2.1 Inpatient Care

2.1.1 Definition & Services

I. Definition

Inpatient care refers to medical care that occurs when a patient is admitted to the hospital. According to the American Hospital Association (AHA), hospitals are licensed institutions with at least six beds whose primary function is to provide diagnostic and therapeutic patient services for medical conditions; they have an organized physician staff, and they provide continuous nursing services under the supervision of registered nurses (Centers for Disease Control and Prevention [CDC], 2022a). The World Health Organization (WHO) considers an establishment a hospital if it is permanently staffed by at least one physician, can offer inpatient accommodation, and can provide active medical and nursing care (CDC, 2022a).

II. Services

Inpatient services are services that involve an overnight stay or prolong the stay of a patient in a licensed healthcare facility. Historically, in the United States (U.S.), inpatient services are provided by hospitals. As the healthcare system evolved, hospitals became the backbone of healthcare delivery (Shi & Singh, 2012). Although the original focus for hospitals was inpatient services, the need for cost containment and more patients preferring services outside the hospital led to more outpatient services being offered by hospitals. Hospitals have advanced in the types of care offered and the technology utilized. Inpatient services typically focus on acute care, which includes secondary and tertiary care levels. Secondary care is “specialist care provided on an ambulatory or inpatient basis, usually following a referral from primary care” (World Health Organization, 2023). Tertiary care includes “highly specialized services in ambulatory and hospital settings or in a facility that has personnel and facilities for advanced medical investigation and treatment” (World Health Organization, 2023).

Inpatient care is very expensive and, throughout the years, has been targeted for cost containment measures. Hospitals have begun offering more outpatient services that do not require an overnight stay and are less financially taxing on the healthcare system. U.S. healthcare expenditures have increased as part of the gross domestic product, and consequently, more cost-containment measures have evolved. Outpatient services have become more popular because they are less expensive and are preferred by patients.

Hospitals, the most common healthcare facility for inpatient services, are very distinctly divided into well-defined spaces known as units (Dean et al., 2021). Each hospital is comprised of a wide range of services and functional units. These include diagnostic and treatment functions, such as clinical laboratories, imaging, emergency rooms, and surgery. This diversity is reflected in the breadth and specificity of regulations, codes, and oversight that govern hospital construction and operations. In addition to the wide range of services that must be accommodated, hospitals must serve and support many different users and stakeholders.

2.1.2 General Hospital Classifications

Hospitals may be classified by type of service (e.g., Children’s hospital), ownership (for profit or not for profit), size (number of beds), and length of stay (e.g., long‑term care hospitals). The AHA uses a typology of hospital classifications that combines these classifications. AHA designates, firstly, whether the hospital is federal or non-federal, then whether the non-federal hospital is community or non-community, and then lists the type of community hospitals based on the services provided (National Center for Health Statistics [NCHS], 2017).

“The American Hospital Association conducts an annual survey of hospitals in the U.S. The infographic below, published in 2022, presents some of the data from the 2020 AHA Annual Survey” (American Hospital Association, 2022).

Review Infographic (American Hospital Association, 2022): Fast Facts on U.S. Hospitals – 2022

Federal hospitals are those operated by the federal government and include hospitals in the Veterans Affairs and Indian Health Service. Non-federal hospitals are divided into community and non-community hospitals. Community hospitals are non-federal short stay hospitals that are open to the local public. Short stay means that the average length of stay is less than 30 days. Community hospitals form the bulk of hospitals and hospital beds in the U.S. providing both general and specialty services. General community hospitals provide a broad range of services and do not specialize in any type of service. Specialty community hospitals provide only a specific type of service, such as obstetrics and gynecology; orthopedics; pediatrics; psychiatric care; and cardiovascular services. Non-community hospitals are those not open to the local public. Examples of non-community hospitals are prison hospitals and state mental hospitals.

Key Terms

For-Profit. A for-profit organization operates with the goal of making money. Most businesses are for-profits that serve their customers by selling a product or service. The business owner earns an income from the for-profit and may also pay shareholders and investors from the profits.

Nonprofit. A nonprofit organization qualifies for tax-exempt status by the IRS because its mission and purpose are to further a social cause and provide a public benefit. Nonprofit organizations include hospitals, universities, national charities, and foundations.

2.1.3 Community Hospitals

The AHA classifies all community hospitals by ownership: nonprofit, for-profit, and state and local government (NCHS, 2017). Nonprofit hospitals are controlled by nonprofit organizations such as religious organizations and fraternal societies. For-profit hospitals are owned by individuals, partnerships, or corporations. State and local hospitals are controlled by state and local governments. The AHA also places all community hospitals into eight categories of size by the number of beds, ranging from 6–24 beds in the smallest category to 500 or more beds in the largest category (NCHS, 2017). A government or nonprofit community hospital can also be designated as ‘teaching’ or not. Teaching hospitals educate and train medical professionals, conduct medical research, provide care for the most serious conditions, and care for the uninsured and indigent (AHA, 2015). Two other categories of of community hospitals are the critical access hospital and the specialty hospital.

I. Critical Access Hospitals

The critical access hospital (CAH) serves rural communities that have no other close access to inpatient care. To be designated as a CAH, a hospital must have no more than 25 acute care beds, be located 35 miles from another hospital (or 15 miles in mountainous terrain), and have an average length of stay of 96 hours or less per patient (Joynt et al., 2011). These hospitals receive retrospective cost-based reimbursement rather than prospective reimbursement, which has helped them stay financially solvent (Joynt et al., 2011). Under cost-based reimbursement, the payer agrees retrospectively to reimburse the provider for the costs incurred in providing services to the insured population. A Prospective Payment System (PPS) is a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. The CAH designation was established so that small rural hospitals would continue to provide basic inpatient and emergency services close to home for the rural population. The program has helped maintain access to inpatient care for rural communities (Joynt et al., 2011), but since many rural hospitals do not have this status, more remains to be done to provide access in rural communities.

II. Specialty Hospitals

Specialty hospitals provide a narrow set of services in a specialty area (Siddiqui et al., 2014). A broad grouping of specialty hospitals includes non-surgical hospitals providing care for cancer, psychiatric illnesses, rehabilitation, long-term needs (excluding nursing homes and skilled nursing facilities), children and women, and surgical hospitals serving cardiac, orthopedic, or general surgical  patients  (Al-Amin et al., 2010). Small orthopedic, cardiac, and general surgical specialty hospitals are a newer phenomenon (Siddiqui et al., 2014). Many specialty hospitals are physician-owned (Siddiqui et al., 2014).

2.1.4 Emergency Care

Definition:  The National Hospital Ambulatory Medical Care Survey, (NHAMCS) defines an emergency department as a hospital facility that is staffed 24 hours a day, 7 days a week, and provides unscheduled outpatient services to patients whose condition requires immediate care (CDC, 2022b).

Emergency departments are a major part of the US healthcare safety-net (Mortensen, 2014; Rhodes et al., 2013). Emergency departments in hospitals that receive payment from Medicare are required by the Emergency Medical Treatment & Labor Act (EMTALA) to provide care to anyone needing emergency treatment. This legislation allows underinsured and uninsured persons access to the emergency department for emergency conditions. Hospitals must care for the individuals until they are stable, which could include inpatient admission and surgery. Legally, individuals are responsible for paying for care not covered by insurance. However, they may be unable to do so and the hospital may write off the payment as charity care or bad debt, which are two accounting terms for uncompensated care. Hospitals make up for some of the revenue loss through Medicare funds earmarked for safety-net care and through higher charges to other payer groups.

Emergency departments tend to be overused for non-urgent and serious problems that could have been prevented with better primary and specialty care (Adams, 2013; Kangovi et al., 2013). When patients do not have regular or readily accessible primary care, they may go to the emergency department to seek primary care services (Kangovi et al., 2013; Morley et al., 2018; Rhodes et al., 2013). They may also wait until they are seriously ill and then appear in an ED. Uninsured and underinsured patients who have difficulties obtaining access to specialist outpatient services also seek care in emergency departments for specialist services (Nourazari et al., 2016). Emergency departments are also used for urgent, but not emergent, problems that could be seen in urgent care centers (Borkowski, 2012).

Knowledge Check

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Exploring the U.S. Healthcare System Copyright © 2023 by Karen Valaitis is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

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