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Amidst all the noise about healthcare in the United States, a quiet revolution is reshaping the industry. Care delivery is migrating from inpatient (IP) to outpatient (OP) settings at an accelerating pace. But just because care migration is taking place without much fanfare doesn’t mean device manufacturers should ignore it. Indeed, as this trend continues, manufacturers need to take decisive steps to serve this new customer segment, or they may pay a price.
Hospital outpatient departments (HOPDs) and ambulatory care centers (ASCs) are operationally very different from in-patient facilities and present their own set of unmet needs. Those needs represent an emerging market opportunity, and manufacturers need to understand the nuances of this evolving industry to build long-term, sustainable strategies.
Care migration is an irreversible trend, not a temporary headwind. Hospitals have been experiencing declining inpatient admissions over the last 20 years.1 Between 2006 and 2016, IP revenue for community hospitals declined from 62% to 52% of total revenue, while OP revenue increased from 38% to 48% in the same period.1(p38) Today, around two-thirds of surgeries are performed in HOPDs and ASCs2; ASCs saw procedure volumes increase by 23% nationally in 2017.3
Several factors have enabled this evolution, including the growing sophistication of surgical tools and techniques, new pain management and diagnostic techniques, a boom in the development of OP care delivery options, consumer demand for convenience and access, and changing perspectives on site-specific reimbursement.
This transition is good news for consumers, payers, and employers as it promises to lower costs, improve access and convenience, and, if done right, deliver better outcomes. Public and commercial payers enforce policy to migrate care to ASCs, like compressing HOPD reimbursement rates, expanding the “ASC-covered procedures” list, removing procedures from the “in-patient only” list, and offering lower copays for ASC procedures compared with those for HOPD procedures. ASCs save Medicare and its beneficiaries more than $2.6B annually,4 so it is no surprise that payers are proponents of this shift in care.
Manufacturers whose sales have historically been in in-patient settings need to consider whether the growing volume in out-patient settings has implications for design, profitability, or commercialization. Those who do not will leave themselves vulnerable to market erosion. By recognizing and capitalizing on the needs of the ASC market, manufacturers can differentiate themselves and enhance their position as a vendor of choice.
Here are a few targeted interventions manufacturers should consider as they look to expand their presence in the ASC market:
- Build a compelling, data-driven case for providers that your products improve short and long-term outcomes AND lower cost when used in outpatient settings, and that quality and safety are equivalent or better compared with those of inpatient settings.
- Work with clinicians to improve skills, providing tools/resources and training to enhance quality, safety, and efficiency related to your product or therapeutic area in the outpatient setting.
- Advocate for a data-based approach to triage. Work with physicians and clinical practice guideline organizations to develop data-driven methodologies to reliably identify patients for whom OP settings would be suitable.
- Develop tools and training to facilitate patients’ pre-surgical preparation and post-discharge health monitoring (with patient-reported outcomes and at-home data monitoring), thus keeping track of quality of outcomes.
- Offer technological solutions for optimizing operational efficiency at ASCs. ASCs must manage high surgical volumes in constricted time frames while complying with CMS rules. Manufacturers could offer technological solutions that improve efficiency, including inventory and case management/tracking software, and clinical data registry solutions that accelerate quality improvement, propel clinical research, support CMS quality reporting, and leverage patient feedback among other features.
- Engage in strategic alliances to offer products and services that bring holistic value across the care continuum. For example, DePuy Synthes, a J&J orthopedics and spinal care company, led the following strategic alliances to extend patient care beyond surgery:
1. With IBM Watson, they offered a range of treatments and solutions through a science-based, insights-driven approach.5 These include behavior modification tools like Health Partner for Knees and Health Partner for Hips to support joint replacement preparation and recovery.6,7
2. With Pacira Pharmaceuticals, they expanded the reach and frequency of EXPAREL education (bupivacaine liposome injectable suspension) for post-surgical pain management.8
OP settings present significant growth opportunities for medical device manufacturers in terms of portfolio expansion and positioning as market leaders. ASCs in particular are sufficiently different in their operating structure and concerns to merit a separate and distinct strategic commercialization plan. Manufacturers must take conscious steps to tailor their business strategy for the ASC market.
- AHA (2018). "TrendWatch Chartbook 2018: Trends Affecting Hospitals and Health Systems." [online] pp.27-34. Available at: https://www.aha.org/system/files/2018-07/2018-aha-chartbook.pdf. Accessed 26 Jun. 2019.
- Popa R. "The best insight in the ASC industry today: 10 key trends to know." Becker’s ASC Review. https://www.beckersasc.com/asc-turnarounds-ideas-to-improve-performance/the-best-insight-in-the-asc-industry-today-10-key-trends-to-know.html. Published December 18, 2018. Accessed May 24, 2019.
- "Ambulatory Surgical Care Growth. ASC Surgical Volumes Grow in 46 of 50 Largest Markets while Hospitals Lose Share." https://www.franklintrustratings.com/wp-content/uploads/2018/02/Press-Release-Ambulatory-Surgical-Trends-2018.pdf. Published February 2, 2018. Accessed May 24, 2019.
- "ASCs: A Positive Trend in Health Care - Advancing Surgical Care." ASCA. https://www.ascassociation.org/advancingsurgicalcare/aboutascs/industryoverview/apositivetrendinhealthcare. Accessed May 24, 2019.
- Allen D. Serving Ambulatory Surgery Centers: A Q&A with DePuy Synthes. MD+DI Online. https://www.mddionline.com/serving-ambulatory-surgery-centers-qa-depuy-synthes. Published September 11, 2017. Accessed May 24, 2019.
- Knee Pain Help & Resources. "Health Partner for Knees." https://knees.thehealthpartner.com/. Accessed May 24, 2019.
- Hip Pain Help & Resources. Health Partner for Hips. https://hips.thehealthpartner.com/. Accessed May 24, 2019.
- Pacira Pharmaceuticals Inc. "Pacira Pharmaceuticals Announces Collaboration With Depuy Synthes To Support Promotion, Education And Training Of EXPAREL In Orthopedics." 2017. http://investor.pacira.com/news-releases/news-release-details/pacira-pharmaceuticals-announces-collaboration-depuy-synthes?ID=2239568&c=220759&p=irol-newsArticle. Accessed May 24, 2019.