Care is leaving the hospital. Hospitals are getting busier anyway.
Leaders from four West Coast health systems described both trends during a Nov. 3 panel at Becker’s CEO + CFO Roundtable. Vizient’s Sg2 projects outpatient volumes will grow 20% over the next decade, compared with 7% for inpatient discharges. But the panelists said the patients still filling their beds are sicker and more complex.
“What we’re experiencing is kind of a tale of two cities,” said Suresh Gunasekaran, president and CEO of San Francisco-based UCSF Health. “While there is a lot of care that is leaving the hospital setting, there is still enormous demand for inpatient care for increasingly complex patients.”
On a given night, about 700 of UCSF Health’s San Francisco beds are full, and more than half of those patients come from outside the city, Mr. Gunasekaran said. Demand for that level of care is growing as fewer hospitals in each region can handle complex cases.
“The hospital business isn’t getting any less capital intensive than it was a decade ago,” he said.
Kerry Heinrich, president and CEO of Roseville, Calif.-based Adventist Health, said inpatient demand comes from two places. One is the specialized care only hospitals can provide. The other is patients who do not need to be there but have nowhere else to go, including those with behavioral health and substance use issues who crowd emergency departments.
“We all know they should not be there, but there is no social system to take care of them,” Mr. Heinrich said. “Yet we are the safety net that takes care of them.”
Leong Koh, MD, executive medical director of Portland, Ore.-based Northwest Permanente, recalled that residents on call more than 30 years ago would “pray for a kidney stone or a pneumonia to admit.” Those patients rarely get admitted today, so new hospitals are more expensive, with bigger operating rooms and more technology.
How the systems are responding
Northwest Permanente: Kaiser Permanente is leaning on hospital at home, which it hopes to grow from a daily census of 15 to 20 patients into the 20s and 30s. That takes significant technology investment and scale before it pays off, he said.
Sutter Health: The Sacramento, Calif.-based system has shifted its focus from adding inpatient beds to expanding its ambulatory footprint, said Matthew Dahnke, MD, Sutter’s chief medical officer of virtual health and chair of hospital-based service lines. Over the last three years, Sutter has opened 51 new clinic centers, added about 500,000 patients and grown by about 1,000 clinicians a year.
“We still need hospital beds to care for our incredibly sick patients or our complex patients,” Dr. Dahnke said. “So that’ll never go away.”
UCSF Health: The system acquired St. Francis Memorial Hospital and St. Mary’s Medical Center in 2024 because so many patients with non-complex conditions were coming through its emergency department, and its longtime partners were full too, Mr. Gunasekaran said. But building community hospital capacity is “not a strategy,” he said.
Where each system plans to grow
UCSF Health: Depth, not breadth. Mr. Gunasekaran said UCSF is not trying to be the largest health system or to provide all care for the Bay Area’s 8 million residents. Instead, it is focused on highly personalized, complex care, and on moving more of it to the outpatient setting. He pointed to neurosciences, behavioral health, cardiovascular and pediatric care. He also expects AI to create “some of the most sophisticated patients in the world,” so UCSF is retooling its clinical workforce to meet their expectations.
Sutter Health: A cross-regional bet. Sutter is pursuing a combination with Minneapolis-based Allina Health. Dr. Dahnke said the systems share values and culture, and the move would diversify Sutter beyond California’s challenging regulatory environment.
“Ultimately, it grows our ambulatory footprint, and that’s what we’re really after,” he said. He also said that by 2031, he expects capacity, not demand, to be the constraint, so Sutter is betting on its people.
Adventist Health: Relevance over size. Mr. Heinrich said his system’s strategy centers on being relevant in each local market: eliminating redundancy and partnering with academic medical centers so patients can get clinical trials and advanced cancer care closer to home.
“My view of growth is not so much how do we get bigger; it’s how are we more relevant,” he said.
He said Adventist has paused capital planning because of HR 1. Estimates suggest 20% to 30% of the Medicaid population in Los Angeles alone could lose coverage, Mr. Heinrich said. His biggest challenge ahead is growing ambulatory care without destabilizing Adventist’s hospitals as procedures move to ASCs.
Northwest Permanente: Spreading value-based care. Kaiser Permanente’s growth runs through Risant Health, which includes Geisinger and Cone Health, with Oklahoma City-based Integris Health set to join.
Risant partners must share a commitment to value-based care, and the deals “shouldn’t be a bailout situation,” Dr. Koh said. Because Kaiser can no longer build its integrated model from scratch, Risant is testing whether that prepaid model can work alongside fee-for-service systems. By 2031, he expects more virtual care and deeper community connections, including social determinants of health screening and links to community health workers.
“I think the needs of the communities are not going to go down in 2031,” he said.
Becker’s 3rd Annual Fall Chief Pharmacy Officer Summit is the top tier event that the people leading the future of pharmacy convene. This 3-day event is built specifically for Chief Pharmacy Officers and senior pharmacy leaders. The sessions examine the workforce, financial and clinical priorities shaping pharmacy today. Becker’s is where candid discussions flourish and new ideas thrive. Becker's 3rd Annual Fall Chief Pharmacy Officer Summit
