Hospital utilization slows as healthcare moves to cheaper care settings

Hospital utilization is slowing down in its growth, according to a recent survey of hospital administrators. The trend underscores the shift across the healthcare system away from high-cost settings toward lower-cost outpatient utilization.

Across inpatient, outpatient, emergency department (ED) and ambulatory surgery centers (ASCs), acceleration in utilization slowed during the second quarter of 2018 and year over year, according to the survey by Leerink Partners.

Inpatient utilization accelerated 0.7 percent during the quarter, compared to 0.8 percent in the first quarter. ED utilization acceleration dropped from 1.6 percent growth in the first quarter to 0.9 percent in the second.

While the deceleration may be somewhat reflective of a drop off from the flu season, which was particularly harsh at the start of 2018, “the results are consistent with broader healthcare trends and MCO and facility efforts to manage populations” away from high-cost settings to lower-cost options, according to Leerink.

Still, the utilization rates are “modestly positive” for facilities, Leerink noted, as the results beat estimates of “flat utilization.”

Across procedure specific utilization, most rates remained flat during the second quarter, while spine utilization rose 1.4 percent. Orthopedics and cardiology led growth in the sector, with 2 percent and 1.7 percent increases in utilization, respectively. Reimbursement also remained largely flat for delivery sites.

In the shift toward the outpatient setting, total hips, interventional cardiology and cardiac surgery led the trend away from inpatient care delivery as procedures, according to the survey.

Companies with a strong ambulatory footprint may be best positioned as the trend continues. ASC utilization increased 1.4 percent during the second quarter, down from 1.9 percent growth in the first three months of the year.

In particular, the shift toward ASC and outpatient care is positive for HCA, a Nashville-based hospital system with 1,800 ambulatory touch points, and Tenet Healthcare (THC), a Dallas-based company with 250 ambulatory surgery centers through United Surgical Partners, which it owns a 95 percent stake in.

The biggest driver of the utilization rate trends was the aging population, followed by an improving U.S. economy and the Affordable Care Act pull-forward effect.  

The survey analyzed responses from 47 hospital administrators in June 2018, with most respondents holding a C-suite executive position.