The future revenue growth and profit margins of hospitals will be constrained in part due to the continuing shift of patient care to cost-effective outpatient settings, according to new research from Moody’s Investors Service.
The Moody’s report, released last month, says hospitals that make money from new investments in outpatient services will suffer a net loss because inpatient care has long been considered the measurement of market share and market presence.
Growing investments in surgery centers are fueled by patient and provider preference and the pandemic necessitating a greater reliance on outpatient care, notes the report. Additionally, it says, more cases are moving to outpatient ORs because of ongoing reimbursement changes such as recent incremental approvals by CMS that allow knee and hip replacements and cardiac catheterizations to be performed in ASCs. “Orthopedics and invasive cardiology are among the top revenue-generating services for hospitals,” states the report.
Many not-for-profit hospital systems have already partnered with leading players in outpatient care, including telehealth, urgent care and ASCs, according to the report. “Some are developing their own ASCs,” it states. “For example, as part of its outpatient expansion initiatives, Mass General Brigham has plans to expand and build several ASCs in nearby towns outside of Boston.”
The report continues, “Several for-profit chains continue to consolidate large numbers of ASCs, putting them ahead of not-for-profit hospitals in certain markets. In December, for example, Tenet Healthcare acquired SurgCenter Development’s interest in 86 ASCs.”
ASC usage will continue to grow as commercial insurance companies promote more outpatient surgical coverage, according to the report. “Payers are promoting them as more cost-effective care settings,” it notes. “United HealthGroup, for example, has reported that the cost of performing common procedures in a hospital outpatient department was 144% higher than in an ASC.”
Hospitals will attempt to offset these discouraging financial trends by focusing on complex, specialized care, according to the report. And, in the short-term, inpatient hospital beds might fill up due to higher-acuity patients seeking care they had delayed during the pandemic. In the long term, inpatient care could get a bump because the U.S. population is aging, especially in retirement destinations such as Florida and Arizona.Adam Taylor