Question

Describe how the balance between inpatient and outpatient services has shifted. What are the major factors for the shift? How did the ACA change the balance? What role does cost transparency play? Does technology play a role? What effect, if any, did the mandatory electronic medical records have in the shift?

Answer 1

The balance between inpatient and outpatient services has shifted because of the various reasons such as:

Medical innovation, patient preferences, and financial incentives are tilting the balance in favor of outpatient settings for hospital services. The aggregate hospital revenue from outpatient services is growing rapidly. Some of this change is driven by patient preference and clinical and technological advances such as simplified surgical procedures and new anesthesia techniques that reduce complications and allow patients to return home sooner.

Also financial incentives have likely played an important role as well. Health plans and government programs payment policies support are providing services in lower-cost care settings, including outpatient facilities. Health systems have been joining hands with physicians and physician practices, further driving up the volume of services performed in outpatient settings.

Moreover, these payers also are often using shared-savings, bundles, and other arrangements that relate payment amounts to cost and quality performance. One reason for the growth in outpatient care might be health systems’ planning to perform well under these arrangements by reducing inpatient care by shifting patients to outpatient settings. To gain greater insight into the factors driving growth in outpatient services and decline in inpatient care.

Factors for the shift are:

Hospitals with greater revenues from quality and value contracts provided more outpatient services than the other hospitals. Hospitals that are deriving a large part of their revenue from quality and value contracts had 21 percent more Medicare outpatient visits and 13 percent higher outpatient revenue between 2012 and 2015 (even after controlling for hospital characteristics), compared with hospitals that did not report revenue from such contracts.

The association between having these type of contracts and higher outpatient services was even more pronounced for certain therapeutic areas.

The lack of a relationship between quality and value contracts and inpatient care may be because health systems are not yet at sufficient risk to actively manage population health to reduce inpatient care more aggressively.

Affordable Care Act (ACA) expands access to health insurance and, to date, an estimated 20 million previously uninsured individuals have gained coverage. Understanding the law's impact on coverage, access, utilization, and health outcomes, especially among low-income groups, is critical to informing ongoing debates about its effectiveness and implementation. There have been significant reductions in the rate of uninsured among the poor and among those who live in Medicaid expansion states. In addition, the law has been associated with increased health care access, affordability, and use of preventive and outpatient services among low-income populations, though impacts on inpatient utilization and health outcomes have been less conclusive.

Transparency in cost play an important role as patients and consumers are now especially disadvantaged when it comes to the lack of transparency around the price and cost of healthcare products and services. Shielded in the past by comprehensive public or private insurance coverage, consumers are faced with substantial increases in cost sharing. As costs increase, market proponents should insist that consumers have access to comparative information, the price and cost of the products or services compared, and an analysis of the possible scenarios relevant to their purchasing decision

Given the shift from inpatient to outpatient care, health systems will want to consider building effective strategies to grow capacity and infrastructure for outpatient services. Investing in virtual care/technology capabilities could expand outpatient services while also helping hospitals bend the cost curve and boost revenue.

The current use of EHRs initiated by the new technology would have been hard to foresee. Current and new EHR technology will help to provide the international standards for the applications that use health, social, economic, behavioral, and environmental data to communicate, interpret, and act intelligently upon complex healthcare information and to foster precision medicine and a learning health system.