It’s no secret that there is an ongoing shift from inpatient to outpatient medical procedures. These days, patients prefer to have their knee replacement surgeries, cataract surgeries, colonoscopies, and mammograms (to name a few) performed in the outpatient setting due to the associated ease, convenience, and price point.
Why is this the case? Because, over the past decade, advances in medical technologies and changes in the market have made it safer and easier for surgeries and complex procedures to be performed in outpatient facilities.
What is the outpatient market?
Before we dive into the forces contributing to the growth of the outpatient market, let’s first define what we mean by outpatient care.
Outpatient care refers to any healthcare treatment, procedure, consultation, or other service administered to a patient without the need for an overnight stay. Your yearly check-up with your primary care physician is a typical example of outpatient care, but lately, the market has expanded to include services like chemotherapy and radiation treatments, drug and alcohol rehabilitation, some surgeries, and more.
With definitions taken care of, let’s take a closer look at how the outpatient market has changed over time.
The outpatient market has shrunk
Over the past 10 years, we’ve seen the healthcare market consolidate significantly, particularly in the outpatient market. Hospitals, private equity firms, and even insurers are quickly buying up outpatient facilities across the U.S. for several reasons:
Population health: We are seeing providers, clinicians, and payors organizing themselves in ways where they can more effectively and jointly manage healthcare for broader populations, looking at outcomes and population health as a whole.
Consumerism: Outpatient facilities are being purchased in response to consumer need. These days, patients seek convenience and prefer to receive care at a nearby facility. And, for a lot of patients, outpatient facilities are simply more accessible.
Price: In a lot of ways, this shifting landscape helps reduce healthcare spending. Because services are often limited at ambulatory surgery centers (ASCs) and outpatient clinics, these facilities can charge less than hospitals, whose charges encompass operating costs of a wide breadth of services and staff.
Larger health systems and networks are also eager to acquire outpatient facilities because it helps keeps their patients in the network and expands referral networks. Many outpatient facilities also see these consolidations as mutually beneficial. With larger systems coming in to manage these smaller outpatient facilities, providers at outpatient facilities are freed up to do fewer administrative, financial operations, and reporting tasks and focus more on care delivery. The larger health systems also expand outpatient budgets, which can result in shiny new equipment and technologies like EHRs and telehealth systems.
Payment reforms and reimbursement gives outpatient clinics a boost
Increased reimbursements for outpatient procedures can be a major motivating factor for ambulatory surgery centers and other clinics to commit more resources to outpatient care. In 2022, the Centers for Medicare & Medicaid Services (CMS) delivered some good news: ASCs can expect a 3.8% increase in Medicare reimbursement on average per procedure. Hospital outpatient departments (HOPDs) also received significant single-digit increases in reimbursement.
In addition, procedure codes continue to be added to CMS’ payable/reimbursable list, which enables patients to seek more convenient care in surgery centers with the ease of mind to know that insurance covers the procedures. For instance, in 2018, CMS removed Total Knee Arthroplasty (TKA)from its inpatient-only list. And in the year since, the overall volume of TKA procedures increased by 8.14% from 2017 to 2018, according to Definitive Healthcare data.
In other words, as soon as this procedure was reimbursable in an outpatient setting, patients started choosing these facilities for their procedures. Outpatient TKA market share increased by 88% in that time, and inpatient share decreased by 4.5%.
Of course, there were many more financial changes to outpatient care made in the years since. Check out our blog “Outpatient clinics are in!” for more on how reasonable, transparent pricing encouraged patients to pick outpatient facilities over hospitals.
New technologies and techniques made outpatient care more accessible
Outpatient care may be growing in popularity, but it is only possible because of recent technological advancements. Here are three examples:
Improvements to minimally invasive procedures
Ear, nose, and throat (ENT), heart, kidney, and orthopedic surgeries can be performed at outpatient facilities because of new, minimally invasive surgery techniques. Outpatient surgeons create smaller incisions and use high-definition cameras to guide their techniques (and sometimes even work alongside robots that can assist with the procedures).
Patients, in turn, see a number of benefits. These include a reduction in costs, shorter recovery time, less pain and need for pain medications, reduced risk of contamination compared to open surgeries, and shorter hospitalization times.
Hybrid operating room advancements
Hybrid operating rooms are surgical theaters equipped with medical imaging devices that enable minimally invasive surgeries. The imaging devices allow surgeons to perform surgical procedures through a series of small incisions in addition to “open” procedures by enabling the visualization of minuscule body parts such as blood vessels.
In outpatient settings, hybrid operating rooms are set up to allow patients to undergo two separate procedures under one round of anesthesia. In these expanding operating rooms, doctors can perform open surgery and minimally invasive procedures at the same time, which results in fewer labor needs, reduced costs, improved outcomes, and less time spent in recovery.
Telehealth adoption
Since the early days of the COVID-19 pandemic, telehealth has proven to be a vital tool for physicians and patients in all manner of care settings. Thanks to rapid advancements in cloud technology and remote patient monitoring devices, more patients than ever can see check-in with their doctor virtually via telehealth.
The same is true for outpatient clinics, which use telemedicine systems to improve outcomes for patients who walk through their doors. The American Medical Association suggests telehealth consultations can lead to improved patient satisfaction, clinical outcomes, and reduced hospital admissions.
There are many more reasons why telehealth is so widely used by patients and providers. In our podcast episode, Virtual care is where you want to be, with Dan Trencher, we dig into how telehealth is being used to address burnout and the staffing shortage—two problems acutely affecting the outpatient care market.
Learn more
The outpatient market is constantly evolving—just like the rest of the healthcare landscape! If you need to stay up-to-date on the shift from inpatient to outpatient care or need detailed info on the outpatient clinics you’re targeting, healthcare commercial intelligence can help. Start a free trial with Definitive Healthcare today to expand your view of the market and make more strategic decisions.
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