Health systems benefit from growing demand for outpatient procedures

©EyeMark-stock.adobe.com

Apparently, outpatient services aren’t going to be out of fashion with patients anytime soon.

More patients are showing their preferences for having procedures done outside the hospital, and a recent report from Strata Decision Technology and Syntellis Performance Solutions sheds more light on the trend. (Syntellis is now a part of Strata.)

At a time when hospitals are continuing to struggle financially, health systems are seeing a welcome increase in revenue from outpatient services. Outpatient revenue jumped 11.6% from July to August 2023.

Health systems are providing more orthopedic services on an outpatient basis, the report indicates. Outpatient orthopedic volume for the typical health systems rose 29.9% from January 2022 to May 2023 (the number of procedures from 373,266 per month to 484,857).

Knee replacements illustrate the growing trend in outpatient care. Outpatient knee replacement surgeries have soared by 293% since 2019, while inpatient knee replacements have fallen by 78%.

This year, the number of outpatient knee replacement procedures is more than five times higher than inpatient volume, according to the report.

Outpatient orthopedic procedures may not be big money makers for health systems, but they are far more profitable than inpatient procedures.

For orthopedic outpatient visits, the total margin per case was $25 in May 2023, the report states. While modest, it’s far superior to the margin for inpatient orthopedic visits, which typically lost $3,600. The report cites that as an example of “the severe losses hospitals are experiencing in some areas of inpatient care.”

Brad Bowman, chief medical officer of Healthgrades, told Medical Economics’ sister publication Chief Healthcare Executive® in a May interview that patients are showing their preferences for outpatient care, and health systems are responding accordingly.

“A lot of health care is shifting to outpatient, both procedures and treatments,” Bowman said.

Health systems are continuing to see higher labor costs, which is hurting their operating margins, the Strata-Syntellis report stated.

Total labor expenses in August 2023 were 3% higher than in the same month of 2022. With higher costs to pay staff, total hospital expenses rose 4.2% from August 2022 to August 2023.

On the upside, health systems are relying less on staffing agencies to fill positions, including nursing and other key roles, the report found. The report examined data from more than 2,000 hospitals.

Steve Wasson, chief data and intelligence officer for Strata Decision Technology, said health system executives need to understand the trends to navigate a changing landscape.

“Our nation’s vital healthcare organizations continue to face immense challenges including elevated costs, long-running labor issues, severe losses in some areas of inpatient care, and escalating demand for outpatient services,” Wasson said in a statement. “Despite revenue and margin gains, overall margins remain narrow and financial pressures continue to build.”

Hospitals and health systems continue to deal with staffing shortages. The majority of health systems said they weren’t able to operate at full capacity due to staffing shortages, according to a recent report from Kaufman Hall.