Hospital care in the U.S. is a complex dance of coordination and communication. Management guru Peter Drucker wrote in 2002 that the hospital is “altogether the most complex human organization ever devised.” Drucker was talking about the proliferation of “knowledge workers” in today’s workforce – groups like physical therapists, lab and imaging techs, care managers, and so many more that help a patient along their journey. Seventeen years later, that statement still rings true; with today’s payment and reimbursement policies, you could argue that hospital health care is even more complex today than it was then.

Deciding on what to improve within this world can be daunting. There are so many options, and so many groups involved in each. I’d like to discuss one that appears to be an opportunity for just about every hospital in the U.S.: observation management.

Learn how MercyOne Des Moines reduced their average observation length of stay by 33%.

The use of observation status when admitting patients today is extremely widespread. Originally intended as a short-term period of lightweight care before admission or discharge, Medicare has seen a 450% jump in observation spending from 2011 to 2016, and that number is surely higher today. Hospitals are reimbursed at lower rates for what’s essentially the same as inpatient care, to the point that most observation visits represent financial losses to the hospital. On the other side, patients (especially Medicare and Medicaid recipients) are also subject to a different payment structure and sometimes end up paying more for an observation stay.

On top of that, many hospitals don’t have separate accommodations for their observation population, so patients are often scattered across units. This lack of cohesion and focus represents a big challenge to care teams: they must juggle several tasks across different groups and departments to ensure an observation patient gets the required care, and they must do it in an extremely tight time frame (ideally fewer than 24 hours). As Drucker wrote, this isn’t easy. As a result, patients often get lost in the shuffle. It’s not that they’re receiving poor care; in fact, they receive the same high-quality care as inpatients. The problem instead is more of an operational one: how can we manage this population within the time and financial constraints we’re given?

This issue presents a twofold opportunity for hospital systems: first, reducing the length of stay of any observation visit represents a direct financial savings. On the other side of that coin, increasing conversions to inpatient status allows for an insurance billing rate that’s more representative of the care provided to those patients. Here are four steps I’ve found to be impactful while working with hospitals on improving how they work with observation patients:

  • Identification. There’s power in a simple, real-time look at how many observation patients there are in a hospital, where they are, and how long they’ve been there. Having to glean that data from dozens of charts can be frustrating and time-consuming, and result in operating from outdated information.
  • Prioritization. Knowing what an observation patient needs to move through care is paramount. For example, if the decision to convert or discharge an observation patient lies in the result of a test like an MRI, then the entire care team needs to know. Shaving even a few hours off the average observation length of stay can have a profound effect on cost savings and patient flow.
  • Recommendation. For observation patients, modern systems can analyze history, compare to national norms, and include important clinical and environmental factors to predict lengths of stay and likelihood of an observation patient to be converted to inpatient status.
  • Communication. Getting important handoff information to the next shift or group is a tough task – it’s often a patchwork of notes and phone calls. Some of that data is locked away in separate systems and not accessible to the entire care team. An easy, open way to communicate a patient’s needs and eligibility for conversion or discharge across shifts and teams can speed the process of dispositioning a patient.

As I mentioned, there are so many possible ways to impact hospital patient flow. Better management of observation patients is just one choice of many, but it’s a widespread issue that’s seen solid results with our customers.

Hospital IQ helps hospital systems manage their observation population, regardless of where patients are physically located, by providing real-time location and length of stay information in a one-stop, mobile-friendly fashion for clinicians on the go; giving foresight by predicting length of stay and likelihood of inpatient conversion, highlighting outstanding needs for any given observation patient; and allowing care teams to share vital information with each other as they guide patients through their journey.

Check out our latest case study and read how MercyOne Des Moines reduced their average observation length of stay by 33%.