More hospital beds are staying empty in the region. Here’s why.

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On an average day in 2016, 61.9 percent of set-up hospital beds in the region were occupied compared to 64.5 percent in 2015, according to Allan Baumgarten, a health care analyst and author of the Ohio Health Market Review.

Premier Health’s Chief Strategy Officer Craig Self said the hospital network — which includes Miami Valley Hospital, Upper Valley Hospital and Atrium — has recorded declines in the patient census at its hospitals for years, in part because insurance companies have changed the way they pay hospitals to reward better health outcomes.

That has resulted in less time in the hospital and more time at home.

“Frankly, we think that’s appropriate versus being in a high-cost inpatient environment,” Self said.

Common surgeries that used to mean several nights in a hospital can now be same-day procedures; some total hip replacements can be done as outpatient. More people are staying out of the hospital with the help of home health care.

There has also been a rise in the number of patients who are spending the night in a hospital bed but are labeled as “held for observation,” which means they are considered outpatient not inpatient, analysts say.

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And as patients pay a greater portion of their medical bills, many have put off elective surgeries.

Self said the low occupancy rates played a significant role in Premier’s decision to close Good Samaritan Hospital, which until late July had been operated in northwest Dayton.

Thomas Campanella, professor of health care economics at Baldwin Wallace University, said health care networks are moving away from building and operating big regional hospitals in favor of slimmed-down outpatient offices like a freestanding imaging center or a series of urgent cares.

“If you were starting from scratch today and deciding ‘How many hospitals do we need in the Dayton area? How big and how many beds do we need on the inpatient side?’ You would probably come up with a completely different model than exists today,” he said.

Kettering: ‘We’re seeing rapid growth’

Kettering Health Network says that while the federal occupancy numbers show the network is a little under 60 percent occupied in 2016, that doesn’t paint the full picture.

Kettering Health’s hospitals are Kettering Medical Center, Grandview, Sycamore, Southview, Greene Memorial, Soin, Fort Hamilton, and Kettering Behavioral Medicine.

Paul Hoover, vice president of strategic development for the network, said a shift in how patients are classified has led to some of its patients not considered inpatient even though they are still staying in a bed. Patients can still be staying in a bed at a hospital but considered under “observation” and be tallied as an outpatient visit, he said.

Hoover said over the last two years, the health network is seeing an increase in the number of people in its beds. He said Sycamore at one point last week had its staffed beds 100 percent occupied, with one unit closed down for maintenance.

“We’re seeing a rapid growth in demand for services,” said Hoover, who added that Kettering had a 3 percent growth in inpatient stays at their hospitals between 2014 and 2017 and a 10 percent growth in observations. .

Hoover said Kettering Health is also feeling the changing hospital trends in how and where health care is delivered.

A routine surgery that might have been a three- to five-night stay a decade ago might now mean less than a day’s visit.

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Technology also lets patients be seen in more convenient settings, including virtual doctor’s visits, he said.

The trends can be seen in the number of hospital outpatient observation hours recorded in the U.S. That number increased from 27 million in 2007 to 58 million in 2016.

Observation care is intended to determine whether a patient should be hospitalized for inpatient care, transferred to another setting, or sent home.

While the overwhelming amount of hospital network construction in the region has been for outpatient centers, Kettering Health has one of the few projects adding more inpatient beds, building a new hospital to open in Troy mid-2019.

The only other hospital in Miami County, Premier’s Upper Valley Medical Center, is listed as 39.3 percent occupied in 2016, down from 45.9 percent in 2014.

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Revenue growing

The overall decline in recorded inpatient stays doesn’t appear to be translating into lower hospital profits.

Hospitals in the Cincinnati/Northern Kentucky/Dayton region had combined net income of $908.4 million in 2016, up from up from $768.7 million in 2015 — even as inpatient days for the region fell by 3.5 percent, according to the Ohio Health Market Review.

Kettering Health ended 2016 with a 12.4 percent profit margin, with those numbers including not just patient revenue but also investment income and philanthropy, the report states. Premier closed 2016 with a 3.4 percent profit margin, according to the report.

Hospitals have been placing most of their investment focus on services outside of regional hospitals. Freestanding ERs and other outpatient medical centers have instead been on the rise.

Home health agencies have been growing, and Premier has been investing in Fidelty Health Care, its home care division.

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Self said the trends are also reflecting consumer demand. People would generally prefer to be in their own homes with the assistance of telehealth or home health aides rather than check into a hospital, he said.

“Consumers are paying more and they are looking for alternatives at lower costs,” Self said.

Baumgarten, author of the Ohio Health Market Review, said more people are deferring elective surgeries as they take on a greater share of their health care costs.

The steady decline in inpatient volume has been one of the factors pushing hospital systems to seek more patients by expanding or acquiring facilities, lines of services and geographic reach, he said.

J.B. Silvers, a health care economist at Case Western Reserve University, said hospital systems are being pushed by the payment models of insurance companies, which tend to penalize longer and repeat hospital stays.

There are benefits for patients, he said, because they can sometimes avoid hospital-related infections.

“You really don’t want to go to a hospital unless you have to,” Silvers said.