Ambulatory and outpatient care strategy is being driven by many different industry factors, including the need to listen to the voice of the consumer.
This article first appeared in the December 2016 issue of HealthLeaders magazine.
Ambulatory and outpatient care expansion continues to be driven by a broad range of industry factors. In fact, there are few healthcare activities that don't, in some form or another, provide momentum to the trend.
The transition to value-based care, the ongoing battle to improve quality outcomes, and population health management can all be seen as contributing to ambulatory and outpatient growth. Likewise, provider business initiatives that focus on expanding market share and increasing revenue also play a role.
However, healthcare is ultimately about doing what is best for the patient, and as consumers, patients are increasingly seeking care closer to home, without having to wait to see a physician, and in more cost-effective settings. Improvements in medical technology have made some of this possible, but a change in provider thinking is also driving the trend. More and more, providers are listening to the voice of the consumer as they develop and execute their ambulatory and outpatient strategy.
"I think the reason for this is we're looking at it through the eyes of the consumer," says Pam Nicholson, chief strategy officer and senior vice president at Centura Health, a Centennial, Colorado-based health system with 17 hospitals, 12 affiliate hospitals, and numerous urgent care centers, emergency rooms, and clinics, and the lead advisor for this Intelligence Report. "And with technology changing for medical care and how much can be done on an outpatient basis, and then looking at the convenience factor, you're going to find consumers want it faster, closer, and right away, and that doesn't always happen at an inpatient hospital."
Ambulatory/outpatient care strategy
Survey respondents indicate that two of the top three factors driving their organizations' ambulatory and outpatient care strategy—increasing revenue (49%) and expanding market share (45%)—are key aspects of a fee-for-service model. However, the top response for factors driving organizations' ambulatory/outpatient care strategy is improving quality and outcomes (54%), with responding to consumer-driven trends (40%) ranking fourth and population health management (35%) ranking sixth, which are all factors indicative of a value-based care model. Ambulatory and outpatient growth is clearly impacted by both models.
Interestingly, the response for population health management is down eight percentage points from last year's survey, where it ranked fourth. And although population health management makes the top three factors driving ambulatory/outpatient care strategy for approximately one-third of respondents, it remains a second-tier factor in this year's survey.
For the most part, ambulatory and outpatient care strategy is proactive in nature. Only 14% of respondents say that protecting market share is one of the top three factors behind their strategy, and over three times as many respondents mention expanding market share (45%). This is consistent with results in which 82% of respondents say that the industry shift to ambulatory/outpatient care represents an opportunity and only 11% see it as a threat.
Ambulatory/outpatient care tactics
It is apparent from survey results on ambulatory/outpatient care tactics that respondents are paying particular attention to physician organizations as they look to expand their networks. For example, the top tactics respondents use to expand their ambulatory/outpatient network are to partner with physician organizations (52%), acquire or establish physician organizations (50%), and partner with community-based organizations (47%).
The responses for ambulatory/outpatient tactics such as acquiring or establishing urgent care clinics (32%) and convenient care clinics (26%) fall in the middle of the range. Interestingly, respondents show a preference for acquiring or establishing their own versus forming a partnership with an existing clinic, with responses for partnering with urgent care clinics (16%) and convenient care clinics (15%) having nearly half the response rate.
Ownership of clinics appears to be fairly stable. While 37% of respondents say they currently participate in convenient care clinics through ownership or partnership, only 14% not currently participating say they plan to in three years; nearly half (46%) have no intention of pursuing that tactic. Likewise, while 57% of respondents say they currently participate in urgent care clinics through ownership or partnership, only 10% say they plan to in three years, and 33% say they will not adopt that approach.
Note that, according to respondents, participation in urgent care clinics (57%) is greater than convenient care clinics (37%), and this is highest in health systems and large organizations.
Urgent care clinics are attractive to these organizations because they admit patients with higher acuity levels, thus earning correspondingly higher reimbursement. They are also a more cost-effective alternative to an emergency department, a benefit to both hospitals and health systems. And for health systems and hospitals, this is an environment in which they have ample expertise.
Greatest financial contribution
According to respondents, the ambulatory/outpatient care areas offering the greatest financial contribution today are surgery centers (25%), specialty care (24%), and primary care (19%). Surgery centers and specialty care provide significant contributions because they provide care for patients with higher acuity levels than the other ambulatory/outpatient areas, which can result in higher reimbursements.
Looking out three years, the top three areas making the greatest contribution remain the same, but the order is different. Notably, primary care (28%) has the highest response, followed by surgery centers (27%), and specialty care (20%). The response for primary care is up nine points from 19% today, the largest increase of any area. This is perhaps an indication of the impact of healthcare reform and the trend toward population health.
On the other hand, headed in the opposite direction is the response for imaging centers, which is down nine percentage points to 7%. This likely reflects the ongoing provider emphasis on cost containment initiatives.
"We're seeing a large shift to outpatient, and we see that also in a lot of our systems of care, especially around oncology," says Nicholson. "In orthopedics, we're starting to see same-day surgeries that are pretty intense that have always been inpatient. So we are definitely seeing that shift."
Greatest competitive threat
Survey responses indicate that the greatest competitive threats to respondent organizations in three years are physician practices and organizations (23%), retail medicine (15%), and surgery centers (13%). The results are somewhat similar to last year's survey: retail medicine (21%), physician practices and organizations (20%), and convenient care clinics (13%).
Respondents overwhelmingly say that the industry shift to ambulatory/outpatient care represents an opportunity for their organization (82%), and only 11% say it is a threat. Note that a greater share of health systems (16%) and hospitals (10%) than physician organizations (4%) say it is a threat.
The strong response for ambulatory/outpatient care as an opportunity suggests that few providers see the shift as a disruptive trend. Interestingly, physician organizations, which exist almost exclusively in the ambulatory/outpatient care domain, see little cause for concern despite all the outside interest (4% see it as a threat and 4% don't know). In fact, they are among the most bullish on the trend—92% see it as an opportunity.
"We're building solutions that meet consumers' needs," Nicholson says of Centura Health's ambulatory/outpatient care strategy. "We are partnering with our providers to optimize health value and changing the way that patients are engaging by educating and empowering them across the care continuum and supporting them in their health journey."
Jonathan Bees is a research analyst for HealthLeaders.