In June of 2011, I penned a blog entitled…. A Common Question: Where Are Inpatient Volumes Going? I began by stating that this question was being asked by a myriad of healthcare audiences – leaders in the C-Suite, physicians, pharmaceutical companies, revenue cycle experts, insurers, supply chain companies, and investors. At that time I predicted inpatient volumes would decline 2% to 4% annually over the next decade.
Fast forwarding to today, in the April 29, 2013, edition of Modern Heathcare, one of the lead articles was entitled…."Feeling the Outpatient Pinch: Low Demand Squeezes Chains’ Quarterly Earnings". The article stated that “although inpatient admissions have been falling for some time, outpatient volumes continued to be a bright spot for hospitals, helping to boost financial results in a big way. But publically traded systems are reporting a reversal of that trend, and if it persists, it could be a sign that this year will be a particularly challenging one for the hospital industry”
With this being the present reality, the question that must be answered is the “why” – what are the reasons for this declining volume picture unfolding before our eyes?
Clearly, one of the early and most significant reasons was the economic crisis which began several years ago, and, although it has softened, the high unemployment rates continue to cause people to forgo necessary health care and encourages them to seek cheaper alternative treatment modalities, including over-the-counter remedies. The crisis has also caused many employers to implement high deductible employee insurance plans, simulating more deferments in treatments.
New entrants into the market are also eroding the market share of the traditional providers, moving some of the hospital outpatient care to free standing urgent care centers, physician owned ambulatory surgery and diagnostic centers, large retail company’s outpatient clinics, and insurance company acquired providers. These new providers are quickly learning how to provide high quality of care at a lower cost, and are using their all ready honed marketing skills, often lacking in hospitals and health systems.
A third, and perhaps most important reason, is the acceptance by many of what I have been saying for over a decade….”there is significant over-utilization of diagnostic and treatment procedures, creating not only unnecessary costs but often complications that worsen the patients’ problems”. Getting strong support for this position today from recognized medical associations, CMS, insurance companies, and physician leaders, over-utilization is being replaced by evidence-based medicine’s care management protocols. If fully instituted, we are suggesting that both inpatient and outpatient volumes could fall an additional 20%.
Along with these critical drivers of decrease in volumes, advances in clinical technologies will permit more and more of the safe and appropriate care to be rendered in more non-traditional locations, including the home and senior living centers, which will only worsen the declining volume picture, Hopefully the leaders of healthcare today will do what is necessary to “right their ship” and make sure the volumes of the future are only the necessary ones delivered at the lowest cost possible. These changes will be critical as we move to an era where success in healthcare will be judged on value, not volume!