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Healthcare providers increase reliance on demand forecasting

Forecasts may predict trends for at least three years, but not much longer than five years out.

Tammy Worth, Contributor

An increasing number of healthcare organizations are turning to demand forecasting, crunching numbers to help them determine potential device usage, patient demand and even to decide whether or not to build new facilities.An increasing number of healthcare organizations are turning to demand forecasting, crunching numbers to help them determine potential device usage, patient demand and even to decide whether or not to build new facilities.

Predicting the future healthcare needs of a community isn’t easy, as demographic shifts and rapid changes in policy can make it hard to see immediate needs, let alone issues down the road.

That’s why more providers are turning to demand forecasting, crunching numbers to help them determine potential device usage, patient demand and even to decide whether or not to build a new healthcare facility.

For example, New York’s Long Beach Medical Center was decimated during Hurricane Sandy in October 2012, and the organization never reopened as a full-service hospital. Bankrupt, the hospital recently sold to South Nassau Communities Hospital in nearby Oceanside.

There is little access to emergency services for the beachfront community of Long Beach – the medical center was the only hospital on the thin barrier island, which has just three exit points to nearby towns.

Many Long Beach residents felt another hospital should be built in its place. But Mark Bogen, senior vice president of finance and CFO at South Nassau, said his organization disagrees, and they’re using demand forecasting to help them make the decision.

[See also: Forecasts for future health spending.]

Before Hurricane Sandy, only 50 percent of residents used the emergency department, Bogen said. Only 35 percent sought inpatient care there and less than 10 percent used the hospital when needing surgery of any kind. According to Crain’s New York Business, revenue during the year before the storm was $55 million, not enough to cover its $59 million in expenses.

After the storm, the community of more than 30,000 full-time residents shrunk: Nearly one-quarter of residents never returned, choosing to stay full-time in their winter homes in the South. Since then, the community has tried to bring in young families to fill the gaps.

“We need to know how to bring in services but do it in a financially responsible way,” Bogen said. “Our belief is that with changing tides of healthcare reform where so much is moving to outpatient care, the need to build a hospital is not really there.”

We see fewer inpatient bed need models than before – not too many hospitals are looking to expand.

Adam Powell, consultant and president of Payer+Provider Syndicate, recently worked with a healthcare client to determine a staff development plan based on potential demand in 2014 and 2019. He examined the organization’s primary service area population, its market share and out-of-area draw to determine its potential patient volume. Then he calculated how many physicians would be needed to treat that population to get an idea of potential physician demand.

The organization had estimated what the demand would be, but working through the process officially gave them a lot of data and a consistent picture to back up their assumptions, he said.

Demand forecasting can be used to understand staffing needs, determine if beds need to be added or subtracted, if new hospitals or freestanding facilities should be built or if service lines can be introduced or removed. Hugo Finarelli, Jr., senior vice president of Health Strategies and Solutions Inc., said some of the more common forecasting his organization sees now include demand assessments for freestanding emergency rooms and ambulatory care centers, and understanding the need for specialty services like bone marrow transplants or pediatric heart transplants.

[See also: Recession, reform disrupt hospital strategic planning efforts.]

“We see fewer inpatient bed need models than before – not too many hospitals are looking to expand,” he said. “Organizations want to understand freestanding ED services and physician needs if they are going to get into population health management.”

Finarelli said demand forecasting can help predict trends for at least three years, but not much longer than five years out. Once you get beyond five years in a changing industry like healthcare, “you are just guessing,” he said.

Bobbi Brown, vice president of finance for Health Catalyst, a data warehousing and analytics group based in Salt Lake City, said much of this data can be created in-house. Information on metrics like use rates can be gathered from Medicare, payers or professional societies, she said. The planning department or finance staff can gather the information, and the whole management team must sign off on assumptions regarding things like population growth and technology development.

“You have to look at the data and ‘beat up on it’ with higher-ups to understand what will help get the population that we serve the services they need,” Brown said.

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