HOSPITAL BEDS IN NEW YORK CITY"'THE NUMBERS GAME" S. DAVID POMRINSE, M.D. President Greater New York Hospital Association New York, New York
T HE "Numbers Game" is the name of the paper I was asked to present. I have brought you some numbers. I cannot guarantee the fortune they will gain for anyone at a casino but the numbers become unwieldy when they get to the hospital bed count. As you know, the hospitals and the medical care which is provided in them compose a service industry that is responsive to the people's needs for health care. Since 1970, when the last complete census was taken, New York City has lost more than 500,000 people (see Table I). These are the people that the census has acutally counted. It is significant to note, however, that the census clearly undercounts people. The undercount generally occurs in the poorer neighborhoods of large cities, especially where there has been an influx of illegal aliens. Ask any hospital administrator in New York City. You will be told about ineligibles for health insurance because they are illegal residents in this country. Recently, a Congressional committee published estimates of up to one million people in New York City who offically do not exist. Presently this issue is a core problem in New York
City. Another circumstance worth noting is the gradually decreasing length of the average hospitalization, due in large measure to utilization review (PSROs, on-site teams, etc.). We are finding that one cannot maintain the efficient levels of occupancy (of 85% or so) simply because we are processing people more quickly. Table II shows that although the number of discharges, meaning the numbers of people treated, has gone up, the total number of patient days has gradually decreased. Federal authorities say that there are 100,000 excess beds in the country-an estimate based on Walter McClure's Interstudy report. The Presented before the Committee on Public Health of the New York Academy of Medicine January 8, 1979.
Bull. N.Y. Acad. Med.
TABLE I. POPULATION ESTIMATES
July 1, 1977 New York State New York City Bronx Brooklyn Manhattan Queens Richmond
17,924,000 7,312,200 1,292,700 2,345,500 1,387,500 1,954,500 332,000
July 1, 1976 April 1, 1970
18,053,000 7,415,600 1,329,200 2,381,600 1,407,100 1,968,900 328,800
18,241,391 7,895,563 1,471,701 2,602,012 1,539,233 1,987,174 295,443
Change, 1970 to 1977 No.
-317,391 -583,363 -179,001 -256,512 -151,733 - 32,674
-1.7% -7.4% -12.2% -9.9% -9.9% -1.6% 12.4%
Other Background Information Population Estimates
New York City New York State
July 1, 1977
April 1, 1970
Change, 1970 to 1977 % No.
Statistics: U.S. Dept. of Commerce, Bureau of the Census, Population Estimates-Series P-26 No. 77-32, Nov. 1978.
state and our Health Systems Agency (HSA) have repeatedly stated that there is a 5,000-bed excess in New York City. The problem is that no matter how many beds close, we still have a 5,000-bed excess. That is the numbers game. In New York City, since January 1976, when this 5,000 figure first appeared in the press, we have eliminated some 4,600 beds-a 1% reduction in the hospital system. During the same period (since January 1976), 25 hospitals have closed-25 out of 113, leaving 89 hospitals in New York City. We are now down to less than 37,000 beds from the 41,000 (round figures) that existed in 1976-a significant drop.* The state health planners still say, however, that we have 5,000 beds too many because that figure continues to be used by the press. It has become a moving target, so to speak. One might think that all this "shrinkage" happened because of a sudden realization that we had too many hospitals and beds. However, I checked back to 1950, before we had public efforts to reduce bed counts. I found that there were 113 hospitals three years ago and 170 hospitals in 1950. During that 25-year period there was a drop from 170 to 113, but with *Since this paper was presented, the state has grudgingly acknowledged some of our numbers, and now indicates that the excess is between 2,500 to 3,000 beds.
Vol. 55, No. 9, October 1979
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little change in the total bed count. What happened was that hospitals merged and were rebuilt as larger institutions, while the total number of smaller institutions disappeared. As a result, there was a progressive enlarging of the average size of hospitals but a decrease in the total number of hospitals. This happened without the State of New York saying, "Thou shalt," the HSA publishing a plan, or the Academy publishing a statement. It just happened. It happened because of the same forces that have led from a reduction of 350 companies making automobiles in 1900 to the current three and a half companies doing so. The reason, as far as I am concerned, is, to use economic jargon, the need to accumulate capital. Hospitals are increasingly capital-intensive: they take bigger buildings and bigger, more sophisticated equipment, which all doctors want. I have heard physicians insist on obtaining the latest gadget for this, that, or the other thing- "It only costs $50,000"-and so on. All those expenses must be added to the aggregation of capital in terms of brains, manpower, and the specialization of medicine. Subspecialists are needed to create the total pattern of a medical center. As it becomes increasingly necessary to accumulate both human and financial resources, few institutions can survive, and so the weaker ones do not. This trend has accelerated in recent years, due mainly to a stringent reimbursement system that has forced out some of the financially shaky institutions. The number of beds in the closed hospitals-those that are completely out of operation totals 5,000 (not including new beds that were added). The least expensive bed costs about $65,000 a year to maintain, a little less than $200 a day, which, for New York, is rather low. (The Group I major teaching hospitals are now running around $300 per day.) By the elimination of the beds in closed hospitals, the system-third-party payors, the city, and the state-is saving $210 million a year, or 6% of the total $3 billion hospital expenditure in New York. This is not an insignificant sum. Health care is considered to be the largest industry in New York. Although it may be fragmented, it is larger than the financial sector, manufacturing, and retailing-all of which involve less money and personnel than the health sector. We have saved 6% of the $3 billion health-care industry by closing hospitals. I believe that this is the only way to make any significant financial savings in the total system. When the federal government got interested in the issue of closing hospitals it realized that some relatively simple technique was needed to Vol. 55, No. 9, October 1979
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get all the various localities around the country to understand the process. And so HEW Secretary Joseph A. Califano waved his magic wand and said, "Let there be four beds per 1,000 population, and no more." We are told, on fairly good authority, that the staff had recommended 4.5 beds per 1,000 and he said, "Well, hell, if you can get it down to that figure, let's get it down to four." So regulations were published setting four beds per 1,000 population as a planning guideline. If one reads carefully PL 93-641-the law that puts this principle forward-one sees that there are all sorts of exceptions. That is, there are special situations in which this formula can be changed. The trouble is, the bureaucratic mind likes to have things simple and clean. It can multiply calculations by four, but when you ask, "What about a lot of other situations?" (which I shall get to shortly), it gets confused. Since the bureaucratic mind does not like confusion, four beds per 1,000 became an inflexible maximum figure. The formulas become cast in bronze, and changing them is extremely difficult. Obviously, no bed-need formula, no matter what the magic number, would fit every community in the country-from a rural area with more cattle than people compared to the City of New York, which is as complex as anything can possibly be. What adjustments do hospitals think need to be addressed? I should remark that the Greater New York Hospital Association got into this in enormous detail last year because the State of New York, in its wisdom, attempted to apply the rigid four beds-per-1,000 formula to the borough of Brooklyn. It produced a Brooklyn bed-need study which originally stated that there were 1,000 too many beds in Brooklyn. We finally got them down to 600 too many, which was probably more accurate. My guess is that, with the progressive shortening of stay and the prospect of several institutions closing-particularly Greenpoint and Cumberland (although Woodhull may open),-and if some shrinkage occurs at Kings County and Brooklyn Jewish, we shall probably achieve a balance in Brooklyn. The problem to be addressed first is that of the elderly population. Old people use about four times as many hospital days per 1,000 as the general population, those under 65. If one looks particularly at the people over 75 (and the curve rises steeply when one looks at utilization by five-year age ranges), one finds that New York City has a significantly higher percentage of people 75 and older. We have about 20% more people 65 and over than is called for in comparison to the national figures. We also have well Bull. N.Y. Acad. Med.
BEDS HOSPITAL BES
over 30% more aged 75 and over. Those are the people that fill the nursing homes and cause a back-up in hospital beds because one cannot place them in alternate levels of care. So the aged are obviously a crucial factor. The second issue is ethnicity. It is accepted that nonwhites use 9% more days per 1,000 per year than whites. This is not a figure that is argued about. The key question is, "What is happening to the mix of ethnic groups in New York City?" We could not understand why the State authorities said there were so few nonwhites in Brooklyn until we discovered that they had not counted Puerto Ricans as nonwhites. But when one corrects for the inclusion of Puerto Ricans, one discovers a significant change in the numbers. The third issue, which I have already referred to, are the illegal aliens. Let us say that there are only three quarters of a million, even though Congress says it may be as high as a million. That is 10% of our population-10% more than the seven and a half million that have been counted. They all use hospital services; they all fill beds; they have babies; they get sick; they break their legs; and everything else that can happen to people in general also happens to illegal aliens. We have in New York a very special situation, due to a concentration of medical schools here and the teaching institutions associated with them, which are major economic assets for the city. There was a one-day study sponsored by Blue Cross-done every few years, with fairly consistent findings-which showed that 11% of the inpatient days are accounted for by nonresidents, whom I shall call immigrants. These are people from Westchester County, New Jersey, and Long Island-and from California and Iran, too. They go primarily to the referral hospital because they are referred from someplace to have specialized, tertiary care. Eleven percent of the hospital days in New York is a $350-million-a-year contribution by our neighbors-neighboring states, neighboring counties, neighboring countries-to the economy of this city. The money brought into our economy via the hospitals pays for the services of 18,000 to 20,000 people. If we limit our beds so that we discourage in-migrants, we shall destroy the teaching centers, but we shall also be "cutting our nose off to spite our face" because these people bring their Medicare, Blue Cross, and major medical insurance with them, and they pay their bills. They, therefore, are a significant factor. To interfere with their movement would be most counterproductive. During the Brooklyn study, some minor technical points were raised Vol. 55, No. 9, October 1979
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about types of beds (maternity, rehabilitation, etc.). I shall not elaborate on these areas. Suffice it to say that we succeeded in convincing some State people that there was, indeed, not as much of a surplus in Brooklyn as they thought. Actually, our study showed that no excess existed in Brooklyn and, as a result of our efforts, the State brought its number down to around 650. One would think that it would be easy to say how many beds we have. I can get for you five different "accurate" counts of beds in New York City's hospitals, each of which would be defended by the people who put it together. I am talking about either official agencies or, in our case, a voluntary organization's count. And then, if one takes an administrator aside, he will admit to including a couple of illegal beds he has added because the hospital is full. It is really very interesting that it is so difficult to get a definite number for something as simple as this. The State has it easy; they use a category called "certified beds," but that has no close relation with either capacity or complement. One of the things we discovered when we got into the excess beds controversy last year was that State bureaucrats simply did not have the political guts to stand up and say "Close." They have the legal authority to do it, given by a special statute that was passed two years ago. It gives the State Commissioner of Health the right to decertify and close a hospital. The political questions, including the major one-the unemployment problem-are obviously very significant. To avoid that, the State Health Department employees said, "Let's take 50 beds out of each hospital. That's the nice, quiet way to do it, and that won't hurt anybody and we can still say we have eliminated hundreds of beds." What that would do, I am afraid, is lead to the financial collapse of all the hospitals where beds were cut in this piecemeal fashion because hospitals have overhead fixed costs which do not vary significantly whether they are that size or 20% smaller. And so, if one eliminates 10% to 20% of their beds, one spreads that cost over fewer patient days and sends costs through the roof. One also destroys their house-staff training programs and their ability to provide various types of specialized services-in effect, destroying the hospitals. But, when one is an employee of a political system, one tends to look for the easy way to solve tough problems. Unfortunately, what is expedient is not usually considered best. As part of our efforts to prove that piecemeal bed decertification would not save the State any money, we hired Ernst and Ernst to do financial Bull. N.Y. Acad. Med.
feasibility studies on four hospitals which were up for review at that time. We asked, "What would happen to these places and what would happen to the total reimbursement expenditures of the State after all the adjustments were made because of the changes in costs of these hospitals?" We found that it would have cost the State $17 million more to have the 50 beds or so taken out from each of these four hospitals (as they were recommending), basically because the rate ceilings would have changed. Richard Berman, who is in charge of this sector in Albany, was a little distressed by that because it did not fit the affordable solution for which they were looking. Observe Table II, which has some data on total patient days. One can see what has been happening throughout this area if one looks at the comparison in the last column to the right. Total patient days are down over the two-year period 1.3%, but discharges are up 6%, which is obviously explained by a 6% drop in the length of stay. My preliminary information on 1978 suggests a further drop in length of stay-about another 3/lOths of a day. Table III is significant because it shows where New York State stands in relation to the nation in a number of different areas. In total number of beds per 1,000, New York is about a third of the way down 4.7 beds per 1,000-and is not too far from the national average of 4.5. This is statewide. New York City is a little higher on the scale. Our 85% occupancy rate is the highest in the country. In length of stay, we are also the highest in the country. One might say, "That's why your occupancy rate is so high-you're keeping all those folks." In admissions per 1,000 we are way down the scale: about a quarter of the way up from the bottom at 148, with a national figure of 160 admissions per 1,000 population per year. I took this one step further because I thought there was something strange about this data. The New York City Blue Cross plan has the lowest utilization in days per 1,000 of any large city Blue Cross plan in the country. Last year they paid for 557 days per 1,000 enrolled members. That is getting down to where the Health Maintenance Organizations are-about 500, or a little less, and is in sharp contradistinction to the next 10 large cities, which run around 900 days per 1,000. So we are at almost the halfway point-let's call it 60%-of the other large cities. I thought, "That's strange. That does not tie in with this high utilization, high occupancy rate, and everything else. There is something wrong here." Vol. 55, No. 9, October 1979
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When we looked at the Medicare utilization rate, we found that four of the five counties in New York State rank among the highest in the country. These are the Medicare days utilized per 1,000 elderly; so it is already corrected for the difference in age groups. It is really puzzling. Here are the same inefficient hospitals, the same sloppy doctors who overadmit, keep patients too long, and do all those other nasty things that the press says we do daily. With our young population, we are more efficient than any city in the country as a total system; but, with the aged, we are the least efficient in the country. "How come? What's the difference between the aged and the young?" I asked. These patients may be in the same room. In a four-bedded room, for example, you could have a couple of people over 65 and a couple under. I am absolutely convinced that physicians do not say, "This is a Medicare patient, I'll keep him longer," or "This is a Blue Cross patient, I'll get him out." Indeed, Professional Standards Review Organizations (PSROs), and other utilization-review groups, have been essentially negligible for the younger population, and have all been concentrated on the oldsters. And yet, this is the outcome of all that activity. It is obvious that old people use long-term-care facilities but young people do not. So I asked, "How well equipped are we with long-termcare facilities?" I discovered that for skilled nursing facilities, which is where practically all of the patients requiring long-term care go upon discharge from a hospital, the national figure is 51 beds per 1,000 elderly, but we in New York City have 29 beds per 1,000 elderly. It now begins to fall into place. There is one more bit of information. The PSROs did a one-day census of how many federally insured people are in hospitals awaiting transfer to more appropriate levels of care, which basically refers to those on Medicare. It was found that 5% to 6% of the acute general hospital beds are filled with people no longer medically needing those beds. convert some marginal acute care hospitals into skilled nursing facilities there would be significant savings to the state because it would be paying a skilled nursing rate instead of an acute care rate. We would get rid of the fixed overhead because we would wipe out 90% of the accounting department, close the operating rooms, cut the laboratories down to one tiny nook (such as one finds in a skilled nursing facility), cut the nursing staff down to where it ought to be for a skilled nursing facility, and so on. I do not think that doctors are venal or lazy or bad or anti-social or Bull. N.Y. Acad. Med.
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anything else. I simply think that it is impossible to move old people out of acute care hospitals when there are no beds to receive them and when home-care services are antiquated or not available. But if what people need, what they are waiting for, say the PSROs, are skilled nursing beds, then there is no sense in attacking inpatient facilities; rather, it is more important to make sure that facilities that truly meet their needs exist. In summary, I do not know how many beds New York City needs for acute care. I know it can do with less, and I represent the trade association that defends hospitals. When I took this job, I told the board that I would not defend every last member hospital in New York City. They are all waiting to find out which I won't defend. I have a little list, which happens to be the same list that was published in the newspapers several years ago. The interesting thing about this is that the hospitals that have closed are, by and large, the ones that the State, the HSA and the mayor's office agreed should be closed. Of those that have not closed, one is arranging to move its flag; it has purchased a proprietary hospital and will probably be moving within the month. Another one is also moving, and a third is a small proprietary hospital, which I think is an outrage, and cannot understand why the Commissioner allows it to continue. So if you want to know how many beds New York City needs, I do not know the answer. But I know it needs a number fewer than it has, and more than the state says it should have. If you take our seven and a half million population at four beds per 1,000, you get 30,000 beds. That is easy to compute. If one adds the immigrant population, (those patients coming into New York City for care) you add 3,000 more for a total of 33,000. I think we have to add something like 10% for illegal aliens, the over-aged, and so on. That would bring us to about 36,000 beds. We now have about 37,500, and I suspect therein is the difference. If we were to move out the 5% of the people awaiting a skilled nursing bed in the acute care hospitals, I think we would just about achieve a balance. That is the numbers game for today. Watch tomorrow's newspapers for a further accounting..
Vol. 55, No. 9, October 1979