Outpatient migration: 6 trends and developments

As part of the process for my company to put together our latest in an ongoing series of infographics focused on outpatient services, we conducted an analysis of the shift of services from the inpatient to the outpatient setting.

We compiled several statistics from this analysis for the new infographic, which provides an outpatient statistical snapshot.

We also identified numerous trends and developments concerning the current state of outpatient migration. Here are six that we view as some of the most significant.

1. No signs of slowing down. Numerous statistics demonstrate that outpatient migration continues to gain steam. There's no reason to believe this will stop soon. Factors contributing to the momentum include development of advanced technology and anesthetics, physicians becoming more comfortable with minimally invasive approaches to care, consumer and payor demand for lower-cost care and tightening reimbursement.

2. Increased interest in ASCs from hospitals and health systems. For many years, hospitals and health systems pushed back against the ambulatory surgery center (ASC) model, painting these facilities as unfair competition that would harm the ability for hospitals to provide care. While hospitals occasionally found success in their efforts to halt the development of ASCs, this did little to stop the growth of the surgery center industry. Statistics now show that there are more ASCs in the United States than hospitals. Many hospitals are taking the "if you can't beat them, join (or acquire) them" approach to ASCs, pursuing joint ventures with physicians and building their own ASCs.

3. Complex surgeries leaving the inpatient setting. Surgical procedures once considered complex and requiring days, if not weeks, of recovery in the hospital are finding their way into the ASC, office-based surgical practice and hospital outpatient department (HOPD) settings with positive outcomes. Over the past decade or so, spine fusions and disc replacements, total joint replacements, retina procedures, vaginal sling procedures and many other higher-acuity cases have become commonplace in the outpatient setting. We're now seeing some cardiovascular procedures migration to ASCs. Hospital ORs are rapidly becoming the location for only the most complex procedures and higher-risk patients.

4. Consolidation is slowly reshaping the market. Like in almost all of healthcare, outpatient care providers are experiencing increased consolidation. Large ASC management and development companies are acquisition targets by health systems (e.g., Tenet Healthcare Corp. acquiring United Surgical Partners International in 2015), payors (e.g., Optum, a healthcare services division of UnitedHealth Group, acquiring Surgical Care Affiliates in 2017) and other type of organizations (e.g., Envision Healthcare Holdings acquiring AmSurg in 2016). Large management and development companies are acquiring smaller such companies and continuing to grow their portfolios through individual ASC acquisitions. As mentioned earlier, hospitals are acquiring ASCs, and we're even seeing some merging between ASCs. As demand for outpatient services continues to grow, consolidation will likely do so as well.

5. Employers are embracing the model. We've seen a surge in ASCs contracting directly with self-insured employer groups and third-party administrators. This a model typically built around bundled payments for services that cuts payors out of the process. If executed effectively, it can deliver significant savings to the employer and allow an ASC to capture a large batch of case volume at reasonable payment rates.

6. Steady movement toward transparent and cash-pay pricing. To help attract employers looking for more direct contracting with providers and patients trying to find ways to reduce their costs, a growing number of ASCs are promoting a cash-pay offering, with some even publishing their cash-pay prices online. This is another way ASCs can reduce their reliance on payors and unpredictable reimbursement, potentially attract patients from outside their typical market (i.e., medical tourism) and receive fast, predictable payments, all while giving consumers greater control over their healthcare decisions.

Joan Dentler (jdentler@avanzastrategies.com) is president and CEO of Avanza Healthcare Strategies, which provides healthcare organizations with strategic guidance, with a focus on outpatient services. For more than 25 years Ms. Dentler has been consulting on, developing or operating ambulatory surgery centers, hospital outpatient services and community health initiatives.

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