There may be a shortfall in reaching expectations for hospitals that plan for outpatient facilities. "One of the risks you have is overcapacity on the ambulatory side in the long run," Bronson adds. "There's probably more imaging available in this country and equipment than we are going to need in the long run. You can't put a da Vinci in every operating room every time. That would not be necessary in a controlled economic environment."
Still, there are considerable benefits. "We've shifted a lot of work to outpatient facilities where patients prefer to be treated; we've mastered gallbladder and plastic surgery and even mastered partial knee replacement on an outpatient basis. It's less costly, and it's a way of trimming costs off the healthcare system," Bronson says. "And there will be continued pressure to prevent utilization of hospitals by being more aggressive in having ambulatory services."
Strength in a market
Health systems focusing on outpatient centers are trying to develop strength in their own market and working toward integrating with physician practices, specializing in certain areas. "That has been the market trend," says Brett Hickman, a partner in the health enterprise practice of PricewaterhouseCoopers, the global professional services firm.
"I would say in the upcoming year we're going to see more acute care organizations focusing on developing an ambulatory care access model," says Hickman. "Health systems are adding spokes to the hub of their main campuses. A lot of organizations are trying to differentiate themselves in four or five areas and are working diligently to bend the cost curve. Whether it's in cardiac care, diabetes, orthopedics, or cancer, there is a focus on the integrated care model to get costs under control."
When UPMC closed the inpatient services at 149-bed South Side Hospital in 2009 and enhanced outpatient services, hospital leadership believed it didn't have much choice. One of the major areas of concern was a "significant population decline in our region," says Karlovich, describing a situation similar to Cleveland Clinic's predicament with Huron Hospital. "It then becomes a challenge to keep all these facilities operating. The community might be getting smaller around the local facility," he says. UPMC has more than 20 hospitals and more than 4,500-licensed beds in its system.
The hospital system consolidated South Side with UPMC Mercy, which has 535 beds, and reopened as UPMC Mercy South Side Outpatient Center in 2009. UPMC South Side and UPMC Mercy are less than two miles apart. UPMC purchased South Side Hospital in 1996.
It was important to not only consolidate services with Mercy and South Side, but also to retain a surgical presence in the community, Karlovich says. Already, the system had a "very robust sports medicine and orthopedics program" located near the South Side area. "It was an operating decision to keep those functions going," he adds.
Karlovich says it's important for hospital systems, as they evaluate outpatient growth or whether to consolidate programs, "to rate the economies of scale."
"What I mean by that is," Karlovich adds, "is if you have physicians who are doing both inpatient and outpatient services on a general population, they may not be able to do it in two places and instead should focus energies on one place. In theory, if you have an MRI in your hospital, and then you have that in an outpatient setting, all of a sudden, then your volume is pulled away to outpatient—aren't you in fact creating an increased cost structure?"