A Strategic Facility Planner’s Opinion on Continued (strong) Ambulatory Growth

As strong outpatient (OP) volumes continue to grow and inpatient admission utilization a declines nationally, health systems are finding themselves in a unique paradigm where, mathematically, the ratio of outpatient visits per inpatient admissions is substantially increasing.

What does this mean for healthcare leadership grappling with the balance of evolving patient demand versus space and capacity utilization?

To establish a baseline, below is a macro-overview of national historical and projected utilization trends and volume since 2010: 

Historical Trends

Population growth has added +24M at a +0.6% CAGR (a)

+10 Year Projections

Population growth of only +10M projected, at a 0.3% CAGR (b)

Historical Trends

Inpatient utilization has consistently been declining at (1.5%) CAGR

+10 Year Projections

Inpatient admissions growing +1.9M nationally at a 0.55% CAGR (c)

Historical Trends

Hospital outpatient visits per 1,000 population growing at +1.1% CAGR

+10 Year Projections

Projected outpatient visits growing +600M nationally at +2% CAGR (d)

NBBJ Analysis and Findings

With these macro considerations, we reviewed 10 health systems we have closely worked with over the past 5-years to compare current and historical outpatient visits to admission ratios, 9 out 10 documented exponential growth higher than national outpatient CAGR’s:

From this ten hospital cohort, the nine hospitals that showed an increasing visit to admission ratio identified a growth range of +3-8 outpatient visits per inpatient admission.

How does this evolving ratio impact strategic facility planning?

Here are four key considerations to support optimal long-term ambulatory growth and facility planning:

1. Know your system and data

   As a macro-national assessment, each state, region, and health system are unique and should be further studied to understand market dynamics and capacity pain points across a system. Just because inpatient utilization trends continue to decline does not correlate to decreased admission volumes or census levels.

   
   

2. Prioritize both Operations and System Capacity

   Operational enhancements and increasing outpatient capacity can only go so far. Health systems need to leverage systemwide assets and capacity to cost effectively address access and capital planning efforts.

   
   

3. Embrace a Health Management Every Step of the Way

   Patients are now more than ever ‘experiencing’ health systems, through increased visits, testing and diagnostic services. Health systems have more ‘touchpoints’ to impact patients’ lives and should invest in enhancing such opportunities along the entire continuity of care.

   
   

4. Financial Strategies to Decrease Volatility

   In the current political environment and continued rising costs, health systems need to pursue a financial structure favoring increased outpatient activity.  With direct outpatient visits carrying a marginal profit or even a loss, downstream higher margin diagnostic and treatment services are likely a continued driver for a health systems’ bottom line.  Additionally, larger health systems with partnered insurance platform continue to achieve balance and navigate volatility, a trend of continued M&A activity is likely to continue with this in mind.

We understand your unique health system or region may have unique circumstances which vary from these findings.

Please feel free to reach out with any questions or for further discussion around ambulatory growth and facility planning!

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(a)        CAGR – Compound Annual Growth Rate

(b)        Population counts and projections provided by US Census Bureau

(c)        Historical utilization rates (volume per 1,000 population) provided from Kaiser Family Foundation (kff.org) since 2010

(d)        Projections established through Advisory Board ‘Market Scenario Planner’ 10-year outlook.