Question

In your opinion, is a low average percentage of occupancy a positive or negative aspect for a healthcare facility? In addition, are there ways a facility might adjust to a declining occupancy rate, taking into account how the needs of the community it serves might have changed? Explain your answer in detail and cite evidence that supports your opinion

Answer 1

TOWARDS A BETTER UNDERSTANDING OF HOSPITAL OCCUPANCY RATES

Bed occupancy is the number of hospital beds occupied by patients expressed as a percentage of total beds available in the ward ,speciality hospital,area,or region.It is used to assess the demands for hospital beds and hence to guage an appropriate balance between demands for health care and number of beds.The occupancy rate is a measure of utilization of the available bed capacity

WHY OCCUPANCY RATE IMPORTANT

Occupancy rates are important to business owners because they can signify success or failure of the property in question. here in a hospital setup also occupancy is an aspect better health care facility.In the sense as the number of cases increases occupancy rate should also met with this.otherwise the health care given to the patients will be compromised

The low occupancy rate of hospitals has been and continuous to be a subject of debate.It is alleged that,on a national basis,the average occupancy rate of hospitals is lower than it ought to be,and the resulting idle capacity contributes,in an important way,to the escalating cost of hospital care

Uniform occupancy rate for hospitals is not a meaningful concept because the ability of individual hospitals to maintain certain occupancy rate consistent with a specified protection level depends on several factors.

FACTORS CAUSING VARIATIONS IN OCCUPANCY RATES

• Hospital size
• The number of non substitutable patient facilities
• The percent of non urgent beds
• The number of hospitals serving an area
• Relative variation in the demand for services

Although capacity is generally calculated on the basis o full time operation of a firm, different industries adopt qualifications to suit their distinct modus operandi- the preferred rate of output plus a normal safety margin,the practical maximum rate barring enormous repair and maintenance costs,the minimum average cost rate and so on.In the hospital industry, capacity is traditionally defined in terms of bed complement. but the industry counts beds in more than one way

• bed setup and staffed
• licensed bed
• licensed bed are defined as the maximum number of beds approved the licencing agency,and are not necessarily existent beds

SPECIAL SIGNIFICANCE OF IDLE CAPACITY

It is well known that the delivery of hospital care has several unique features. first, in the delivery of hospital care ,time factor is of such over riding importance that it precludes scheduling in all but those instances involving,non emergency or elective cases.Now consider a hospital operating at 80 percent occupancy rate or what is the same thing an idle capacity of 20 percent.There is a real sense in which this safety margin to deal with fluctuations in the arrival of patients may be considered productive.idle capacity eliminates or minimizes the cost of denying admission.These costs include the greater pain and suffering,increased probability of death or permanent disability, and greater curative costs arising from delayed treatment.

Second hospital care must be consumed in person so that swift access to hospital facilities by the patient takes on a degree of importance which sometimes supersedes, or at least serves to temper such considerations as demand steadiness and economies of scale- critical factors that enter into managerial decisions concerning the location and size of firms in most industries. we intend to show, presently,that subordinating these considerations in the interest of access - an admittedly social welfare criterion -impairs the ability of hospitals to maintain higher occupancy levels

EMPIRICAL VALIDATION

we have discussed several factors that could influence the occupancy rates maintained by hospitals.these may be expressed in the following functional form:

OR = f(S, PD, PNU, RV, H)

OR = overall occupancy rate

S = hospital size

PD =product diversification index

PNU = percent non urgent beds

RV = relative variation in the demand for hospital care faced by individual hospitals

H= number of hospitals serving an area

The hypothesized direction of influence is indicated below

S =+

PD=-

PNU=+

RV=-

H=-

For example: hospital size increases overall occupancy rate, product diversification reduces it, and so on

RESULTS

Before commenting on the results and their practical significance, a degression an optimum occupancy rate is in order.from a social perspective,the concept of optimum occupancy rates revolves around the issue:how does one strike an acceptable compromise between 2 objectives- minimization of the probability of delayed/denied admissions and the minimization of the probability of hospital resources being used at in efficient rates.conceptually, the optimum level is where the social cost of expected delay/denial equals the social cost of resources.however,the quantification of these costs i fraught with such difficulties that the best that can be done with current knowledge and data is to ensure safeguards against gross imbalances........

To summarize this :

• if the hospital service area has a small population base and low admission rate, and if in addition, this area is served by several small hospitals, the fluctuations in demand facing each hospital will be rather high
• .if the hospital area has a large population base and high admission rate, and if in addition,this area is served by one or a a very few large hospitals,the fluctuations in demand facing the hospital will be rather low