- The long-term shift from hospital-based care toward more treatment delivered in the home and ambulatory centers picked up pace during the COVID-19 pandemic and is expected to continue to gain momentum, pressuring revenue growth and margins in the hospital sector, according to new research from Moody's Investors Service.
- Reimbursement changes, risk-sharing, investment in outpatient services including ambulatory surgery centers, advances in drugs and medical devices and greater use of at-home acute care services are among the forces driving the movement away from more expensive hospital inpatient care.
- Medicare telehealth visits increased 63-fold during 2020, Moody's said, citing HHS data. Although hospitals are reporting that telehealth use is receding as more patients return to in-person physician visits, it will likely remain above pre-COVID levels, the ratings agency said.
The pandemic brought a surge in telehealth use and a drop in emergency room visits, accelerating a move to outpatient and home care that had been underway for several years. Before COVID-19, hospital admission rates already were trending flat, and outpatient revenues consistently outpaced inpatient revenues, according to Moody's data.
As patient volumes slumped during the pandemic amid people's reluctance to seek care in hospitals, for-profit operators such as Tenet have been notable for expanding their ambulatory services. Tenet, which has been building its outpatient business through its United Surgical Partners unit, reported a 9% rise in outpatient visits during the fourth quarter, even as total admissions declined 4% from the year before. HCA Healthcare saw patient volumes increase in most categories during the period except for inpatient services.
Underscoring the shift to outpatient services, jobs in ambulatory care have increased steadily during the pandemic. In the latest data from the Bureau of Labor Statistics, the home health services sector added 20,000 positions in February alone. Overall, healthcare employment was down 2% from two years ago.
Moody's noted that in particular, a number of providers are focused on expanding in-home acute care admissions. For example, Mayo Clinic and Kaiser Permanente in May 2021 invested in Medically Home, a service that helps health systems develop complex care-at-home models that would allow some providers to reduce inpatient beds while others, such as academic centers, increase inpatient capacity as needed. Mayo and Kaiser are among more than a dozen systems that launched the Advanced Care at Home Coalition in October 2021.
Reimbursement changes and risk-sharing models also will support the larger shift to outpatient care, Moody's said. The decision by CMS to remove certain orthopaedic and cardiac procedures from its inpatient-only list will help drive more treatment to hospital-based outpatient departments or ambulatory surgery, the report said. CMS' penalties for excessive readmissions are another incentive to keep patients out of the hospital.
At the same time, new drugs and at-home heart monitors are expected to reduce hospitalizations for heart failure, while new orthopaedic technologies are reducing time spent in the hospital.
Hospitals such as academic medical centers with a strong focus on highly complex cases requiring greater levels of specialty care will be better able to sustain demand for inpatient services than hospitals that offer mostly secondary care, Moody's said. However, hospitals may see greater demand for inpatient services in the near term due to the number of higher-acuity patients who delayed care during the pandemic.
Hospitals in markets with strong population growth, such as Florida, Texas, Arizona, Utah and Idaho, in general will continue to see stronger overall volume trends, including on the inpatient side, the report noted.