Strategic Management of a Healthcare Facility in St. Louis In the late 1800's and early 1900's St. Louis was a major center for automotive and other heavy manufacturing but the industrial restructuring of the Midwest during the latter half of the century has resulted in consistent economic decline of the St. Louis region. Today however as the rest of the country faces a slowing economy this region is showing new signs of growth. [Kotkin, 2002] Due to changing socio-demographics, the demand for health care and advanced medical technologies is growing consistently with a concomitant rise in health expenditure. [Zhou 2001] Health expenditure in the U.S. has risen from 7.4% of the GNP in 1970 to 15% of the GNP in 1995.[Zhou, 2001] The Health care sector deals with not only the clinical medical services, but also include methods which finance them, for e.g. insurance, benefit schemes, Medicare and Medicaid. Reforms have had to occur in health care finance, insurance, and service delivery to match demand. These reforms have included modifications of the Medicare system, increasing and evaluating managed care, efforts to cover the uninsured, the effect of health insurance on labor market and employment decisions, and the role of tax policy in health care in the past and the future. [Zhou 2001] St. Louis also had to adapt its health care strategy to the changing environment.

Economics and Population:

The population growth slowed down in St. Louis in the 70's such that the actual numbers decreased. Yet, there was a 4% increase in between 1990-2000 so that the city of St. Louis could only declare a population of about 350,000 by the end of the 90's as compared to its previous 800,000. [Kotkin, 2002] 28% of the population in St. Louis is above 50 years of age while only 9% between 18-24 years. [Author not available 2002] The demography of St. Louis reflects that of the nation as a whole. According to analysis of population demographics this last century, the elderly dependency ratio (the ratio of elderly Americans to those of working age) will be relatively constant for the next 15 years but there will be a sudden rise in the elderly retirees after about 2010. [Author not available, 1997]

In a community like St. Louis where the elderly population is the major consumer of health services, these have to be adapted to fit geriatric needs. This will mean facilities that deal with long- term care assistance. Their problems will arise from the effects of old age rather than a particular disease and can vary from decreased mobility due to osteoarthritis to specific chronic illnesses such as morbidity related to diabetes, strokes, hypertension or chronic lung disease. Older persons are more likely to have medical problems and it has been reported that at least 87% take at least one prescribed and three over the counter drugs. [Moeller and Mathiowetz 1989] The availability and affordability of these medications is thus important, as is the excessive and often unnecessary use. It has been seen that 19% of hospital admissions of the elderly are due to adverse drug reactions [Grymonpre et al., 1988] and that a significant number of operative procedures on fractures are produced by falls from the sedative effects of these drugs.[Grymonpre et al., 1988]

These statistics show that drug prescription especially in the case of the elderly needs to be strictly regimented, keeping to the absolute essentials, adjusting dosages according to changed pharmacokinetics, and constant monitoring of effects by follow ups at the hospital or through mobile teams. This may seem a lot of effort but will reduce costs entailed through further intensive management of side-effects and also budget costs accumulated from paying for the multiple medication through insurance or Medicaid, which ultimately is an economic drain on the health care system.

Long-term nursing care either at home or in nursing homes is the need of the present population. People over 85 made up about 10% of the elderly population in 1994 and according to the Census Bureau by 2050 this figure will be almost 24%. In 1993 about 25% of those...

[Author not available, 1997] Good nursing care or supervision at home can be a preventative measure reducing complicated healthcare intervention through early detection and prompt treatment to provide these services in a cost effective manner St. Louis must be able to use its assets to the maximum. With more than 50 hospitals in Greater St. Louis area health care facilities are among the best and most accessible in the nation.[Kotkin, J, 2002] The presence of two major medical schools at Washington University and Saint Louis University leaves no dearth of highly trained personnel and modern and scientific research and facilities.[Kotkin, 2002] There are also present major biotech and plant-technology giants Monsanto and Ralston-Purina sources of venture capital investment to the tone of some $300 million.[Kotkin, 2002]
The trend of hospital services is shifting towards outpatient care over the past 15 years. The number of surgeries in hospitals has been affected by an increase in ambulatory surgery centers (ASCs) in the past decade. Thus in Missouri hospitals the number of surgeries in 1998 were 64% compared to the 26% in 1983. [Author not available, June 1999]

This has assisted in decreasing the inpatient days and thus rate of hospital licensed-bed occupancy from 74% in 1983 to 44.8% in 1998. [Author not available, June 1999] Missouri's staffed-bed occupancy rate of 56.7 for general medical surgical hospitals continues to be higher than the U.S. staffed-bed occupancy average of 47%. [Author not available, June 1999]

The need for Emergency room facilities is needed with the growing rate of use. In Missouri 113.6 per 1,000 persons that use the E.R. are less than 15 years while 23.9 per 1,000 populations are over 65 years. [Author not available, June 1999]The persons who are uninsured and using the E.R. were 310,858 in 1997 and the number has not changed much in the last 5 years.[Author not available, June 1999]Studies of health insurance in the United States show that, compared with the insured, the uninsured are less likely to use health services, including physicians, emergency rooms, prescriptions and hospitals and have lower average health expenditures.[Author not available,1996, Higgins, 1986] The utilization of hospital facilities unnecessarily to the detriment of the system is limited by Managed Care and Ambulatory Centers.[Author not available, January 1999] New procedures, technology, and home health care have reduced the need for longer hospital stays.[Author not available, June 1999]

Medicaid and Medicare, were implemented in 1965 to provide health and custodial care for people who could not afford it themselves. As Medicaid pays for half of the nursing home expenditures these costs have been rising steadily with the changing demography, and longer life expectancy.[Author not available, 1997] A growing population and rising cost of health facilities has added to the Medicaid expenditure.[Author not available, 1997]

Insurance seems to be a better alternative for providing nursing home care as a vast majority of people over 65 years will not require nursing home care, and the duration of stay for the remainder will likely be short, only 9% remaining more than 5 years.[Author not available, 1997] But expensive premiums, less incentive to purchase insurance due to the availability of Medicaid and desire to remain with family and thus transferring funds to other individuals that could have been used for insurance used on long-term nursing care keeps the burden on Medicaid.[Author not available, 1997]

Conclusion

Given the increasing elderly population in St. Louis and improving lifestyles, and thus real incomes, it is within the healthcare facilities' scope to increase the prices of certain services so as to make others more affordable or efficient. This 'trade-off' will require research into the resources available, the demand, and the possible adverse allocation of facilities. If done efficiently the public should be able to acquire the facility it wants at the least possible cost.[Author not available, October 2002,Institute of Medicine (IOM) 1986]

Obviously Managed Care will need to be implemented effectively and efficiently, encompassing the geriatric sector of the population so as to reduce costs of unnecessary hospital procedures, and admissions plus improve quality of life by early intervention.[Boland, P. 1991] It will also produce new job positions for people as requirements for primary care are less.[James Dao,1995]Preventive medicine should play a larger part in the healthcare services as compared to curative care due to the obvious medical and long-term economic benefits.

Insurance, charity care, fee for service options must increase so as to reduce the burden on Medicare and Medicaid programs that drain health care expenditure that could be better used for research, or facility provision. The strategy should be one that fulfilled consumer demand but also implemented policy based on community needs and planning for improved futures. [Author not available, October 2002, Institute of Medicine (IOM) 1986]