AMA 2017: Outpatient services to drive profitable growth for health systems

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 - John Becker, senior vice president at Sg2, speaking at AMA 2017 in Chicago
John Becker, senior vice president at Sg2, speaking at AMA 2017 in Chicago

Health systems looking for ways to grow profits should focus on sites of care and know what kind of insurance plans their patients may be utilizing, with much of the growth being seen in outpatient services.

In a presentation at the American Medical Association’s annual meeting in Chicago, John Becker, senior vice president at healthcare consultant Sg2, said his firm is projecting negative growth rates in many inpatient service lines through 2026, often in disagreement with population-based forecasts. For example, the population-based forecast estimated 21 percent growth in the cardiovascular inpatient service line between 2016 and 2026, but Sg2’s own forecast predicted a 12 percent decline.

There are some exceptions to the inpatient decline, with Sg2 forecasting the orthopedic, neurological and cancer service lines to see positive growth.

“There’s some things that grow,” Becker said. “Even in declining service lines, there are procedures in the hospital that actually have growth. It’s the mix of patients. Always.”

Some of the difference the population-only forecast and what Sg2 predicted was based on changes brought by the transition to value-based care. In orthopedics, it forecasted 3 percent growth versus the 20 percent based on population-only. Becker said this could be a result of some orthopedic procedures being skipped due to questions about their medical benefits, as well as joint replacements shifting to outpatient sites.

That shift will be a main driver of profitable growth. The same service line categories which showed largely negative growth in Becker’s presentation were all forecast to show positive growth by Sg2, sometimes above figures in the population-only forecast.

“Everything grows,” Becker said.

In the orthopedic service line, Sg2 forecast 14 percent growth through 2026 for outpatient services versus the 3 percent growth in inpatient. It also predicted a big jump of 22 percent in outpatient cancer services. The greatest discrepancy between the inpatient and outpatient service line predictions was in cardiovascular care, with that previously-mentioned 12 percent inpatient decline being outweighed by 22 percent estimated growth for outpatient services.

These shifts may test systems looking for growth as many make the gradual transition to value-based payment.

“If you think about business models and be able to maximize returns, it’s pretty much impossible to maximize a business model when you’re caught in between, with some contracts being risk-based and some contracts being fee-for-service-based,” he said.

An April survey of hospital executives from the Advisory Board Company listed improving access to outpatient services as their top area of interest in 2017. Additionally, profitable systems like Ascension Health have credited some of their financial success to investing in outpatient assets.