RPM to Solve High Occupancy Challenges in Hospitals

The most significant benefit to the hospital in RPM deployment, other than reimbursement opportunities for RPM care, is opening hospital beds for sicker patients.

January 10, 2023
RPM to Solve High Occupancy Challenges in Hospitals

Healthcare in the US is a business. The best providers are in healthcare to help people get and stay healthy, but the industry is very, very concerned with financial outcomes. So don't be misled by the fact that most hospitals are classified as "not-for-profit" since this has nothing to do with making money. And don't hold it against the entities we depend on – as citizens, we've repeatedly embraced the business-first aspect of healthcare when we need it.

With this in mind, we consider hospitals' financial and medical constraints differently. Simply put, a hospital is a constrained environment with a significant fixed cost base and a mission to generate profitable revenue through admissions and procedures. The type of procedures performed dramatically impacts a hospital's profitability since as much as 80% of the expenses a hospital faces are fixed. In that scenario, the goal is high-quality – high-margin revenue.

The revenue generated by a hospital stay varies considerably based on the procedures performed, tests and imaging studies, etc. So a simple average of "cost per day" doesn't tell much about a specific hospital's caseload and throughput. Most citations will show a nightly rate of about $10,000 – but this is a mix of a patient admitted for observation with chest pains that will generate $5,000 per night and a patient undergoing a CABG procedure that will be $15,000 - $20,000 per night. So the type of patient and procedure matters. 

Now, this is a moot point if the hospital has extra beds – and many do: the average hospital occupancy rate usually lands around 65-70% of capacity. But in many parts of the country, there are hospitals with 90% - 95% occupancy rates. So essentially, these hospitals are "sold out."

That could sound good, but it brings us back to the procedures patients receive. If they're patients under observation, the hospital may be operating inefficiently. Hospitals with very high occupancy rates typically offer advanced care – tertiary or quaternary level of care – which are high revenue, high margin patients. That type of hospital will usually have many opportunities – sometimes hundreds of times a month – to transfer in high-value cases. With one caveat – they need open beds. While no one begrudges a lower revenue patient if they need to be in a hospital, many don't need to be in a hospital. This is where remote patient monitoring - RPM – can be helpful.

Let me explain. If you're out of beds and can't accept transfers, you're out of luck. But certain patients may be able to be monitored at home as effectively (some providers argue more effectively). RPM can enable those patients to be discharged for home monitoring, freeing up resources for more acute patients. There are reimbursement opportunities for RPM care that also add to the value of the RPM deployment. But the most significant benefit to the hospital in this deployment type is opening hospital beds for sicker patients.

If your hospital is frequently at capacity and can't accept transfers, RPM may help solve this challenge.

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