Inpatient Utilization Flat Or Declining For Two-Thirds Of Not-For-Profit Hospitals

New findings show continued shift away from inpatient-focused healthcare system.

In the first six months of 2014, inpatient utilization was flat or declined for 68 percent of not-for-profit hospitals responding to a recent Kaufman Hall survey, while 72 percent had an increase in outpatient utilization, according to findings released recently. These findings reflect the continuing transformation of the healthcare system toward lower intensity care and less expensive settings. In addition, the survey found that emergency department use—a frequent target in efforts to reduce unnecessary utilization—was flat or declined for 60 percent of respondents.

The penetration of value-based payment—another key indicator of health system change—continues to be low, the survey found, with more than three-quarters of responding hospitals reporting that less than 10 percent of their revenue is associated with any form of risk-bearing contract. However, almost two-thirds of respondents believe that within the next two years value-based payment will account for ten percent or more of their revenue.

“These findings are a sign that macroeconomic, structural, and competitive forces continue to shift the emphasis of healthcare away from expensive inpatient care,” commented Mark Grube, Managing Director, Kaufman Hall. “In this environment, executives of acute-care organizations are challenged to determine how—and how quickly—to reposition their organizations for a healthcare system that focuses on value, health, and outpatient/web-based care.”

Findings are based on an online survey of executives at not-for profit hospitals. Forty-one percent of respondents have 400 or more licensed beds, 26 percent have 200-399 beds, and 32 percent have 199 or fewer beds. Sixty-seven percent are located in urban areas.

About Kaufman Hall
Kaufman Hall is an independent management consulting firm that offers integrated strategic, capital, and financial advisory services and software tools to healthcare organizations of all types and sizes. Our goal is to help hospitals and health systems achieve best-practice strategic financial management that produces tangible, measurable, and improved financial results. For more information, visit kaufmanhall.com.