Health reform will close hospitals: Why that may not be a bad idea


Health reform will close hospitals: Why that may not be a bad idea Robert Pearl is a physician and CEO, The Permanente Medical Group. This article originally appeared on

A practical example: Cardiac surgery in Silicon Valley

Silicon Valley stretches approximately 50 miles from San Jose to San Francisco. Within its boundaries there are 14 hospitals that perform heart surgeries: two academic medical centers, two hospitals that are part of larger health systems and 10 independent community hospitals. Some facilities are located as little as 1 mile apart.

While the operative procedures performed at these facilities are largely the same, their volumes and outcomes vary greatly. The highest-volume facility performed nearly 800 cardiac surgeries in 2011, the last year the State of California released its risk-adjusted data. The lowest performed 57.

Seven of the 14 hospitals performed fewer than 150 heart surgeries and, together, accounted for just 20 percent of the surgeries in Silicon Valley. Not surprisingly, the lower-volume facilities averaged more risk-adjusted deaths. In contrast, the mortality rates for the two highest-volume facilities were about half the hospital average.

Despite averaging less than one surgery a day, the nurses, technicians and other staff at low-volume facilities need to be paid regardless of whether any surgeries are performed.


Pose this problem to a first year MBA student and the solution would be clear: Close the half of the cardiac surgery programs that did the fewest procedures then watch as the volume and experience in the remaining seven increases, leading to higher quality and lower costs. Moving from less than one surgery per day to an average of three would make a noticeable difference. And using just a fraction of the savings, patients could be picked up at their homes, travel by limousine to the designated facilities and receive free hotel rooms for their families.

The benefits of consolidation apply not only to cardiac surgery but to just about every surgical and medical service.


Don’t expect hospitals to jump on board quickly

We can predict that the first hospital CEO who suggests closing down a cardiac surgical program will be fired on the spot. The doctors and local community will do everything in their power to stop it from happening.

Consolidating or closing entire hospitals will be even more painful. Regulators would likely intervene. Change will be resisted and delayed.

But if there were fewer hospitals with higher volumes, quality would rise and the overall spend on hospital services would decrease. We should not underestimate how difficult this process will be or how long it may take. But once it is complete, patients will barely miss the old hospital down the street.

Dr. Pearl cited the study Hospital Volume and Surgical Mortality in the United States published in NEJM April 11, 2002.

1 thought on “Health reform will close hospitals: Why that may not be a bad idea

  1. The article does make sense. However, there could also be undesirable consequences to closing down some medical facilities.

    Here in Albuquerque, many people go to emergency rooms simply because they are unable to see their primary care doctors promptly for a condition that many not be a life threatening emergency but nevertheless requires prompt treatment. For example, a common bladder infection requires prompt treatment, i.e., the same day, but it is often impossible to see a doctor without going to an emergency room and waiting for hours. Emergency rooms are overworked and it is not unusual for a patient to have to wait for more than six hours to be seen; there have been cases in which patients have had to wait for more than 12 hours.

    Although it does make sense to shut down some hospitals, something should be done to make it easier to see one’s primary care physician promptly.

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