The majority of procedures analyzed only saw marginal outpatient market share growth from 2014 to 2019. Surprisingly, this outpatient shift was nearly even across both data sets, despite the differences in patient population. While the Medicare data set includes only Medicare FFS patients, who are largely over 65 years old, Optum’s de-identified Clinformatics^® Data Mart Database includes patients of all ages and skews younger.

5-year outpatient market share growth across all procedures, by data set
Medicare Fee-for-Service; Optum’s de-identified Clinformatics^® Data Mart Database

Despite this slow growth, six procedures experienced a rapid shift away from the inpatient setting, highlighted in the graph below. We found that CMS had either removed these procedures from the Inpatient Only List or added them to the ASC payable list during the analysis period. This positions regulation as a precondition for rapid outpatient market share growth.

Five-year outpatient market share growth among fastest shifting procedures, by data set
Medicare Fee-for-Service; Optum’s de-identified Clinformatics^® Data Mart Database; data represents 5-year percentage point change in market share attributed to outpatient care settings

Surprisingly, both removal from the Inpatient Only List and addition to the ASC payable list increased HOPD utilization rather than increasing driving volumes in the ASC. Again, regardless of data set, median HOPD utilization grew by 12% in the four years after regulatory approval, compared to just 1% for the ASC.

Impact of ASC approval on ASC and HOPD market share, by procedure
Medicare Fee-for-Service; data represents increase in HOPD and ASC share of annual volumes in four years following ASC reimbursement approval from CMS

While regulation clearly plays a role in driving procedures out of the inpatient hospital, there must be other reasons behind the variation in ASC market share growth across procedures.

We attribute this variation in ASC market share growth to the presence, or lack thereof, various market forces. Take SI joint fusion as an example, which was approved for ASC reimbursement in 2015. Immediately following approval, inpatient Medicare volumes dropped dramatically while ASC share, represented in the graph below by the darker line, experienced strong growth.

Share of annual volumes by each major care site for SI joint fusion
Medicare Fee-for-Service; data represents share of annual volumes treated at each major care site

Share of annual volumes by each major care site for SI joint fusion
Optum’s de-identified Clinformatics^® Data Mart Database; data represents share of annual volumes treated at each major care site

Orthopedic specialists have a higher degree of independence from health systems and more frequently own stakes in ASCs than physicians in other service lines, creating a financial incentive to treat patients outside of the hospital. Many SI joint fusions also carry fewer clinical risks than spinal fusion procedures, which did not see a similarly dramatic drop in inpatient volume share from 2014 to 2019, and the procedure requires few additional investment in procedural infrastructure for delivery in the ASC. These factors that set SI joint fusion apart predate regulatory approval for moving the procedure to outpatient. So, the approval may have triggered the (relatively simple) shift to the ASC.

We saw similar variation in long-term shifts after regulatory approval. The graph below shows the current site-of-care distribution for procedures eligible for Medicare ASC reimbursement before 2013.

Share of 2019 Clinformatics^® volumes across care settings, by procedure
Optum’s de-identified Clinformatics^® Data Mart set; data represents procedures approved for ASC before 2013

Notably, freestanding share of volumes remained low for the three cardiovascular procedures (arterial thrombectomy, ICD implant, and pacemaker implant), despite at least seven years of ASC eligibility by 2019. This slow shift to freestanding sites is likely due to market barriers such as high costs in cardiac catheterization lab infrastructure, the need for specialized staff, and the strong degree of physician employment and affiliation with hospital-based systems. Accelerated shift of these procedures would require a change in one or more of these market conditions.