A more exhaustive summary by Palmer indi- cates that estimates of bed needs can run the gamut from 2.5 to 9.0 beds per 1000 population for similar groups.36 For general hospital beds, the most common ratios range between “.5 and 5.0 beds per 1000. After reviewing the above studies, it becomes obvious that the basic question of how to predict future bed needs has not yet been answered. 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