Complex surgeries are shifting from the hospital setting to freestanding ambulatory surgery centers (ASCs). For example, over one-third of outpatient total knee replacements could take place in ASCs in the coming years — a significant increase from 6.5% from 2019.

Moving forward, many surgeries will no longer require hospital supervision as innovations in technology lower the riskiness of procedures and improve recovery times. Surgeries delivered in outpatient settings are more convenient and less expensive, which incentivizes consumers and health plans to adopt this shift. Furthermore, increased provider competition also encourages expansion into ASCs.

Implications for growth

We expect to see the quickest growth in these five service lines: orthopedics, cardiovascular, urology, pain management, and general surgery. Health systems will take a revenue hit as core inpatient services shift out of the inpatient setting – or out of the hospital altogether. As a result, they will need to own and compete in the ASC setting. As free-standing care becomes more common, ASC operators will need to differentiate episodic cost and quality to win high-revenue cases. This is especially important as employers and health plans adopt centers of excellence or restrict ambulatory networks.

Imaging and lab services are shifting from the hospital to ambulatory sites. Centers for Medicare and Medicaid Services (CMS) and commercial health plans continue to drive the shift with site-neutral payment policies and site-of-service restrictions, both of which incentivize care outside the hospital. In addition, expanded access to at-home or self-administered tests and co-location of ambulatory clinics improves diagnostic capabilities for both patients and providers.

Implications for growth

Labs and imaging centers should anticipate pricing pressures, especially on tests like MRIs and CTs. Furthermore, there will be a demand for lower-cost outpatient options in competitive markets. Health systems will struggle to retain these volumes unless they can strategically co-locate these facilities next to key referral sources such as neurology, orthopedics, and oncology practices. 

Physician visits are shifting from the office setting to urgent care centers and retail clinics. We expect claims share for these alternative sites-of-care to double in the coming years as scope-of-practice laws enable expansion without a primary care physician on-site and retailers expand into underserved markets. Consumer demands also play a role; as traditional primary care offices become harder to access, convenient care clinics become more attractive.

Implications for growth

We predict that more convenient care centers, like urgent care and retail centers could expand to include more chronic care management, cardiovascular, trauma, and orthopedics services. For health systems, that represents a threat to current referral pipelines and an opportunity to build new referral relationships. As convenient care sites expand, they may draw patients away from primary care physicians, though they’re also likely to create new demand for patients unable to access traditional primary care. As this happens, they’ll need referral partners for specialty and tertiary care, creating an opening for health systems to grow.      

Physician, urgent care, and triage visits are shifting from brick-and-mortar sites to digital platforms. These visits can occur synchronously and asynchronously. Predictive models suggest that 26% of outpatient visits could be performed virtually in the future. Even though volumes rose and crashed throughout the course of the pandemic, telehealth volumes are still well above pre-pandemic levels. The expansion of covered services and virtual-first models make access to digital healthcare more convenient for patients. Lower regulatory barriers act as another enabler for patients and providers. 

Implications for growth

We expect to see the greatest shift in psychiatry, general surgery, dermatology, and pediatrics service lines. Long-term utilization will heavily depend on four things: payment, evolving regulations, consumer preferences, and the ability to consistently provide positive outcomes. Health systems should expect new market entrants to specialize in virtual-care or hybrid options first to expand patient relationships. These entrants will influence downstream care, both by replacing in-person primary care and by creating new referrals for specialty and tertiary care. They will also need local partners to direct their patients to, creating an opportunity to expand patient relationships and compete for referrals.

Inpatient medical admissions are shifting from the hospital to the home setting. Our data shows that 30% of the inpatient volume could be eligible for a hospital-at-home model in the next five years. However, the true amounts of volumes shifted is likely to be substantially lower than 30%. This is due to staffing constraints, patient preferences, and upfront costs necessary to create a hospital-at-home setting.  Achieving this level of shift will require investment and interest from commercial payers and a permanent stable reimbursement program, instead of the current CMS Acute Hospital Care at Home program waiver.

Implications for growth

As we envision the future of hospital at home, it’s likely that two factors will drive adoption. First, hospitals experiencing capacity constraints will use the model to better manage capacity. Second, hospitals participating in risk-based contracts will use hospital at home to lower costs of care for patients under risk. Program launch and scalability challenges could hinder near-term growth potential. To combat this, health systems might be required to seek out partners. The viability of such partnerships will depend on a staffing model that enables scale for home-based care.