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Outpatient Care: Strategic Growth Lives Here

Philip Betbeze, for HealthLeaders Magazine, May 12, 2010
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With more procedures migrating, what path should you follow?

Ever heard of a drive-by heart attack? Bill Atkinson has. Even if he's only joking, Atkinson says Raleigh, NC-based WakeMed Health & Hospitals, where he is president and CEO, is keeping that image in mind as it develops its outpatient strategy for the coming decade.

"When you define outpatient as a less-than-24-hour stay, the ability to move things to a less traditional environment is growing so fast that with or without healthcare reform, the possibilities for the outpatient world are virtually unlimited, including very major things."

By "major things," Atkinson means that procedures that were once highly invasive and required long recovery times in hospitals are becoming less invasive and, thus, appropriate for the outpatient environment.

"Many of those things are becoming day procedures," he says. "We do a large number of radial cardiac catheterizations here. We're a system that is a classic example of being way ahead of the curve in that type of procedure. You're seeing the same thing on some issues of stroke where procedures are no longer surgical. They are really catheterization-based."

Not new, but accelerating
The migration of formerly invasive procedures from inpatient to outpatient settings is not really new—physicians and hospitals have long worked to move orthopedic procedures, imaging, and a raft of other work into the outpatient setting, with success. But the trend is accelerating as technology and payment systems shift dramatically.

In fact, hospitals and health systems may be entering a window of time in which they have an opportunity to strengthen their hold on their local healthcare market because of payment changes that make it more difficult for physicians to independently carve out lucrative niches in the outpatient market. In fact, Sg2, a Chicago-based consulting firm that works with more than 1,000 hospitals and health systems, predicts that utilization of outpatient services will grow by 21.6% between 2009 and 2019, while inpatient utilization will grow by an anemic 1.7%. A big part of the shift is coming from recent payment rulings by CMS, says Natasha Goburdhun, a vice president at Sg2.

"We've seen CMS change rulings on how they pay for services," she says. "On the one hand, they've leveled the playing field between hospital-based outpatient and freestanding outpatient center payments, but at the same time allowed freestanding centers to do more procedures."

She says CMS, whose payment rulings commercial payers often follow, has allowed several hundred CPT codes that were previously exclusive to inpatient hospitals to be performed in an outpatient setting.

"The essence of that is they've decided those can be done outpatient without the backup of the hospital in case of an emergency," she says.

Buying back what docs carved out
According to Sg2's analysis, orthopedic procedures can still be profitable under the physician-owned, "mom-and-pop" format, but with freestanding imaging centers, gastrointestinal, and pain management services, for example, "the capital requirements to keep those updated have gotten more difficult given the change in reimbursement. So in some markets we have seen those folks asking for help from hospitals," Goburdhun says. That has allowed hospitals to recapture some of that market share they've lost in the past four to five years.

But hospitals and health systems aren't just depending on government payment changes to drive profitable procedures back into their grasp. WakeMed, to name one example, has been aggressive in expanding into outpatient care through freestanding emergency departments, says Atkinson.

"We had the first two in North Carolina [a certificate-of-need state] and we're approved for three more," he says. "Those are not urgent care; they're true outpatient EDs." Atkinson says his executive team is closely watching for shifts in the ability to do complex procedures in a safer and less expensive setting for patients, "and a steady stream of technologies are marching onto our radar screen."

WakeMed is using the outpatient EDs as testing grounds for how certain modalities would work in an outpatient setting.

"So while some people are sitting around waiting to see what other people tell them makes sense, we're modeling them here," he says. "We think about how the parts foster outstanding outcomes for the patients and not about the parts themselves."

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