How site-of-care shifts are impacting the market

Site-of-care shifts are happening more quickly, with 14 out of 15 identified procedures shifting since 2017, Hula and Beckmann said. In addition, joint replacement surgeries have seen a significant move to outpatient settings, shifting 51 percentage points post-pandemic.

These shifts are driven by factors including regulatory changes, physician interest, and operational reasons, including the COVID-19 pandemic.

These site-of-care shifts vary across different services and markets. Orthopedics has seen a significant shift towards ambulatory surgery centers (ASCs), while some cardiovascular procedures face challenges due to the need for specialized infrastructures like catheterization labs.

Hula noted that some services, like open heart surgery, are unlikely to move to ambulatory settings soon, while others, like joint replacement and cardiovascular interventions, are already shifting.

Market conditions, including physician landscape, infrastructure availability, health plan involvement, and local regulations, can also play a significant role in the pace and feasibility of site-of-care shifts. Consolidated markets or markets with dominant health systems may present challenges for smaller health systems.

In addition, while consumer choice can influence the pace of site-of-care shifts, it's often determined by health plans or physicians. Consumer preferences for cost savings are important, but not the primary driving factor behind site-of-care shifts.

How health systems should respond

In response, health systems need to proactively embrace site-of-care shifts and identify services they cannot afford to lose, Hula and Beckmann said.

Traditionally, health systems have aimed to preserve inpatient volumes due to higher reimbursements. Instead, health systems should aim to solidify their position as market leaders by investing in ASCs and forming partnerships with physician groups, ASC operators, or other stakeholders. Hula noted that partnerships could be essential for health systems unable to invest in infrastructure independently.

"Health systems can't view site-of-care shifts as some necessary evil anymore that they have to avoid at cost," Hula said. "They can't really wait around until they're forced to move things anymore. I like to think about it as going on offense."

Hula and Beckmann noted there are potential benefits to site-of-care shifts, including service line growth, market expansion, and improved access to care.

"Health plans accidentally saved millions and millions of dollars … so if you're a health plan leader, why not use this proactively?" Beckmann said.

Outpatient shift isn't new, but new technologies, changing incentives, market disruptions, and payer pressure have made it more complicated than ever. Discover the five key trends that are reshaping the shifts and gain insights into how your organization can adapt and thrive in this rapidly evolving environment.