Hospital CEO outlines bold ambitions, formidable challenges for Seattle Children’s

Seattle Children’s is on track to become on of the nation’s leading pediatric research center, but first it must meet formidable challenges caused by the current economic downturn, the hospital’s CEO Dr. Thomas Hansen said Thursday.

Dr. Hansen, a neonatologist who specializes in chronic lung diseases in newborns, made the comments today at an address to a CEOtoCEO breakfast forum organized for local business executives.

Currently, Seattle Children’s hospital is operating at essentially maximum capacity with an average bed occupancy rate of 85 percent, Hansen said.

For a hotel 85 percent occupancy is not a problem, Hansen said, but “in a children’s hospital a bed is not a bed; we can’t put a newborn infant in a psych bed or a post-op heart patient in a general med-surg bed.”

A 70 percent occupancy rate is closer to the ideal, he said but “we haven’t seen 70 percent occupancy in three years at Children’s, even at our slow times.”

On one day last year, Hansen said, bed occupancy went over 100 percent when the 250-bed hospital had 254 inpatients. The hospital used operating rooms for to accommodate the overflow, staffing the OR “beds” with emergency room nurses.

“That was a spectacular solution until the surgeons came in at 7 a.m. to start their first cases,” Hansen said, “then it was a disaster.”

Overcrowding is often forcing the hospital to divert patients to other facilities, sometimes in other states, Hansen said. In September last year, for example, 21 intensive care patients and 13 acute care patients had to be diverted to other hospitals because there was no room for them at Seattle Children’s and more than 28 surgeries had to be postponed.

The increase in volume of both in- and out-patient visits is due in part to the changing patient population Children’s now cares for, Hansen said.

In the past, most patients admitted to Seattle Children’s were admitted for “acute, time-limited illnesses,” Hansen said. ”Step on a nail, get an infection, get treatment with antibiotics, go home; break a leg, get some surgery, get fixed, go home—and they never came back to Children’s again.”

Today only 19% of patients being hospitalized at Children’s are admitted for an acute illness with the rest being treated for chronic illnesses, such as cystic fibrosis, diabetes and sickle cell disease, or cancer.

“In fact, more than half of the patients in our hospital on any given day have chronic, life-long illnesses that they’re going to have to deal with every single day for the rest of their lives,” Hansen said.

To reduce overcrowding Seattle Children’s is moving its research laboratories to 2 million square feet of newly acquired office space downtown and expanding its outpatient clinics.

Currently, Children’s has 25 outpatient facilities and is planning to open a 75,000-square-foot outpatient clinic next year in Bellevue that will provide full-service ambulatory  and urgent care, day surgery and radiology services, and a sports medicine program.

The hospital is also seeking to add 180 new beds to its main campus in the Laurelhurst neighborhood over the next five years, pending approval from the City, and to grow to a 500- to 600-bed facility over the next 20 years.

Seattle Children’s plans “slow incremental growth so we grow as little as possible, but as much as is necessary to take care of the needs of the children in our region,” Hansen said.

To promote its research program, Seattle Children’s is “aggressively” seeking federal research funds, Hansen said.

A strong research program is essential if a hospital wants to draw top notch staff, Hansen said. “The best doctors, the best nurses all want to work in research hospitals,” he said. “They want to be the first to use new therapies, not to be the last.”

The recession, however, is hitting Seattle Children’s hard. Outside of grant revenue, which has been growing, all of the hospital’s other revenue sources are down including operating revenue and investment income.

State cuts to Medicaid, which pays for the care of many children the hospital treats, will reduce Children’s income by $40 million the next biennium, Hansen said.

In fact, because of the hospital’s patient population, Seattle Children’s will absorb 12 percent of the state’s cuts in payments to Washington’s 93 hospitals, he said.

Seattle Children’s was founded 100 years ago “on the promise that we would provide high quality medical care to all children in the region regardless of their family’s ability to pay,” Hansen said. “Last year that promise cost us $85 million; this year, it will cost us over $100 million.”

The hospital is taking several steps to weather the economic downturn, Hansen said. The hospital has been able to substantially reduce some costs by implementing “lean” continuous performance improvement programs that streamline services and improve efficiency.

In addition, management and non-contract salaries have been frozen, discretionary spending has been cut and use of agency staff has been reduced.

Still, even with these measures, cash on hand is limited and raising capital is difficult, Hansen said.

Nevertheless, Hansen is optimistic: ”We’re a strong institution; we’ve been around 100 years and we’re going to be around for another 100 years,” he said. “We have challenges like everybody right now; we feel we’ll meet those challenges and come out of its stronger than when we went into it.

Tags: Pediatrics, Seattle Children's

Category: Child & Youth Health, Hospital News, Newborn and Infant Health, Seattle Children's