Outpatient volumes are anticipated to grow by 10% in the next five years. Conversely, inpatient volumes, despite aging demographics, are expected to decline 0.7% according to forecasts from the Advisory Board.
For health systems and hospitals, that means investing in modern outpatient facilities to expand their ambulatory footprint is the clear path to success. Numbers aside, there are four trends further driving the shift toward outpatient care.
1. Technology advancements fuel outpatient care growth
must proactively embrace these innovations and subsequent shift to outpatient care by strategically investing in purpose-built ambulatory facilities. Failure to do so risks ceding ground to competitors, ultimately jeopardizing market share and financial performance.
The expanding scope of outpatient procedures has necessitated a commensurate expansion of ambulatory facilities to meet the growing demand. Procedures once confined to hospital settings — such as total joint replacements — are now routinely conducted in ambulatory surgery centers. This is a testament to the strides made in surgical techniques and instrumentation.
Moreover, the advent of cutting-edge technologies like surgical robots has introduced new design imperatives for these outpatient facilities. These sophisticated systems, with their large physical footprints and infrastructure requirements, have rendered many older on campus ambulatory surgery centers as well as older medical outpatient buildings obsolete. Larger operating rooms are now prerequisites for facilities aspiring to offer the most advanced procedural capabilities.
2. Patients favor outpatient convenience
Patients are gravitating toward the convenience and accessibility offered by outpatient facilities at increasing rates. This shift in patient expectations has catalyzed the need for healthcare systems and hospitals to augment their ambulatory facilities.
The allure of outpatient facilities lies in their ability to seamlessly integrate into patients’ lives. Gone are the days when visits to sprawling hospital campuses, with their daunting navigation challenges and expensive parking, were deemed an acceptable inconvenience. Today’s discerning patients demand a healthcare experience akin to running errands — efficient, proximate, and woven into their well-traveled routes.
Further, the multidisciplinary nature of many outpatient facilities enables patients to consolidate multiple appointments into a single visit, minimizing disruptions to their daily routines. This unmatched convenience, coupled with the modern aesthetics and pleasing ambiance that characterize these facilities, has solidified their appeal among patients seeking a healthcare experience that aligns with their preferences for accessibility and comfort.
Underpinning this shift is also a financial incentive, as patients often face lower out-of-pocket costs when receiving care in outpatient settings as opposed to their costlier hospital counterparts.
3. Physician incentives align with outpatient strategy
Alongside the shift in patient preferences, the incentives guiding the physician community have also coalesced around the outpatient care model.
For physicians, the prospect of practicing within strategically located outpatient facilities situated in high-traffic retail corridors represents an opportunity to amplify their patient bases. By virtue of their accessibility and integration into the daily commutes of their target demographics, these facilities possess an inherent advantage in attracting a steady stream of new patients. This, in turn, translates into earning potential for the physicians.
The amenities offered by modern ambulatory facilities also directly benefit physicians. Ample and conveniently located parking alleviates the frustrations often associated with hospital campuses, while cutting-edge medical technologies empower physicians to deliver care at the forefront of their respective specialties.
For private practice physicians, the transition from a traditional small practice to a modern, large-scale ambulatory care center unlocks additional amenities, operational efficiencies, and cost-savings.
Complementing these fiscal advantages is the potential for physicians to augment their caseloads through the streamlined workflows and efficient layout of outpatient facilities. Without the bottlenecks and complexities that often impede throughput in hospital settings and older outpatient buildings, physicians can seamlessly transition between cases, maximizing their productivity and, by extension, their earning potential.
Finally, the multidisciplinary nature of many ambulatory care centers fosters a robust and integrated network wherein physicians can rely on a steady influx of new patients from their colleagues within the same facility. This further solidifies the advantages of physicians embracing outpatient care.
4. Reimbursement models favor outpatient care
Many procedures can be performed in outpatient settings, and these settings are generally more cost-effective. As a result, payers are increasingly reimbursing at outpatient rates — regardless of the actual care setting. This has profound implications for health systems and hospitals, as the higher overhead associated with inpatient facilities renders many procedures financially untenable when subjected to these lower outpatient reimbursement levels.
The fiscal realities of hospital operations can be harsh. The imperative to maintain specialized, on-call personnel, coupled with the necessity of having equipment and resources ready to address every conceivable medical emergency, translates into high overhead costs. In contrast, ambulatory care centers can streamline their operations by focusing on the specialties they serve, thereby minimizing superfluous expenditures.
Consequently, when payers opt to reimburse at outpatient rates even for procedures performed in hospital settings, healthcare systems find themselves in a predicament. The expenses incurred when delivering care in the hospital setting often exceed the reimbursement received, eroding profitability and jeopardizing financial sustainability.
However, by offering state of the art ambulatory facilities for appropriate patients to receive more cost-effective ambulatory services, healthcare systems can realign their operational models to operate profitably within the constraints imposed by these outpatient reimbursement paradigms. What’s more, these systems can have more hospital capacity for patients who require that level of care.
Realizing the full financial benefits of this outpatient transition hinges on the meticulous design and implementation of these ambulatory facilities. Optimizing workflow efficiencies, leveraging economies of scale, and incorporating best practices in facility layout are crucial to minimizing operational expenditures and maximizing throughput. By embracing an approach that harmonizes clinical excellence with fiscal prudence, healthcare systems can position themselves to thrive in an environment where outpatient reimbursement rates are becoming the norm.
The ambulatory network imperative
By strategically prioritizing the development of highly optimized ambulatory facilities, forward-thinking health systems can position themselves to thrive within the constraints imposed by the reimbursement environment, safeguarding their financial sustainability while delivering care that resonates with the evolving preferences of both patients and physicians alike.
NexCore is a top ambulatory care center developer with an excellent track record of ambulatory network planning and outpatient development. Health systems are boosting their revenues by enhancing their outpatient development strategy. Please reach out to be one of the health systems that thrive amid this shifting healthcare landscape.
Written by: Carolyn Wilson, Chief Operating Officer and Jeremy Allen, VP, Investment Research