Why Are Children’s Hospitals Necessary?

Now I admit an inherent bias in my thinking, but the question arises constantly: Why do you need a free and independent children’s hospital versus a children’s hospital within a larger system?  Is it because of my job at Children’s when I think in these terms or is there some data behind thinking this is better for children?

A recent white paper by the Chartiss Group that was presented to CEOs of children’s hospitals discussed the evolving nature of these hospitals in light of what is happening in our economy. They remind us that birth rates have declined dramatically over the past few years, which of course will have a great impact for us over the next four to five years.  Hospitals that take care of children are seeing an increasing prevalence of chronic diseases and an increasing prevalence of children with technology dependencies.  Both of those groups have an increasing demand for pediatric services.  At the same time, we are seeing thankfully a greater and significantly improved survival rate. Along with this there is a major increase in the growth of obese populations and socioeconomic shifts in Medicaid.  There are more and more children having their care done in the outpatient world and there has been a reduction in neonatal discharges.

What the Chartiss Group found was that the adult hospitals and adult systems do not have the ability to compensate for volumes and other service lines, thus the country is seeing an increased consolidation of pediatric care, more and more within free-standing children’s hospitals.

Also, a few years ago we felt there might be a 3 percent annual growth in pediatric patient days; in reality it is now closer to just 1 percent.  Between 2003 and 2009, the number of patients with at least two or more complex, chronic conditions admitted to hospitals went from 5.6 to 7.7 percent and those children with technology dependencies went from 10.9 to 13 percent.  What we also know is that when the Medicaid population goes up, their utilization of hospitals also goes up.

What was most important — and for all of you out there who sometimes wonder if you should be taking care of children in community hospitals or hospitals within hospitals — to remember is that there is also superior, quality performance at children’s hospitals.  Outcomes at free-standing children’s hospitals are better. Their actual mortalities percentage of expected mortality is lower whether it is in complex children or technology dependent children.

In this healthcare economy, we also have to look upon price.  Children’s hospitals need to differentiate themselves based upon low-cost services, access and quality; they need to promote innovative care models to better leverage subspecialties; align with community; and access additional market opportunities to preserve regional positions.  They also need to invest in an achievable set of destination programs, begin partnership discussions with dominant adult systems, manage financial performance, prepare for Medicaid fee reductions and improve performance. We must also rapidly develop contingency to manage population and work with health plans in the state to shape payment reform.

It’s scary, but also leaves us with great opportunities.

Phil Kibort, MD, is Children’s vice president of medical affairs and chief medical officer. Read his bio here.

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