Increased chronic disease, aging populations and behavioral health awareness will accelerate inpatient and outpatient volumes.
By Daniel Beaird
Workforce demands, capacity constraints and ever-changing payer and policy considerations highlight the enormous obstacles faced by the healthcare industry today. An aging patient population and high acuity rates over the next decade will continue to push lengths of stay longer and put pressure on the industry to adapt and make changes. But how does that look?
Sg2’s Impact of Change report forecasted inpatient utilization to rise 3% and days to increase 9% due to the prevalence of chronic disease and behavioral health conditions that spur demand for complex care and other services. Outpatient volumes are projected to jump to 17% due to outpatient surgical services driven by expanded capabilities and procedural needs.
Behavioral health volumes will grow to 8% inpatient and 26% outpatient visits. Finally, it predicts virtual care will encompass 23% of evaluation and management visits through greater adoption of technology, including home health expansion that is set to increase 22%.
“We’ve seen outpatient shift from the hospital to observation and hospital outpatient surgery gradually occur over the past 20 years,” said Maddie McDowell, MD, senior principal of intelligence for Sg2, a Vizient company. “It has accelerated in the last 10 years due to clinical innovations, payer pressures and changes in CMS payment policy and physician practice patterns, resulting in dynamic shifts across the care continuum and beyond the hospital to lower cost settings, including ASCs, urgent care clinics, virtual visits and the home.
Patient care shifts away from hospitals
While joint replacement surgeries began shifting to outpatient settings before the pandemic, other higher acuity surgeries like cardiac surgery have now joined the trend. Primarily shifting to ambulatory surgery centers (ASCs), health systems are focusing on getting their patients in the right settings and locations for their surgeries.
“They’ve expanded to multiple sites across multiple geographies that connect the dots for the patient care journey so they can have their surgeries done in an ASC or a hospital outpatient department or inpatient depending on the type of procedure and acuity of the patient,” Dr. McDowell said.
As patient care shifts, there has been an uptick to home and remote monitoring as well. “There’s a slow but steady growth in care at home,” she said. “It was rare before the pandemic but spurred by COVID-19, there’s now payment from CMS and artificial intelligence (AI) will augment it over the next decade.”
Dr. McDowell says the model has shown improved quality outcomes, reduced admission rates, shorter lengths of stay and reduced complications. “It’s very successful and some health systems are continuing to grow their programs,” she said. “A lot of experimentation happened during the pandemic because of the necessity to expand hospital bed capacity, and the results were overwhelmingly positive, resulting in a new care model that will likely continue to grow in the wake of advances in AI-enabled remote monitoring.”
With the aging, high-acuity patient population requiring longer stays in the hospital, how many bed days could care at home save? What other capacity constraints could be relieved by a robust care at home offering? Health systems must ask themselves these questions to ensure their resources are deployed for high quality outcomes.
Expanded virtual capabilities also help foster care at home. More services like consultations can be delivered in a virtual setting to help patients manage things like chronic disease and keep them out of the hospital.
“Virtual care was also low volume before the pandemic,” Dr. McDowell said. “But the pandemic accelerated its usage. CMS allocated new payment for it, and as a result we saw a dramatic rise in virtual visits. It’s come down now but it’s still well above what it was before the pandemic.”
CMS extended payment parity for virtual visits to match in-person visits and reduced or limited many of the restrictions originally present. But that’s expiring at the end of this year and it’s causing many organizations to press pause on it, according to Dr. McDowell. “They’re unsure about whether to double down and invest in it going further. They’re just waiting to see what CMS will do.”
But conditions like chronic pain and some parts of cardiovascular where remote patient monitoring can expand local services across broader geographies are predicted to see more uptake of virtual care, along with better access to behavioral health in rural and underserved communities through virtual care.
However, anything towards surgical services is less likely to be tied to it.
Surgical care increasing
Outpatient surgical care is expected to increase 19% over the next decade and physicians have driven growth in the ASC space.
“ASCs were originally for very low acuity surgeries and high-volume surgeries like cataract surgery, for example,” Dr. McDowell said. “They were oftentimes owned by physicians and sometimes partially owned by hospitals. But over time, health systems and hospitals realized their bread-and-butter surgeries, whether they were inpatient or outpatient, were being connected to ASCs.”
Physicians controlled ASCs and could provide high patient satisfaction because ASCs didn’t have the cumbersome challenges that large hospitals had, along with the complexity, different cases and different staffing models, says Dr. McDowell. ASCs were focused on specific conditions and were very attractive to specialties. So, health systems and hospitals began to partner with ASCs in order to provide the entire continuum of care to their patients.
“Physicians play a large role in ASCs,” Dr. McDowell explained. “They bring in the patients, decide the protocols and execute the operational efficiency piece that can be lacking in large ORs at hospitals. If hospitals do these on their own, they sometimes don’t get the referrals, and they don’t have the same operations and processes in place that are successful and that doctors find attractive.”
And if physicians have joint ownership in ASCs, there are financial benefits for them to succeed. So, it’s a beneficial relationship for physicians and health systems to partner together.
“For things like electrophysiology procedures and treating arrhythmias like cardiac ablations, those things are very connected to the hospital,” Dr. McDowell said. “Cardiologists are often employed by the hospital. There’s a lot of care at a clinic or where other cardiology services are given. The diagnostics that are done often require advanced imaging and certain procedures are preferentially done at the hospital.”
Higher acuity, aging patients and longer stays
Even before the pandemic, health systems were seeing longer lengths of stay and higher acuity coding in the ED. And since then, trends have manifested into rising acuity rates in hospitals due to chronic disease and obesity as well as an aging general population and more behavioral health awareness.
But the rate of acuity in hospitals has also naturally risen as other patients have been shifted to ASCs, care at home or post-acute programs, leaving behind sicker patients in hospitals. “We’re seeing that in the inpatient setting, in the ED and in observation as well,” Dr. McDowell said. “But there are dynamic changes in clinical care brought on by pharmacy innovation. The pipeline for new drugs is quite promising for a whole host of chronic conditions.”
Dr. McDowell says that for dementia alone, there are 32 drugs in Phase 3 clinical trials which demonstrates whether or not a product offers a treatment benefit to a specific population. “In the future, the introduction of targeted, effective drugs coming on board to treat common chronic conditions will impact the rising acuity health systems face today and have been addressing since the early 2000s,” she said.
Drugs like GLP-1 receptor agonists and SGLT-2 inhibitors which are used to treat Type 2 diabetes and can reduce the risk of cardiovascular disease and kidney failure are a big story too. “These medication classes address multiple diseases, with impressive downstream impacts, such as reducing chronic disease progression, lowering healthcare utilization, decreasing hospitalizations, and generally improving the overall health of patients with cardiac and kidney disease, hypertension, and diabetes,” she said. “They’ve shown efficacy in reducing hospitalizations for cardiac conditions, including congestive heart failure, and in slowing the progression of chronic kidney disease, even in the short time they’ve been available.”
Cancer drugs, gene therapy drugs, cardiac drugs, diabetes drugs, obesity drugs, dementia drugs and drugs that treat autoimmune conditions are all seeing new targeted therapies. These will have an impact on the U.S. healthcare system from pricing to utilization and everything in between. They will increase utilization in some cases for services like diagnostics, infusions or chimeric antigen receptor (CAR) T-cell therapy at hospitals, but they could also decrease utilization downstream.
“If you’re getting these drugs for an autoimmune condition and you’re in remission, you no longer need the monthly infusions, the imaging and the regular visits to the doctor,” Dr. McDowell said. “That will affect the U.S. healthcare system in price, volume, overall care pathways and in how we manage patients.”