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Implications of the Outpatient Shift

Over the past decade, procedures and services that have historically been performed on an inpatient basis have shifted to outpatient facilities, especially as technology advances and minimally invasive surgical procedures gain traction. While there are certainly benefits to this new dynamic, there are challenges as well.

What Has Prompted the Move to Outpatient Care? 

Several factors have contributed to the rise in outpatient care. The rapid expansion of technology now allows many services to be performed in outpatient clinical settings, whereas traditionally, these were largely relegated to hospitals and inpatient care. Cardiac catheterizations and spinal, bariatric and cataract surgeries are just a few examples. Telehealth, EMRs and mobile health applications have also simplified patient monitoring, particularly postoperatively and for chronic conditions, without the need for admissions.

As patients have experienced the convenience and accessibility of outpatient care, demand has grown. According to a 2019 study by Health Care Cost Institute, healthcare services performed in outpatient settings accounted for 11.1% of visits in 2009, growing to 12.9% by 2017. Although this may seem like a small increase, there were considerably larger variations within service type. For example, diagnostic and screening ultrasound services grew 5%, and drug administration visits nearly doubled from 23.4% to 45.9%.

In addition, health insurance reimbursement models changed, and insurers began to offer more favorable payment policies for outpatient services. This caused hospital revenues to decrease, prompting hospitals to expand their market share and boost earnings by acquiring outpatient facilities and physician practices. Inpatient services had previously been the main source of hospital revenue, though, by 2019, outpatient services were on track to generate similar revenues.

What Challenges Has the Outpatient Shift Created?

The outpatient trend has some benefits, like streamlined coordination of patient care, but it has created challenges for healthcare workers and patients alike, such as:

Market consolidation. The healthcare sector has significantly consolidated in recent years. More sizable competitors have purchased smaller hospitals. The remaining hospitals have acquired existing outpatient facilities, including urgent care, imaging locations and independent physician practices, or opened new ones. A 2018 report published by the Physicians Advocacy Institute found that hospitals acquired 8000 physician practices between July 2016 and January 2018, and hospitals employed at least 44% of physicians.

Lower inpatient days and higher costs. As outpatient care has become more popular, inpatient days and procedures have fallen. Lowered hospital revenues, coupled with higher overhead and labor expenses, have led to staff layoffs in some facilities and increased patient costs. 

How Is the Healthcare Industry Addressing These Challenges?

The preference for outpatient care is expected to continue, but there are ways to address the challenges it poses, including:

Introducing site-neutral payments. Payer reimbursement models are typically based on the setting in which the service is performed. Site-neutral payments would reimburse the same regardless of setting. This lowers patient costs and allows patients the freedom to choose the setting that works best for them.

Encouraging workforce flexibility. As demand drops, hospitals are likely to hire fewer inpatient staff. It is important that nurses and other healthcare workers maintain some flexibility in their skillsets and perhaps seek specialization or further education in order to ease the transition to other care settings. 

Further streamlining care. Hospitals that own a variety of facilities can manage patient care across the spectrum, from inpatient surgery to outpatient endoscopies to urgent care visits, ideally lowering total patient costs and improving outcomes.

A Critical Shift

The move toward outpatient services and away from inpatient care has altered the entire healthcare industry. As hospitals become a bigger player in the outpatient market and patients’ preferences for this type of care continue, it may be necessary to restructure reimbursement models. Throughout the healthcare field, workers are encouraged to expand their abilities to be successful in a variety of environments.

Learn more about UNC Wilmington’s Online RN to BSN Program.


Advisory Board: The Outpatient Shift Continues – Outpatient Revenue Now 95% of Inpatient Revenue, New Report Reveals

Becker’s Hospital Review: 6 Thoughts on the Movement From Inpatient to Outpatient Care

Definitive Healthcare: 3 Factors Influencing Growth Across the Outpatient Market

Deloitte Insights: Growth in Outpatient Care

Healthcare Cost Institute: Shifting Care From Office to Outpatient Settings – Services Are Increasingly Performed in Outpatient Settings With Higher Prices

Healthcare Dive: More Care Shifting From Office to Outpatient Settings, HCCI Finds

Physicians Advocacy Institute: Updated Physician Practice Acquisition Study – National and Regional Changes in Physician Employment 2012-2018

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