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Outpatient shift, digitization, shortages and telehealth will shape healthcare systems of tomorrow

Greater labor costs, staffing shortages, EMR optimization and shift away from inpatient-centric systems are the future, Moody's report says.

Beth Jones Sanborn, Managing Editor

The healthcare systems of the future will emphasize outpatient care, the drive towards digitization and telehealth as they shoulder greater labor costs in the face of staffing shortages. That's the word from a new report published by Moody's Investor Service for nonprofit and public hospitals.

An emphasis on outpatient services will stem from its efficiency and lower cost in treating less severe health issues, even though higher acuity inpatient services are more profitable and carry higher reimbursement rates. Outpatient facilities also provide a lower-cost means to expand into underserved areas. Traditional hospital bed space will likely be reserved for scheduled, high acuity care. 

"Most medical cases, particularly unplanned, will be cared for as outpatients in ambulatory or micro-hospital settings. This evolution will eventually lead to hospitals, especially academic or more advanced tertiary facilities, becoming large intensive care units," the report said.

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The trend of joint ventures with physicians and non-acute care providers will continue as industry competition ramps up and payers are also disrupting the landscape by acquiring and integrating with physician groups and outpatient providers. 

"These strategies place insurers in direct competition with hospitals and will put further pressure on hospital volumes and margins," the report said.

Capital investment will also align with the outpatient trend, meaning that those investments related to traditional inpatient facilities will be geared more towards higher acuity, more intensive cases not suitable for an outpatient setting. Investments in intensive care units and larger operating rooms that can accommodate newer technologies like surgical robots will grow. 

"Consumerism and changing standards of care will continue to drive the shift to single-occupancy rooms, sometimes reducing overall bed count as double-occupancy rooms are converted," the report said.

Investments in information technology will also grow, and will fuel a drive towards digitization. Hospitals will need sophisticated data analytics to manage care, costs, will foretell healthcare needs and will also be used to improve clinical outcomes. This is especially crucial as reimbursement shifts to value and risk-based contracts which will hinge on outcomes and quality.

As such, EMR implementations will continue to roll forward and can pose financial risks, albeit temporary ones, in the form of installation costs and disruptions in patient services. These hiccups rarely impact long-term credit profiles but can if other issues converge.

"If combined with unanticipated liquidity or operating pressures, the disruptions can lead to both short-term and prolonged margin contraction and weaken credit quality," the report said.

The silver tsunami will continue to put downward pressure on staffing for healthcare systems, namely doctors and nurses.  The aging population and increase in chronic disease mean more demand for doctors and nurses, triggering labor cost increases and boosted retainment efforts.

The nursing shortage is is expected to last another three to four years, but should reverse by 2025 thanks to expanded nurse training programs underway nationwide. The physician shortage on the other hand will only get worse and will mean more intense efforts to recruit and retain physicians, as well as greater use of temporary physicians. Compounding the issue is the ever-increasing amount of administrative work required of doctors that can take away from the time they spend with patients.

The convergence of the shortages and labor costs will be an increased drive toward productivity, but Moody's cautioned against pushing too hard, as that can contribute to burnout, safety risks, errors and other adverse consequences. 

Enter telehealth, which the report said will be crucial in delivering care and improving access, especially in rural areas, and tends to be cost-effective. " Telenursing and telehealth with remote monitoring near home will also become more popular for regular users, those with chronic illnesses, and in rural locations where there are physician shortages," Moody's said.

Finally, streamlining operations and divesting underperforming service lines that are not part of a long-term strategy will be key to maintaining healthy margins.

Twitter: @BethJSanborn
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