GE Healthcare is making a big bet on outpatient care.
The legacy company has confirmed a partnership with healthtech operation Medtronic aimed at facilitating the shift to outpatient care. GE and Medtronic will offer ambulatory surgery centers (ASCs) and office-based labs (OBLs) all kinds of support, from planning to construction to equipment provisions and beyond. It’s the latest major signal of a broader trend that shows consumer preference tilting toward outpatient care.
Patients are getting more sophisticated care without having to check into hospitals. And with new reimbursement models, they’re often paying less, too.
It sounds like a great deal. In some respects, it is—but, as always, the picture has more complexity than meets the eye.
The rise in outpatient care has been accompanied by a drop in inpatient care. Hospitals are processing fewer patients, performing fewer procedures, and as a result, raking in less revenue. Decreased revenue has triggered changes of its own, not all of which may benefit patients in the long run.
Here’s what the trend toward outpatient care means for the industry:
Lower inpatient days. An explosion in medical technology has changed the face of inpatient care. Complex surgical machines are now being used by outpatient facilities. Telehealth, electronic medical records (EMRs), and wearable tech have made it possible for physicians to monitor patients without in-person evaluations.
All of this means patients will spend fewer days in hospital beds. For people who don’t want to upend their lives to get ultrasounds, cataract surgery, or heart catheterizations, that’s great news. But for hospitals who want to maximize their revenue, not so…
Market consolidation. As hospitals see their revenue numbers drop, a wave of consolidation has spread throughout the healthcare industry. Hospitals have begun acquiring outpatient facilities and private practices in hopes of recapturing lost revenue.
In theory, market consolidation is good news for patients. Hospitals claim that owning the full spectrum of patient care—from evaluation to procedure execution to postoperative care—will increase convenience and lower costs for patients.
But research shows that market consolidation usually reduces competition, allowing providers to increase costs. We’ve already seen this phenomenon play out in California. Care may become more convenient—but that convenience will probably come at a premium.
Further changes to reimbursement models. For the same services, physicians working for hospitals get significantly higher reimbursements than independent physicians. This puts a higher burden on people receiving inpatient care, and is a major reason why patients have come to prefer outpatient care.
Current reimbursement models tend to determine payments based on the setting in which care was administered. If you got care in the hospital, that’s an input in the reimbursement formula that produces a bigger number than outpatient facilities.
To counteract this, federal authorities have introduced site-neutral payments, in which patients pay the same reimbursement fee regardless of where they received care. This has the potential to reduce Medicare’s spending by hundreds of billions of dollars. Ultimately, those savings should reflect on patients’ payment obligations.
Layoffs and worker recalibration. As we’ve seen in the broader economy, decreased revenues prompt immediate cost-cutting measures. Coupled with inflation, the financial strain has caused hospitals across the country to begin cutting workforces.
Some of the layoffs are due to predictable changes to circumstance, as in the case of the NYC Trace & Test Corps; as the pandemic scales back, New York City’s task force for COVID-19 testing and contact tracing is doing the same.
But others may signal a fundamental shift in the way hospitals staff inpatient facilities. Fewer secure inpatient jobs may permanently change the labor market for nurses, surgeons, and other specialists who have traditionally found a comfortable home in hospital work. These workers may need to acquire new competencies and undergo additional trainings to stay relevant.
COVID-19 made outpatient care a necessity. Convenience and reduced costs made it a consumer preference. As the healthcare world adapts to the change, the implications are anything but simple, and will affect every dimension of the industry.
