A Debate of Inpatient Versus Outpatient Services: What Happens If you Take Away the Cash Cow?

Anthem, One of Blue Cross’s major payers, has announced that they will no longer pay for MRIs and CTs conducted in the hospital setting for all insurance plans. This is just the tip of the iceberg in the movement of healthcare from inpatient to outpatient settings for many services.

In order to cut costs in an effective way without decreasing value, health systems need to understand what their expenditure and utilization patterns look like. Once the low hanging fruit have been plucked, it’s time for aligning payer contracts with the effort to begin trying new ideas, which may mean finding creative ways to adjust for losing their “cash cows”.

Albert Einstein stated, “The definition of insanity is doing something over and over again and expecting different results.” If our health systems continue to encourage procedures to be completed in settings that are four to six times more than others, then we are sure to never fix this spend issue that is spiraling out of control.

Despite knowing that inpatient lab work and imaging is tremendously expensive and can easily be done in the outpatient world, there are some aspects of care that do benefit from being done within hospital walls and this decision can only truly be made by the physicians who understand his or her patients’ needs.

For example, there has been a debate about inpatient versus outpatient rehabilitation. Many believe that it should be outpatient, and consequently, many hospitals are divesting their rehab facilities to join the movement. The problem with this diminishing supply of inpatient rehab is the fact that many who receive inpatient rehab care are in need of those extra amenities and benefits one may have while receiving care in the hospital such as having on-staff psychologists, various specialists close by, 24/7 around the clock nurses, and an ER around the corner.

Of course there are an exorbitant amount of cases where healthcare does not need to be rendered within a hospital. But, in this shift to value-based medicine, we should trust our physicians to know which settings will work best for their patients.

We absolutely cannot trade spend for value, but rather seek to achieve both as best as possible.

Ultimately, patients will know the difference between receiving care of high value and knowledgeable insight as opposed to cheap and thoughtless care, but we need to ensure patient satisfaction, which will only come when the physician makes the best decision for their patients.

Hospitals may be losing their cash cows, but they will have other opportunities open to them. For now, we know that the wind is blowing in the outpatient direction, but we must always keep in mind if the value is in tow.

Amy Kotch

About the Author

Amy Kotch, MHA

Amy Kotch is Salient’s Lead Business Consultant working with ACOs nationwide. She received a masters in health administration from Florida Atlantic University as well as a bachelors of science from the University of Miami and has just recently completed a master certification in population health through a federal grant from the Office of the National Coordinator for Health Information Technology in conjunction with the Johns Hopkins University and Normandale Community College. Her prior work includes being the operations coordinator at Triple Aim Development Group consulting with ACOs/MSOs.

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