Health care’s shift to value continues to accelerate, and health systems are facing head-on a changing payment and regulatory landscape that emphasizes efficiency, appropriate use and transparency. This new market places a premium on accessible, high-value, evidence-based, patient-centered care. The kind of planning required to tackle such challenges demands a robust understanding of the significant implications of future health care utilization.
Sg2, a Vizient company, provides analytics and expertise to help hospitals and health systems achieve sustainable growth and ensure ongoing market relevance across the continuum of care. Sg2’s Impact of Change® forecast provides a detailed look at how changes in population, payment, policy and clinical care will alter inpatient and outpatient demand year over year for the next decade.
The Impact of Change is updated annually to ensure that it is based on the most recent data and addresses the latest industry trends. Recent historical data are showing a slowdown in inpatient growth, largely attributed to a shift to observation and outpatient surgery status. Despite a growing elderly population, Sg2 projects this downward impact on inpatient utilization rates to continue. In fact, over the next 10 years Sg2 projects a 3 percent decline in adult inpatient discharges and 16 percent growth in outpatient volumes across the U.S. Below are some additional key findings from this year’s forecast.
- Shifts in payment and policy, increased consumerism drive forecast changes. CMS’ 2016 legislative trajectory points to multiple initiatives intended to move physicians to a value-based payment system. “When combined with the growing proportion of Medicare Advantage enrollees, these policy changes will drive direct and measurable change in utilization and shifts in site of care,” said Madeleine McDowell, MD, FAAP, vice president, medical director at Sg2. “Additionally, the rise of consumerism in health care, propelled by high-deductible health plans, new market entrants offering low-cost convenient care, price transparency and national steerage programs, will further drive changes in utilization for a growing list of price-sensitive services.”
- Behavioral health services growth. Expanded payer coverage, pent-up demand and expanded mental health parity rulings under the Patient Protection and Affordable Care Act will drive demand for psychiatric services across the continuum. Sg2 projects significant growth (17 percent) in urgent and emergent visits to the emergency department (ED) for behavioral health over the next five years. Expansion of partial hospitalization and intensive outpatient therapy programs will help address demand and access issues; strong growth is projected over the next 10 years, with a 25 percent increase in partial hospitalization programs and 26 percent increase in intensive outpatient therapy programs.
- Softening emergency department (ED) utilization. Urgent and emergent visit types each represent about half of total ED visits, and their combined volumes are expected to remain flat over the next 10 years. Sg2 projects growth in ED demand due to expanded coverage under the Affordable Care Act; after 2016, however, expect the impact of value-based care and consumerism to dampen long-term projections. While emergent visits are projected to grow (tracking closely with population growth), lower-acuity urgent visits are expected to decline by 2 percent in the next five years. “Conditions such as injuries and infections are forecasted to shift to lower-cost, convenient sites of care, including urgent care centers, physician offices and emerging virtual health alternatives,” said McDowell. In addition, new payment incentives such as patient-centered medical homes emphasize coordination, access and adherence to evidence-based guidelines, all of which may help reduce avoidable ED visits over the long-term.
- Observation visit growth, but a slowdown is expected. Significant growth in observation visits – which serve as a middle ground between the ED and inpatient care – has occurred over the past five years, leaving less opportunity for additional shift from the inpatient setting to observation status. As a result, the five-year forecast for observation visits has been dampened to 10 percent, down from 15 percent last year. The CMS update to the 2-midnight rule further supports this change. For observation stays less than two midnights that are supported by documentation and clinical indications, inpatient payment will be allowed.
- Inpatient growth is expected for cardiac surgery and advanced treatments for stroke. While overall inpatient discharges are expected to decline, volumes for select inpatient surgeries will grow. Cardiovascular surgeries will grow by 9 percent over the next five years due in part to an increase in valve surgeries and a rebound in coronary bypass surgery, as evidence shows improved outcomes over percutaneous coronary intervention for patients with comorbid conditions. “Improved access to advanced stroke treatment through tele-stroke and stroke networks will drive high inpatient demand for specialized therapy and procedures,” added McDowell.
- Scrutiny of post-acute care. Post-acute spend has been shown to be the largest driver of overall variation in Medicare spend and its price tag for treatment of chronic conditions nearly mirrors that of the hospitalization itself. Targeting reductions in variation has been a goal of CMS—we expect to see significant utilization shifts to lower cost sites due to alternative payment models (bundles and shared savings programs) and proposed policy such as site-neutral payments.
Today’s competitive market and payment dynamics make sound projections of future demand more essential than ever. A truly successful forecast, however, goes beyond identifying changes ahead—it focuses on delivering solutions that bridge the way to the future.