The Unstoppable Force of Hospital Beds and Hospital Employment

A hospital bed capacity study published last month in JAMA Network Open caused an industry kerfuffle. It argued that the U.S. would face a critical shortage of hospital beds by 2032 unless we figured out how to reduce inpatient hospitalizations or build more hospital beds. The concern is that proponents of building new multi-billion-dollar inpatient towers would use the study as fuel for their expansion agendas at the expense of spending that money on prevention and wellness to keep people out of the hospital.

So much so we did a 4sight Health Roundup podcast on it: “Do We Really Need More Hospital Beds?”

To add some much-needed objectivity to the polarizing debate over the need for more hospital beds, I flipped through Medicare Payment Advisory Commission’s (MedPAC) March report to Congress. MedPAC released the 527-page report to the public on March 13. The annual report is a treasure trove of facts on healthcare delivery, financing and utilization that often challenges the rhetoric from healthcare special interests and trade associations.

In last week’s blog post, “Money for Nothing and Risk for Free,” I cited hospital profit margin facts from MedPAC to counter the incessant crying from the hospital lobby that hospitals and health systems are going broke. Guess what? They’re not.

Anyway, here are some facts from MedPAC on hospital utilization and inpatient capacity:

• There were 4,556 hospitals in operation in 2023, down less than 1% from 4,563 in 2022.
• Seven new hospitals opened in 2023: five in urban areas, two in “other” areas like suburban areas and none in rural areas.
• Nineteen hospitals closed in 2023: 11 in urban areas, five in rural areas and three in other areas.
• Total inpatient stays by Medicare beneficiaries were essentially unchanged at 6.9 million in 2023 compared with 7 million in 2022.
• The average length of stay for Medicare beneficiaries, though, dipped to 5.3 days in 2023 from 5.6 days in 2022.
• The hospital occupancy rate was unchanged: 69% in both 2023 and 2022.
• Hospital outpatient services provided to Medicare beneficiaries dropped 1.3% to 145 million in 2023 from 146.9 million in 2022.

If I were to pick an adjective to describe the above trends, I would use the word stable. I also would say there’s no inkling of an impending crisis. No warning signs. No red flags. No outliers.

But here’s where it gets a little more interesting. According to MedPAC, hospitals employed 4.7 million people in 2023, up 3% from 4.5 million in 2022 and in 2019, the year before the pandemic. The number of hospital beds in 2023, meanwhile, was 674,000, up 1% from 667,000 in 2022 and up 1.7% from 663,000 in 2019, the year before the pandemic.

Rather than constricting after the pandemic hit in 2020 and then returning to pre-pandemic levels, not only did hospitals return to pre-pandemic levels but surpassed them in staff and in beds despite stable utilization. Now that is a crisis.

Nothing, not even a deadly hundred-year pandemic, can stop the inevitable growth of hospital capacity and hospital employment. And you wonder why healthcare costs are so high.

I don’t think the authors of that controversial hospital bed capacity study in JAMA Network Open have anything to worry about. Hospital beds and workers will find a way.

Thanks for reading.