A methodology for projecting hospital bed need: a Michigan case study

The Michigan Department of Community Health (MDCH) was founded in 1996 through the consolidation of the Department of Public Health, Department of Mental Health, and the state's Medicaid Agency. MDCH is tasked with preparing and administering many critical health services used by Michigan residents. The more well known services include Medicaid state health insurance, mental health services, health promotion and disease prevention programs.The Certificate of Need (CON) Commission is a state mandated program, operating under MDCH, tasked with balancing the cost, quality, and access of health care services within the state. The CON Commission regulates the number of inpatient beds each hospital is approved to operate. These beds are managed to meet, but not exceed, the demand for health care services in an area (i.e. "bed need"). Whenever there is a desire to open a new hospital facility, relocate hospital services, or expand existing facilities, a CON application is made to MDCH for the approval of additional beds. The MDCH evaluates these applications according to the anticipated "bed need" within the state for health care services. In Michigan, all regulatory decisions are made by aggregating zip codes and facilities into groups that reflect use patterns; these groupings reflect the geographic distribution of the state's population, use rates, and hospitals (Figure 1).The original methodology for calculating bed need was adopted by the State-Wide Health Planning Commission in 1977 as a means for predicting future patient bed need [1]. The methodology achieves this objective by multiplying use rates in a base year and scaling them based on projected population growth. Between 1977 and 2008, the Michigan bed need assessment was completed in house by MDCH personnel.In May 2009, prompted by questions over the interpretation of the bed need methodology, the authors were commissioned by MDCH to calculate the projected bed need for 2011 [2]. In the process of conducting t