Outpatient market is booming

Hospitals that want a bigger share of high-growth markets are investing in outpatient services, often in suburbs to bring services to the places where fully insured patients who can pay their bills live, the Tennessean reports.

Vanderbilt University Medical Center plans to spend $200 million for a 500,000 square foot outpatient services campus in Franklin, Tenn. One of its competitors, TriStar Health System, is seeking the state's permission to open an emergency department in Spring Hill, Tenn., that will also offer diagnostic services such as X-rays, ultrasounds and CT scans 24 hours a day.

Saint Thomas Health Services will expand its network of chest pain centers, and has created stroke centers following the same model.

Compared with other healthcare categories such as inpatient care and physician services, outpatient care saw the greatest growth in spending, according to Milliman. Between 2009 and 2010, outpatient care rose 17 percent in total costs, outpacing growth in categories such as inpatient care, physician services and prescription drugs.

Outpatient care makes up at least 40 percent of U.S. health system spending and, according to McKinsey & Co., total outpatient spending is projected to reach $163 billion this year. The growth in outpatient services can be traced to technological advances that have allowed smaller incisions to make procedures quicker and less complicated.

As more of the market shifts toward outpatient care, hospitals will increasingly be confined to treating the very sick or significantly injured, said Paul Keckley, executive director of the Deloitte Center for Health Solutions.

Outpatient outposts give hospitals a way to reach profitable patients, said David Dranove, a professor of health industry management with Northwestern University's Kellogg School of Management. "The outpatient who has chest pain one day becomes the heart surgery patient who generates $10,000 in profits for the hospital," he said.

To learn more:
- read the Tennessean article

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