Hospitals are increasingly shifting care to outpatient settings as patient demand and payer pressures push procedures out of expensive inpatient environments. According to a recent analysis by Strata Decision Technology, this trend has led to sicker patients in inpatient wards, while lower-acuity cases are directed to outpatient departments.
The analysis, based on data from over 2,000 hospitals and 149,000 providers, highlights the accelerated move toward outpatient care. Service lines like gynecology have seen a decrease in hospital procedures due to the rise of minimally invasive surgery options in outpatient settings. Conversely, areas like breast health have experienced an increase in hospital visits, likely tied to more breast cancer testing and diagnoses.
Health systems have invested heavily in outpatient care to align with patient preferences and reduce costs. Technological advancements, such as minimally invasive surgery, have made outpatient procedures more affordable and accessible. Patients increasingly favor these settings due to lower out-of-pocket costs and convenience.
Vizient forecasts outpatient volumes will grow by 20% over the next decade, compared to just 7% for inpatient discharges. This shift is also improving hospital margins, with overall operating margins reaching 0.7% in June, despite challenges like inflated drug and supply costs.
Payers are capitalizing on outpatient demand to reduce expenses. Studies show outpatient procedures can cost up to 50% less than inpatient services. The Centers for Medicare & Medicaid Services (CMS) has been phasing out Medicare’s inpatient-only list, removing over 280 procedures this year and aiming to eliminate the list by 2028.
CMS has also expanded site-neutral payments, where Medicare reimburses hospital outpatient departments at the same rate as independent physician offices. This addresses the higher costs hospitals currently charge for the same care in inpatient settings.
Payers like Elevance Health are pushing back against hospital pricing by implementing lower reimbursement rates for services at off-campus departments. This reflects growing frustration with hospital billing practices and a push for cost parity across care settings.
