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Use existing resources to find new revenue, meet community need

December 5th, 2012

by Kevin L. Shrake

The rules of the game changed this past year in regards to the hospital's role in evaluating and meeting community need. In the past, hospitals were required to complete an annual community needs assessment, which usually ended up simply as an exercise to meet the requirement and put the plan on the shelf.

The most common use of the community needs assessment was to establish the need for physician specialists, thus creating the documentation required to assist with income guarantees for physician recruitment.

In an effort to make this exercise more meaningful, the government now requires that not only community needs assessments be completed, but also that a specific action plan of how to respond to needs be developed using the input of key community stakeholders. In this process, hospital executives are looking for ways to positively "build a healthier community," improve operational efficiencies and create new sources of revenue.


The face of addiction: According to recent statistics from the National Institutes of Health, there are nearly 5 million emergency department visits per year associated with substance abuse. This represents an 80 percent increase over the past 5 years, with 32 percent represented by alcohol and 46 percent involved alcohol with other drugs.

Many of these patients are not behavioral health or psychiatric patients, nor do they require emergency care. They represent all walks of life, including a high percentage of gainfully employed professionals who have an addiction, need help and simply don't know where to go to receive care.

Meeting the community need: Some hospitals are meeting this pervasive community need through the establishment of an inpatient medical stabilization service using existing empty beds and leveraging the overhead that already exists. This creates a scenario of improved efficiency with a new revenue stream, tied directly to meeting an important community need, thus creating the proverbial "win-win" scenario. Successful programs have the following best practice characteristics:

  • Patients are carefully screened for medical necessity and reimbursement.
  • Behavioral health, psychiatric and emergency care patients are excluded.
  • Patients are voluntarily admitted with InterQual scores in the 16-20 range.
  • Protocols, policies and procedures are established to manage and perform services during an intensive three-day hospital stay.
  • Hospital utilizes existing overhead of empty beds, current nursing staff and attending physicians.
  • Discharge planning includes entering patients into community-based after-care programs and services for follow up.
  • Service is promoted through community outreach and public information campaigns.

Best practice success story: A 100-bed facility in the Midwest recently engaged an expert partner to provide a "turnkey" intensive three-day inpatient medical stabilization program leveraging existing resources.Using the best practice characteristics listed above, they carefully screened patients and voluntarily admitted those using diagnosis-related group (DRG) numbers 894, 896 and 897, which relate to alcohol and drug dependency.

They established an exclusive arrangement within a 70-mile radius of their facility and are averaging 32 admissions per month using three empty hospital beds. In addition to meeting a critical community need, they created a new service line that is generating $800,000 of revenue annually with a 40 percent profit margin.

Patient testimonial: The program described above has been a major financial success for the hospital, but the real test is whether it is making a difference in the lives of community members. Here is an excerpt from a typical patient testimony that illustrates the need and demonstrates the importance of having a community resource for addiction management.

"A few years ago I made a poor choice and did something I am not proud of, I began using drugs. There was so much stress in my life; I just wanted to forget about my problems. I had no idea where to turn to get this monkey off my back until I heard about a new community program for people like me. There are no stereotypes or boundaries for my problem. This can happen to lawyers and doctors as easily as it happens to the poor. I am blessed to have found your program. No one who has not been there can comprehend the physical and psychological hold that drugs can have on you. I hope your doors stay open for a long time. So many people need this program. It is a matter of life and death."

Bottom line: The bottom line for healthcare executives is you can improve your hospital's bottom line through the establishment of medical stabilization services. However, the most important aspect of these programs is that they meet a pervasive community need and make a difference in people's lives.

Kevin L. Shrake ( is a 35 year veteran of healthcare, a Fellow in the American College of Healthcare Executives and a former hospital CEO. He currently serves as the Executive Vice President/Chief Operating Officer of MDR™, based in Fresno, Calif.


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