Healthcare is leaving the traditional four walls of hospitals. As patients, payers, and providers seek to reduce costs and improve quality, they are relying less on inpatient stays and more on outpatient services. A growing reliance on outpatient services could drive healthcare costs down as costly inpatient services are increasingly reserved for patients who truly need them.
Fewer patients admitted means less need for beds
Hospital beds have been on their way out for a while. Over the past 20 years, the general trend to provide more value and less volume has driven down the number hospital beds available to patients nationwide.
There were a total of 901,056 hospital beds across the country in 1994, according to the American Hospital Association Trendwatch Chartbook 2016. That number fell to 786,874 by 2014. Inpatient admissions ticked upwards slightly during that time, but admission rates per 1,000 visits dropped from 118 to 103.7. Around 2.3 million more patients were treated at hospitals in 2014 than in 1994, but they spent 26.7 million fewer days in the hospital.
Meanwhile, utilization of outpatient services has increased. There were a little less than 383 million outpatient visits in 1994 and more than 693 million in 2014. The number of outpatient surgeries performed each year increased from 13.2 million in 1994 to 17.4 million in 2014. The number of outpatient surgery centers serving patients has increased by 407 from 2009 to 2014, from 5,039 to 5,446.
As a smaller percentage of patients require shorter inpatient stays, hospitals are removing their beds. MedStar Georgetown University Hospital received approval from regulators earlier this year to build a new facility in Washington, D.C., but saw its bed capacity reduced from 609 to 538 because it has only been operating about 415 over the last several years, according to Washington Business Journal. The University of Pittsburgh reduced its beds in service across its network of hospitals by 8.4% from 2013 to 2014, according to the Pittsburgh Business Journal.
The rise of bedless hospitals
While some providers remove beds, others aren’t offering inpatient services at all. In 2014, Montefiore Health System opened a massive 12-story ambulatory surgical hospital without any inpatient beds. With primary care, specialty, imaging services available in addition to 12 operating rooms, the Montefiore Hutchinson Campus in New York actually has a larger surgical capacity than traditional hospitals, Montefiore president and CEO Steven M. Safyer said in a statement.
Just last month, the MetroHealth System opened the Brecksville Health and Surgery Center in Ohio. The facility will feature an always-open emergency department, laboratory and imaging services, and primary care services, but it will not offer inpatient services. MetroHealth plans to build two similar facilities in nearby locations.
The move by MetroHealth is part of a larger strategy to provide more outpatient services, MetroHealth CEO Dr. Dr. Akram Boutros told the Plain Dealer. MetroHealth expects outpatient visits to rise from 850,0000 to 1.2 million as it expands outpatient services. The plan is to open access to cost-effective outpatient services and emergency services in convenient locations to keep patients out of the main MetroHealth campus, where capacity for patients with more complex healthcare needs should increase.
Ed Pfleging, vice president of facilities and real estate for Montefiore Health, provided similar reasoning for their bedless hospital. "Of the 38,000 cases in our operating rooms each year, 23,000 are ambulatory. The new operating rooms in the ambulatory care center will provide capacity at our other hospitals for [more complex,] higher-end surgical procedures,” he said in an interview with the Westchester County Association. “This reduces costs through economies of scale."
What’s driving these outpatient care trends?
The idea that a healthcare could cost less if it focused more on outpatient care than inpatient care is not new. A 1999 report on bedless hospitals from the American Institute of Architects noted that hospitals were being transformed as patients relied more on outpatient services. A 1993 article in The Independent predicted that bedless hospitals would become the norm in the United Kingdom by the early part of the 21st century.
While bedless hospitals haven’t become a mainstay in healthcare yet, the trend is increasingly toward outpatient services. Outpatient services definitely seem less costly than inpatient service. In one review of relevant studies, published last December by Orthopedic Reviews, researchers determined outpatient surgeries were associated with cost savings averaging 16.6% to 57.6%, with most of the savings in nursing and room costs.
One factor driving the trend toward outpatient services is the shift to a pay-for-value model. The government and payers are implementing policies to discourage inpatient admissions.
Many employer-sponsored plans encourage participation in a wellness program to preempt hospital admissions. A 2014 RAND Corporation report determined that a disease management program aimed at at-risk employees reduced hospital admissions by 30%. Additionally, as patients bear greater shares of their healthcare costs through higher premiums and co-pays, they are trying to consume services more carefully.
Advancements in technology have also helped to drive the trend toward outpatient care. For instance, providers at the Mercy Virtual Care Center in Chesterfield, Missouri, which opened in 2015, don’t physically see any patients. Instead, they use cameras and web-based tools to monitor chronically ill patients without hospitalizing them.
While traditional hospitals will likely have their place in healthcare for many years to come, it is almost certain that patients will utilize differently as new care pathways enter and evolve with the care landscape.