Hospital Information

Hospital Information

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Information Analysis of an Emergency Centre as a future option.

Once an Emergency Centre is opened, it will be extremely difficult and damaging to close. Once Visiting Specialists become accustomed to an Emergency Centre, they react very negatively if the unit is closed.

We have a 10 Question checklist we use for our clients shown below:

  • What does the future hold?
  • What options are available?
  • What is this emergency medicine business?
  • Why set up a private emergency centre?
  • What are the advantages?
  • What are the pitfalls?
  • How to proceed?
  • How do we choose?
  • What values and judgement criteria should we use?
  • What are our expected outcomes?

What does the future hold?

  • Over the long term with market and insurance fluctuations most hospitals have experienced unstable or declining occupancy. It is rare for hospitals to have stable occupancy all year round.
  • There are not any strong trends that are an easy hit in private.
  • A lot of “surgical biased hospitals” can experience large swings in occupancy. This is because the younger generation of surgeons work differently to the baby boomer set. The old guard worked most weeks of the year and went to one Conference and had occasional holidays that were planned. The newer generation tend to work more in bursts then take a lot of breaks especially for their family. This creates short term and short notice occupancy drops. Demographic analysis shows this trend will increase with the younger set working less and less and taking lots of leave.
  • The number of theatres and the number of surgeons required to maintain occupancy is far higher than say the 80’s mainly because of this fundamental work change.
  • With the changes in the insurance industry with contracting hospitals the margins have been squeezed down considerably and in my view unfairly. It used to be possible to cover costs with 65% occupancy but now it is much higher.
  • Day surgery will, to a large extent, obviate the need for beds and in some instances hospitals. Twenty-four and thirty-six hour centres are being developed.
  • If you want a hospital to retain GOOD staff then you need to provide them with a stable workplace, not one which is crisis driven from month to month with huge occupancy swings requiring them to take leave etc.
  • Unless the insurance stranglehold on hospital revenues is broken then hospitals will need to maintain very high occupancy both for margins and also for staff retention.
  • VMO/Patient attraction through redesign and refurbishment
  • Renewed marketing focus for new business
  • Increased customer focus for more return business
  • Relocation
  • Co-location
  • ADD new services
    • Emergency medicine
    • New forms of Ambulatory care
    • Home nursing etc
    • Strata titled Specialist suites
    • Day surgery / Joint venture with doctors

We would like to caution about co-location and relocation.

Most organisations are in severe financial trouble as they have discovered the spreadsheet numbers were way off. The vast majority of these have failed and now the trend is disappearing.

The “medical intangibles” involved in planning these are an issue. Some grossly overestimated the specialist commitment to “their great ideas”.

Private sector emergency medicine was first established in 1987 by one of our group and there are now approx 26 well set-up services in a market of approximately 300 private hospitals. There has been extreme variation in the success of EC’s. There have been some disasters.

The main problem has been a poor understanding of how private emergency centres work.

To use a simple analogy: They are like turbochargers:

  • If an engine is unwell, even a good turbo will not work.
  • If an engine is well, a poor turbo will reduce its performance.
  • If the right turbo is put on the right engine, it STILL has to be tuned perfectly to get maximum performance.

Hospitals have come unstuck on these very simple principles by:

1. Putting an EC on a hospital that doesn’t need one.
2. Putting the wrong type of EC on a hospital that was performing satisfactorily.

3. Putting an EC on a “sick” hospital hoping to improve it.
All three have the same outcomes:

  • High VMO dissatisfaction
  • Lower profits or conversion to a loss situation
  • High management stress levels.
  • Major image damage

Emergency centres are complex developments unlike any other addition to a hospital facility


They have the scope and ability to affect ALL areas of the hospital infrastructure from switch to the kitchen.

They are very exposed to the community and other agencies e.g. Ambulance.

Because of this, their effect on IMAGE and REPUTATION is extremely powerful.

The future of private health care is in two areas.
1. Direct Competition to the Public Sector

  • i.e. we can treat everything too!
  • You can come here ANYTIME you are sick we are always here for you!
  • Most medium size hospitals in both public and private in Australia and the USA get >40% of their bed days from ECs

2. Boutique high-end specialty centres.

We believe that hospitals caught in the middle, especially large ones, will not be able to survive on the midweek surgery and will have to downsize.

The addition of the right kind and size EC onto a high quality hospital with strong specialist support will survive the changes of the future.


Fully developed ECs are delivering well in excess of 30,000 bed days per year. Some are heading towards or have beaten the 40,000 mark.


The casemix is high value with Cardiology and Orthopaedics prominent features.

The strong Medical mix (>50%) whilst not high revenue keeps the occupancy up especially over weekends and prevents troughs e.g. during surgeon conferences. The medical mix helps attract general physicians who are now rare but absolutely essential to run a safe and decent surgical facility. Surgeons need and want a large variety of physicians to assist with perioperative care and complications.


If run well, the word of mouth effect of attracting patients is extremely strong.

VMOs are attracted to a good facility with a good reputation. The packaging service we provide makes their practice much more enjoyable and less stressful. Their need to attend the hospital at night actually reduces in most instances. They start to congregate around the centre and start asking for rooms. At St Vincent’s Toowoomba, multiple suites at the hospital were filled by high quality specialists BEFORE we opened the private EC. The specialists were aware of the potential of the centre and moved in ready for opening.


We have to say that some nursing and support staff do not enjoy the disruption that an EC brings. The unpredictable nature of the emergency workload has a high tendency to disrupt schedules and organisational structures. It is also culture changing because there is no routine and significant variation from day to day.

Historically, many doctors and nurses, having trained in good quality public units initially won’t make the shift into private emergency medicine because of fears of inconsistent work and perceptions of a “non-interesting” casemix. However, in time, the credibility of the unit is established and they will be attracted to work in it. This further enhances the credibility of the unit, attracting more visiting specialist support.

This also helps expand the casemix. In several sites large numbers of VMO’s have completely ceased their public hospital commitments because of the volume and work variety provided by a complex hospital with a good emergency centre.


The financial strain is very high in the early period and the hospital must be able to carry it. We aim to get to a critical volume as soon as possible.

When the centre breaks through what we call critical mass several effects are created

  • Constant Volume
  • Fluctuation reductions
  • Top up in key areas ICU /Theatre
  • Feeder to Radiology /Pathology (if you own them or have an incentive contract)

All these add up to a “marginal business conversion effect”

Since the costs pressure has been applied by the health funds, the margins made during busy times are now much less. While they used to cover the losses during quiet times, this is now much less likely to occur. An EC has a smoothing effect so that during quiet times wards can be kept open (20 to 30 acute admissions on the weekend is common).

Losses of running an emergency centre, can be more than compensated by the conversion of $10 to $20 million of extra business coming through the EC doors.

Some hospitals have made less money since opening an EC because of lack of control of ward costs.

We have a table of possible volumes consistent with a medium style launch.


Table 1a. Actual figures from Two EC department during the first 4 years.

Attendances Admissions Bed Days
Yr 1 7,939 2,133 11,534
Yr 2 10,184 2,664 16,635
Yr 3 11,673 2,912 18,894
Yr 4 12,158 3,357 20,264
Attendances Admissions Bed Days
Yr 1 8,000 2,000 10,000
Yr 2 9,090 2,500 14,000
Yr 3 9,820 2,700 17,500
Yr 4 11,000 3,080 20,000

The approximate casemix of this activity is shown in Table 2.

Table 2. Casemix

Medical 60%
Surgical 35%
Other 5%

Impact on hospital services

This shows the seasonal swing common to all EC’s.

graph - admissions vs months

The impact of the emergency centre’s increased admissions during winter will need further careful evaluation and planning once a decision to proceed with an EC is made. Bed pressure and access block become fundamental bread-and-butter issues for the EC, its patients, stress levels of its doctors and nurses, as well as for those specialists who will face difficulty admitting their own patients during these times. The hospitals will be required to confront hard choices in resolving some of these conflicting demands.

Impact by day

Distribution of emergency centre admissions also varies by day.

graph admissions vs day

Weekends are a time of significant activity within an emergency department and admission numbers are higher than during the week. This is a very valuable aspect of the EC profile as these admissions will have a higher marginal conversion rate than at any other time. A hospital’s costs have been largely covered by its elective workload, therefore the additional costs of handling emergency admissions including on the weekend are less.

On the other hand, emergency centre weekend activity will not completely smooth out the weekend drop off in activity even if it significantly ameliorates it.

We have very detailed information on most of the hospitals described that allows us to make some simple generalizations to explain our points.


It may not come despite best efforts.

This is normally due to poor planning and poor marketing. (In our projects, we aim to break a 10,000 bed day target ASAP.) Other centres have been open for years and still have never broken this important threshold.


    Ran three centres in Cairns, Brisbane and Sydney: now company ceased trading.
    Failed and now a GP service.
    Brisbane Service closed recently, major Specialist backlash. Now open for GP referrals only; financial penalty for emergency self-referred.
  • JOHN FLYNN, Gold Coast
    A fortune spent on glossy advertising on opening. Working well but volumes way below expectations.
    Recently closed due to poor performance; nearly bankrupted the hospital.

6.1 (b) Other centres closed for other reasons.

  • JOHN FAULKNER: Melbourne
    Closed at short notice by Mayne. Occupancy dropped drastically. ? Soon to reopen.
  • St ANDREWS: Adelaide
    To reduce costs was turned into an admission centre. Ie Not 24 hr and only GP referrals or ambulance. Major reduction in volume and hospital occupancy occurred.
  • ASHFORD: Adelaide
    To reduce costs was closed at night from 2200. Does not operate as full 24 hr Emergency Centre anymore. This occurred with change of hospital operator.


Examples here are two large church hospitals.

Both had good occupancy levels before they opened an EC in their high quality markets. Their activity levels after opening their ECs overwhelmed the capacities of their hospitals. Long-term loyal specialists had lists cancelled due to bed shortages. Some of them left upset and have not been back. As a midrange surgeon is worth $500,000 in hospital revenue, there is considerable danger.

A Board report of one only showed profit after donations.


Even though the volumes may appear good, the casemix may be poor and not convert to bed days. A well-tuned EC should attract an ALOS of 5-6 days as a performance indicator. A key feature in this is “Ambulance trust”. Ambulance officers have a degree of discretion in where they take non-referred patients (and even referred patients in some circumstances). A centre with a high level of clinical credibility will attract ambulance referrals, which have high admission rates and longer length of stay. This credibility takes time to develop and is lost quickly if there is a problem. Some ECs are only getting ALOS of 3-4, which means they seeing generally low-acuity patients.

An example of this situation was the XXXXX Private Hospital. This department’s strategy was to attract high volumes of patients through discounting and various preferred provider arrangements. The outcome was some 15,000 annual attendances but with an admission rate of around 10%. This volume of attendances required two doctors to be on duty all the time, the cost of which could not be recovered as a result of all the discounting and the low number of admissions. Less than one year into a new consultancy there, a strategic re-focusing has emphasised emergency work ahead of volume. Patient numbers have been reduced by 20% to a level that can be managed by a single doctor and admission rates have more than doubled. This reduction in medical cover alone produced a saving in excess of $500,000.


Used as key growth strategies; they can be dangerous when working in the other direction. It is said that a patient judges the professionalism and competence of their doctor within 17 seconds of the consultation commencing. The same applies to a patient’s first impression of a hospital. A hospital’s reputation is established by impressions made at its “front door”. A poor impression made here is difficult to overcome no matter hard staff work subsequently. The rule is well known that a happy customer tells five but an unhappy one tells 21!


The key issue is TRUST

  • TRUST in EC doctor Competence
  • TRUST in Safety systems
  • TRUST in Feedback

Once the relationships are developed, they will become substantial providers of patients to the EC. They will refer patients such as all their after-hours calls from the huge drainage areas of their group or practice.

If not developed, they will not feed it and may even either refuse to be on call or use it for receiving EC referrals only.


If the EC just costs too much you can never get in front

Using a public sector model with doctors on salary packages creates several problems
1. Very expensive model
2. No incentive in the system to work fast
3. No incentive for customer focus return business
4. Too much paid downtime.
5. Doesn’t bond them with practice growth.

This is a very difficult area for us to explain as it always sounds like a sales pitch.
Consider this analogy:


If all you need is chefs, waiters and nice premises, why don’t they all work?

Emergency Centres:

All you need is doctors, nurses and nice premises..?

The reason most restaurants fail is service.
ECs fail for the same reason even in good sites.
High level customer service is an unfamiliar concept to Australian medicine and to public hospital doctors and nurses in particular! But this is the pool we have to recruit from.
The many intangibles highly successful restaurateurs use, are also used by successful operators in the hospital system.

A good operator must have very high levels of understanding of marketing and customer service to augment the clinical standards. The training of doctors in the public sector in these key areas is close to ZERO.

There are some essential factors in site selection.








  • SITE

All of these need to be weighed up but how do you weight them?

There are three MAJOR factors we use from our experience and knowledge.

The ability to “take an Emergency Centre”

Their willingness to disrupt their lifestyles, form rosters, be available (even Easter and Christmas) and come in at unsociable hours to see patients.

The worst- case scenario

  • Set-up a multi-million dollar EC,
  • Spend more money establishing a marketing program,
  • And then when a private patient presents to the EC, not be able to find a specialist to take over their care;
  • Or almost as bad, to find a specialist who doesn’t want to see them.


Some types of staff severely resent the disruption an EC brings.

They become inflexible and sometimes obstructive.

  • Or how long is a piece of string?
  • What problems will we have?
  • How much money should we spend?
  • Every client has a different business approach from meticulous budgets to open chequebooks.
  • There are 15 key dependencies on outcome shown below which form part of an implementation plan.

We can say the following;

Profit reduction by at least $1,000,000

Profit increase of at least $1,000,000

i.e. there is a $2,000,000 swing.