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Montana's changing health care sector.

Montana's Changing Health Care sector

Provider Categories

The Bureau of the Census identifies four types of health care providers: (1) Hospitals, which in Montana are nearly all acute care establishments; (2) Practitioners, including physicians, dentists, chiropractors, osteopaths, and other licensed (and some unlicensed) professionals; (3) Nursing homes and similar long term care (LTC) facilities; and (4) Other, which includes laboratories, home health agencies, some outpatient facilities, and a miscellany of other providers.

See figure 1 for the 1987 distribution of receipts among the four categories of Montana health providers. Briefly, total receipts exceeded $1.05 billion. Hospitals and practitioners accounted for a hefty 88.8 percent of the total.

The Census of Service Industries provides a good statewide overview of Montana's health care industry as it existed in 1987. It does not, however, describe the industry's changes over time -- and there have been several significant changes in the past decade. Nor does it address geographic variations across the state. For this information we must turn to other sources: the annual Montana Health Data Book and Medical Facilities Inventory.

What follows is an analysis of changes over time and of geographic distribution for each of the four health care sectors in Montana.

Changes in Hospital Activity

Hospitals: Size and activity in this important sector can be measured by counting hospital beds, inpatient days, and admissions (see table 1 for more detail).

From 1977 to 1987, the number of acute care hospitals in Montana remained relatively constant at between fifty-five and sixty. The number of licensed beds declined during the same period by about 6 percent to a little over 3,200. The closure of two hospitals, one in Butte and the other in Missoula, accounted for most of this drop.

(Note that licensed beds refers to a legal capacity which remains stable or changes slowly. Staffed or operated beds, on the other hand, are tied more closely to actual activity).

Inpatient days also reveal trends in hospital activity. Over the decade 1977-1987, the total number of inpatient days slumped by nearly one-fourth. Interestingly, inpatient days were on the rise until 1983-84 when diagnosis-related group (DRG) reimbursement for Medicare patients was introduced. Previously, Medicare reimbursed hospitals on the basis of costs incurred. After 1983-84, a schedule of standardized payments was in effect.

The number of hospital admissions also declined over the decade -- from about 131,000 to less than 105,000, a hefty 20 percent slide also correlated in part with the onset of DRG reimbursement.

A final comparison highlights one of the industry's (and its clients') major concerns -- runaway costs. Expressed in 1989 dollars, Montana's general acute care hospitals' operating expenses rose from $233 million in 1977 to $413 million in 1987. In "real" terms, these figures represent a 75 percent increase.

Hospitals and their customers have been dealt a double blow over the past decade. Huge increases in operating expenses pumped up rates. Substantial declines in hospital activity further pressured rates upward. No wonder Montana (and the rest of the country) is in the midst of a health care cost crisis.

Distribution of Hospital

Activity

What about geographic distribution of hospitals in Montana? As with the Quarterly's first article in this series, we will distinguish here between primary and secondary health service centers chiefly on the basis of county population. Thus, primary center exist in Billings, Great Falls, and Missoula; Bozeman, Butte, Helena, and Kalispell house secondary centers. Primary centers' respective counties -- Yellowstone, Cascade, and Missoula -- are referred to as the "Big Three." These and the counties of the secondary centers -- Gallatin, Silver Bow, Lewis and Clark, and Flathead -- together comprise the "Big Seven." Montana's remaining forty-nine counties are the "Rest of the State."

By 1987, Big Three health centers housed more than four in ten of the state's total hospital beds. The Big Seven accounted for more than six in ten, leaving less than 40 percent of the state's hospital beds in the Rest of the State -- a proportion that has declined steadily since 1977.

Geographic distribution of inpatient days shows an even greater concentration within the Big Seven counties. In 1977, they accounted for a little less than two-thirds of the total inpatient days. Ten years later, the Big Seven's share exceeded three-quarters. In other words, the fraction of inpatient days in the Rest of the State slid from more than one-third to less than one-quarter, a decline of nearly 45 percent (see figure 2 for more detail).

Practitioners: Little information is available for this sector, despite the fact that it accounts for more than one-third of health care receipts in Montana. Reporting requirements -- at least to public agencies -- are minimal for this group, but we can measure gross receipts and covered employment.

In 1987 more than 80 percent of this group's receipts were generated by offices and clinics of physicians and dentists. The Census of Service Industries reported a more than 60 percent employment increase for practitioners' offices and clinics over the decade 1977-87. Practitioner growth rate then, about equaled that of hospitals and was a little less rapid than occurred in the entire health care sector.

Long Term Care (LTC) Facilities: As with hospitals, activity in the LTC sector can be measured best by looking at the number of beds and inpatient days (see table 2 and figure 3). The picture that emerges for LTCs is quite different from that of hospitals, though. More than half the total LTC beds are outside the Big Seven. Moreover, in contrast to hospitals, the Rest of the State's fraction of LTC licensed beds has grown slowly over the decade; it increased 15 percent from 1977 to 1987 and the bulk of this growth (two-thirds) was outside the Big Seven. LTC inpatient days also increased by about 15 percent and the geographic distribution was much the same.

Significantly, non-urban counties house just over half of the LTC industry in Montana. And unlike its hospitals, Montana's long term care facilities have been enjoying a decade of slow but apparently steady growth.

While the total number of licensed LTC facilities grew by about 10 percent from 1977 to 1987, a number of hospitals began providing long term care through the use of "swing beds." These beds operate flexibly according to demand and may be occupied by acute care hospital patients as needed, or shifted for use by those requiring a lower level of care but a longer stay. Swing beds exist primarily in smaller rural hospitals, and do not consititute a significant fraction of the state's total LTC capacity. However, swing beds do point toward an organizational change in the provider community.

Other Health Care Providers: This sectors is the smallest and most diverse of the four. It includes medical and dental laboratories, home health care agencies, and specialty outpatient clinics treating, for instance, drug, alcohol, or obesity problems. Home health agencies and specialty outpatient providers are rapidly growing alternatives to more expensive forms of health care in the state. Collectively, this category accounted for about 7 percent of Montana's 1987 health care employment.

Conclusion

What conclusions can we make, based on this data?

* Hospital usage in Montana has declined sharply in recent years and has shifted from the less populated areas to the three primary health care centers. This combination of absolute decline and shift in service areas creates a "have not" situation for many people. Montanans' access to care is further threatened when many hospitals struggle to remain open. Moreover, concerns about cost and quality invariably arise.

* Contrasting sharply with hospitals, long term care facilities grew in both size and usage over the past decade. Further, although all parts of the state shared in the growth, less populated areas showed the most gain. This broader geographic distribution provides somewhat greater but far from universal access, and lower intensity of care mitigates some concerns about quality. But the matter of runaway cost remains.
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Title Annotation:Health Care
Author:Goode, Rudyard
Publication:Montana Business Quarterly
Date:Dec 22, 1990
Words:1312
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