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Analysts: Hospitals Must Create New Models of Care to Drive Growth

June 14, 2016 By Mike Botta, Contributing Editor

A new Frost & Sullivan analytical report on hospital trends says that preferences for outpatient minimally invasive care is reducing inpatient volumes in American hospitals, compelling them to re-strategize their clinical and operational models. The consulting and research group notes that the shift is in reaction to the reduction in Medicare spending, launch of the Affordable Care Act (ACA) and adoption of value-based payments. 

The report, “The Transformation of the American Hospital: 2015–2020,” shows that care provision is currently in the process of shifting from hospitals to ambulatory care providers — notably retail clinics, urgent care centers and ambulatory surgical centers — services that cost less and are more attractive to patients and insurers.

As a result, hospitals are considering partnerships and collaborations with ambulatory care providers, a move enabling hospitals to decongest emergency wards and reduce costs of care, while increasing patient volumes by leveraging these centers as referral nodes.

Senior research analyst Tanvir Jaikishen pointed to declining inpatient volumes and lower reimbursements are fueling a wave of strategic acquisitions and partnerships aimed at increasing the patient base and improving negotiating power with insurers.

Moving forward, hospitals will leverage partnership models with ambulatory care providers to transition non-critical patients from emergency wards to these providers, the report states. Hospitals also are expected to use ambulatory care providers to share the burden of chronic care management, i.e.., patients with one or more chronic conditions can seek care from the nearest retail clinic. Uninsured patients can access inexpensive care and insurers, then, can incentivize patients to seek care in these facilities as opposed to primary care clinics.

Additionally, hospitals are launching their own in-house insurance plans to compete with established insurers and attract a larger patient base. These initiatives are aimed at reducing hospital costs, increasing patient volumes and focusing on hospital core competencies.

“With the reduced reimbursements and budgets, hospitals can focus on provision of acute care management and pioneering cutting-edge treatment options aligned with academic institutions,” Jaikishen said. “Nano medicine, genetic medicine and 3D printing research will gradually shift from academic institutions to hospitals.”

Complimentary access to more information on the “The Transformation of the American Hospital: 2015–2020” is available on the Frost & Sullivan website.

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