# CASE STUDY o221

For this assignment, consider that you are the health care manager at First Life Community Hospital.

Over the past year, occupancy has been low because of competition from hospitals offering services that are more efficient and innovative in nature. How would you compete with this new competition? What impact would low occupancy have on staff and morale? If negatively, how would you address it?

After analysis of financial losses for the last year, it has been identified that numerous patients were transferred to other facilities due to lack of capabilities to deal with complex issues. How would you ensure that complex cases are kept inside of the HCO? How does keeping complex cases within the facility impact length of stay?

What is the financial impact of reversing the current situation?  Answer the above questions in a two-page response. You must use at least your textbook as an outside resource. Additionally, include an introduction and conclusion paragraph. All sources used, including the textbook, must be cited and referenced according to APA guidelines.

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HTH 1306, Introduction to Health Care Statistics 1

Course Learning Outcomes for Unit IV

Upon completion of this unit, students should be able to:

1. Describe how statistics are used in health care.

1.1 Describe the importance of occupancy in a health care organization and ways to maintain it.

4. Discuss various statistical analysis processes and measurements.

4.1 Discuss the significance of complex cases and how they affect the length of stay.

Course/Unit

Learning Outcomes

Learning Activity

1.1

Unit Lesson

Chapter 5

Chapter 6

Unit IV Case Study

4.1

Unit Lesson

Chapter 5

Chapter 6

Unit IV Case Study

Required Unit Resources

Chapter 5: Hospital Occupancy

Chapter 6: Hospital Length of Stay

Unit Lesson

Patient Stay

As discussed in depth in a previous unit, there are two classifications for inpatient stay: adults and children

(A&C) and newborn (NB). As there are two classifications for stay, there are also two designations for

inpatient stay, which are beds and bassinets. The bed count or bed complement refers to the number of

inpatient beds available. This includes those beds that are occupied or vacant on any specific day (Koch,

2015).

Similarly, the inpatient bassinet count is the number of available bassinets wit hin the health care organization

(HCO) that are available on a specific day, both occupied and vacant (Koch, 2015). With this information

noted, the purpose of an HCO, regardless if its primary purpose is for profit, not -for-profit, or governmental, is

to function at full capacity. In very simple terms, it is the purpose of ensuring that every bed or bassinet is

filled within the organization.

UNIT IV STUDY GUIDE

Occupancy

HTH 1306, Introduction to Health Care Statistics 2

UNIT x STUDY GUIDE

Title

From the perspective of a for-profit organization, the number of

beds or bassinets filled is in direct correlation to the inpatient

profitability of the organization. We will outline an example not

related to health care to clarify the importance of mainta ining

the beds and bassinets at full census. The local movie theater

has a maximum seating capacity of 100 individuals. The

manager has realized that the theater is averaging 70 filled

seats per movie showing. The charge for one seat within the

theater is \$15. The only day that the theater is not in full

operation is Christmas day in which it is closed entirely. The

theater shows five movies daily. Over the next year, the movie

theater continues the current trend of averaging 70 filled seats

per showing. Based on simple mathematics, the annual

occupancy rate for the theater is 70%. After analysis, it is very

easy for management to see that 30% of the theater’s earning

potential is not being realized. In financial terms, the movie

theater has lost or has failed to gain more than \$820,000 annually. Essentially, the fact that the organization is

functioning at 30% under its capacity or census has resulted in severe losses of income from its primary

source of potential gains.

We have not mentioned the potential losses in sales in terms of concessions and games. The previous

example may seem very basic, but the intent is powerful and can happen in any organization, including within

health care. The occupancy goals of the HCO is to keep beds and bassinets 100% occ upied at all times.

Anything less than 100% can have a substantial impact on the HCO in terms of financial gain and staff

morale.

To cement understanding, let’s look at a similar basic example from the health care perspective. The

maximum capacity of the inpatient ward with the HCO is 40 beds, and the average cost to the patient for an

overnight stay in an occupied bed is \$800. Based on increased competition from competitors and severe

turnover within the current location, the average daily occupancy for the inpatient ward is 20 beds. The

average daily occupancy remains unchanged for one year. Based on this data, the organization is not

realizing or capitalizing on nearly \$6 million of potential earnings annually. Note that this is just from only one

inpatient service located within the HCO. The perspective of upper management would generally focus on the

financial sustainability of the organization but other factors would need to be considered.

Staffing

A consideration that is often overlooked is staffing. Staffing requirements are based directly on the percentage

of occupancy. If the occupancy is high or at 100%, then corresponding amounts of staff are required to

ensure that safe and quality care is given to all inpatients. The opposite holds true when census is lower than

expected.

In most cases, staffing is reduced to meet the amount of demand based on the actual census. When the

census is low, staff may be sent home early or told not to come in at all. In extreme cases, entire units of the

HCO are closed. In these cases, the hospital is not the only one to suffer financially; the staff will also lose

income.

Typically, as a result, staff satisfaction may become low and turnover may become high because of the desire

to earn a consistent and stable income. The longer those periods of low occupancy linger, the more likely that

other issues will occur. For example, the human resources department will definitely have restrictions on

recruitment because of decreases in funding, and retention will be a problem because of the lack of

consistencies in the work schedules of the staff. As a result, highly qualified staff may leave the organization

or never be recruited, thus increasing the competitive advantage of competitors and further crippling the

profit-making potential of the struggling HCO. Maintaining the HCO at full occupancy is directly related to the

financial success of the organization and affects the morale of staff greatly, but the length of stay for patients

is also a very critical component to consider.

Movie theater empty auditorium with seats
(Syda Produ ction s, 20 15)

Movie theater em pty auditorium w ith seats

(Syda Productions, 2015)

HTH 1306, Introduction to Health Care Statistics 3

UNIT x STUDY GUIDE

Title

Length of Stay

The length of stay can be simply referred to as the amount of time that a patient remains as an inpatient

within the HCO (Koch, 2015). Typically, within the inpatient portion of the HCO, there is a mix of wards and

units based on the severity of the patient. As the complexity of care increases, so does the financial

reimbursement. Also, in some cases, as the complexity becomes less or more severe, the patient will move

internally throughout inpatient units of the health care organization. For example, a patient, who was assigned

to the intensive care unit (ICU), starts to recover and moves to the inpatient ward. Even though the patient

was moved from an area of higher acuity to a lower one, he or she remains as an inpatient within the health

care organization. The severity of care may have diminished, but the fact remains that the patient is still an

inpatient within the facility and a source of financial income. As long as the patient remains as an inpatient, he

or she will be calculated into the inpatient length of stay numbers and remain financially viable to the HCO.

Let’s provide a basic scenario so that you fully understand length of stay. For example, a patient is admitted

to the inpatient ward on June 4. He or she is discharged from the organization on June 11. The length of stay

is eight days. You, as the student, may state that basic mathematics would equal seven because of the

simple subtraction of 11 – 4. This is a very common mistake made when computing the length of stay. When

formulating the length of stay, the first and last days are counted. Again, in this example, eight days is the

correct answer. The below calendar outlines this example. The days highlighted in pink represent the patient’s

stay. If you count the pink days, you will notice that there are eight.

Sunday Monday

Tuesday Wednesday Thursday Friday Saturday

6/2

6/3 6/4

Patient

6/5 6/6 6/7 6/8

6/9

6/10 6/11

Patient

Discharged

6/12 6/13 6/14 /6/15

To ensure full understanding, let’s view another example that is slightly more complex. A patient is admitted to

the intensive care unit (ICU) on June 4. He or she is then moved to the inpatient ward on June 6. The

condition deteriorates and the patient is readmitted to the ICU on June 7. The condition later stabilizes and he

or she returns to the inpatient ward on June 8. The patient is subsequently discharged on June 9. The

patient’s length of stay is six days. This example not only demonstrates the impor tance of the length of stay

and the basic form of calculating it. It states the importance of being able to care for high-acuity patients within

the HCO.

As the financial importance of full occupancy was discussed in detail earlier, the length of stay is equally

important. In the example, the patient was transferred throughout multiple inpatient units and wards. Based on

the fact that all of the patient’s critical needs could be handled within the organization, the patient remained as

an inpatient with the organization. If the needs could not have been met, the patient would have had to be

transferred to another facility.

Quality personnel and equipment are so important. The longer that a patient stays within the health care

facility, the longer a bed or a bassinet is occupied. For this reason, it is extremely important that the health

care organization is equipped with the personnel and equipment necessary to deal with the most complex of

cases. The ability to deal with complex cases ensures that patients will be moved internally within the facility

and, thus, staying within the organization for multiple days, increasing the financial prosperity of the

organization. Simply stated, the purpose of the HCO is to care for patients. Operating at full occupancy in

terms of population and maximum days is beneficial for both the care provided to a high number of patients

and the financial stability of the health care organization.

HTH 1306, Introduction to Health Care Statistics 4

UNIT x STUDY GUIDE

Title

References

Koch, G. (2015). Basic allied health statistics and analysis (4th ed.). Cengage Learning.

Syda Productions. (2015). Movie theater empty auditorium with seats [Photograph]. Dreamstime.

https://www.dreamstime.com/stock-photo-movie-theater-empty-auditorium-seats-entertainment-leisure-

concept-cinema-red-image65304001

Nongraded Learning Activities are provided to aid students in their course of study. You do not have to submit

them. If you have questions, contact your instructor for further guidance and information.

Welcome to the fourth unit of the course. Before completing your graded work, consider reflecting on the

questions below:

• What impact does occupancy have on the financial stability of the organization?

• What factors affect the length of stay for patients within the organization?

• During time of low occupancy, how do managers keep morale and retention levels high?

• Patient Stay
• Staffing
• Length of Stay
• References