A first-of-its-kind study published in Pediatrics highlights a healthcare phenomenon we’ve been describing for years. If left unrecognized and unmanaged, this phenomenon crimps income potential and threatens the ability to accurately manage marketing. There are implications for quality of care as well.

Jochen Profit MD, MPH, (Harvard / Beth Israel Deaconess Medical Center) and colleagues tracked 850 patients at 10 neonatal intensive care units (NICUs). They found a strong correlation between nurse-to-patient ratio and discharge rates. In short, when nurses feel like they have a lot of patients, they are 32% more likely to discharge. When nurses feel like they don’t have a lot of patients, they are 20% less likely to discharge. The effect of nurse-to-patient ratio on likelihood of discharge spans many healthcare settings including Medicare-certified home health and outpatient physical therapy. Let’s discuss why this is important in business, marketing, and clinical management.

A Quick Definition of Census: In healthcare, census means the number of patients in a given time frame. For example, hospitals track average daily census. Outpatient physical therapy often refers to weekly census. In home health, monthly census is useful because it better predicts income through Medicare’s episodic payment system.

What is Census Inertia: We use the term “census inertia” to describe the disconnect between census and rising or falling referral rates. If the number of referrals per month rises or falls, census has a tendency to not rise or fall at the same rate. Census tends to stay the same. As Dr. Profit et al. measured in their study of ICUs, clinical managers tend to use discharge to keep the census the same – often without being fully aware they are doing this.

Classic Marketing Mistake: Measuring Any Census Other than Annual

Census inertia creates one of the top 5 errors in measuring marketing effectiveness. Practice managers commonly start a marketing campaign and then track census to gauge the campaign’s effectiveness. The campaign could increase the count of monthly referrals 32%, and the daily, weekly, and monthly census could remain relatively unchanged, because the clinical managers become 32% more likely to discharge. Marketing managers should strive to measure the outcome most closely connected to the marketing campaign. If a campaign is meant to increase referrals, don’t measure census; count referrals.

 

Census Inertia Causes Business Losses

When unrecognized and unaddressed, census inertia can negatively affect the fiscal efficiency of healthcare providers, but the exact mechanism may vary by provider. Let’s consider the example of Medicare-certified home health and then outpatient physical therapy.

Medicare-Certified Home Health: Let’s say that under the normal nurse-to-patient ratio, a particular diagnosis-related grouping (DRG) has an average length of stay (LOS) of 80 days. A recent marketing success increases monthly referrals by 30%, and the clinical managers (as observed in Dr. Profit’s study) become more likely to discharge patients. The average LOS drops to 55 days. Now, the patients in that DRG go from getting two episode payments to getting one. The average revenue and profit per patient drops dramatically, while marketing keeps supplying patients at a faster rate.

The solution is to set some basic clinical guidelines for discharge. One option might be to use the goals implied by the Outcome and Assessment Information Set (OASIS). A policy could be to only discharge after a patient who no longer meets admission criteria or who has reached maximum potential with all clinical goals, including relevant goals measured by OASIS. This simple guideline can remove the subjectivity of nurse-to-patient ratio from discharge planning and create a system that maximizes scoring in Medicare’s Home Health Compare.

Physical Therapy: Where outpatient physical therapy is paid by the visit, not by the episode, there are fewer financial repercussions for early discharge. Census inertia simply creates two questions. One, which was the most appropriate discharge rate for the patient and third party payor: the slow discharge rate or the busy one? Two, at what point do more referrals per week or month not create more revenue? In other words, if a therapy team is deliberately discharging faster because all weekly appointment slots are full, could you spend less on marketing, see fewer patients, but still have just as many visits and just as much revenue?

The solution again is having set clinical standards for discharge. When clinicians are following patient-specific clinical standards for discharge, they become more acutely aware if they are discharging for logistical reasons. Clinicians become more likely to communicate with managers about how they diverged with clinical standards because they are getting busy, and practice managers can make clearer decisions about whether they try to grow the clinical team or shrink the rate of new patient intake.

Clinical Implications of Census Inertia

In Dr. Profit’s study, the patients discharged earlier seemed to have equal parent satisfaction and clinical outcomes as the patients with longer LOS related to census. This implies that these ICUs could have been discharging their patients earlier. The rehab element of home health and physical therapy, on the other hand, may suggest that longer periods of follow-up would be ideal. While a patient may be deemed independent with a rehab plan, simple follow-up visits can provide the motivation to ensure adherence to the plan. Preventing early discharge due to census inertia may improve clinical outcomes for patients.