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Research

Services at risk of shifting from the hospital setting

Overview

Site-of-care shifts have been a top-of-mind issue for hospital and health system leaders for years, but recent regulatory, technological, and pandemic-induced forces have brought new attention and urgency to the issue.

Through claims analysis and expert interviews, we sought to understand the most business-critical outpatient services likely to shift from hospitals to freestanding settings in the decade ahead. Download this report for a summary of the analysis, including volume and revenue at-stake for a typical hospital, and moderate and aggressive shift scenarios that planners can use to calculate potential shift impact at their organization.

 

Overview and methodology

Research questions:

  1. What percentage of hospital outpatient volume is at risk of shifting?
  2. How much revenue does at-risk volume represent?
  3. Nationally, are shifts in beginning, intermediate, or advanced stages?

Methodology:

Advisory Board acquired claims from 2014 to 2019 from Optum’s de-identified Clinformatics® Data Mart Database to identify historical shifts across sites of care and regions. We supplemented analysis of this claims data with interviews, a literature review, and a review of private and public coverage and fee schedule announcements. Below is a summary of the insights gleaned from this research, followed by detailed tables on the high-priority services we identified that have significant potential to shift away from the hospital setting. A detailed methodology and formulas are included on page 7 of the PDF.

 

Observations and insights

1. Services at risk of shifting away from the hospital outpatient department (HOPD) span 30 sub-service lines, comprise one-third of hospital outpatient revenue, and account for 18% of HOPD volume.

The greatest number of services at risk of shift are concentrated in orthopedics, cardiology, and radiology service lines.

2. The most notable “early shifter” procedures are percutaneous coronary interventions (PCI), total hip arthroplasty (THA), total knee arthroplasty (TKA), spinal fusion, spinal decompression, and laparoscopic cholecystectomy.

These procedures are more complex than most procedures performed in ambulatory settings today. They also account for a large share of hospital revenues.

3. Ambulatory surgery centers (ASCs) and office-based labs (OBLs) are the primary entities gaining market share for high-priority hospital procedures.

Physician comfort and safety concerns will keep some procedures from shifting to these ambulatory sites, at least for a while. But other factors—including additions to CMS' covered procedures list, payer steerage tactics, and patient demand for convenient access—will support the growth of ASCs and OBLs. However, given that facility payments are typically lower in freestanding settings compared to hospitals, many sites will likely fail without strong physician backing and efficiency in their operations.

4. Advanced-stage procedures at risk for further shifts are predominately within urology, pain management, ophthalmology, general surgery, and orthopedic service lines.

Many markets may already be at shift maturity for services such as arthroscopies, cataract procedures, bariatric procedures, and nerve blocks.

5. Intermediate-stage shifts are concentrated in ENT, radiology, and gastroenterology service lines.

The pace of shift for these services—including colonoscopy, advanced imaging, and tonsil/adenoid procedures—is often inhibited by local market variables, including presence (or absence) of ambulatory competitors. The efficacy of performing the services in ambulatory settings, though, is generally not in dispute.

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