2018 Fall issue of Horizons

By consolidating, hospitals have looked to spread out fixed costs across multiple locations, as well as begin to develop and implement new standardized care processes that provide patients less costly and more effective medical care. During the period of 2010 to 2016, there was an uptick in hospital transactions when compared to the prior period. In 2010 alone, hospital transactions saw a 39% spike from 2009, which peaked in 2013, reporting 71 total transactions. The decline in hospital transactions by year since 2013 could be the result of an inability of hospitals to consolidate further, as well as the shift in focus to acquiring and opening urgent care and outpatient facilities to meeting patient preferences. The Rise of Urgent & Outpatient Care Patient care preferences have changed recently and now more than ever, patients prefer the services of outpatient, urgent care or even home healthcare services. In recent data produced by the Agency for Healthcare Research and Quality, inpatient hospital stays have declined steadily by 6.6% since 2005. This decline in overnight hospital stays is a result of the convenience, flexibility and affordability of outpatient and urgent care centers when compared to hospitals. These facilities provide patients the opportunity to receive medical treatment at a location that is more convenient, closer to home and saves patients time and money by avoiding overnight hospital stays. To reduce the impact these non-primary providers have on hospitals’ financial performance and utilization, hospitals and healthcare providers are beginning to acquire or open their own urgent care or outpatient facilities. By tapping into this growing market, hospitals and primary care providers hope to fill the void of empty beds and begin to regain lost market share. Similar to the number of hospital transactions, the yearly number of outpatient care transactions flourished beginning in 2010. Throughout the same period, the yearly

Healthcare Transactions by Year

0

30

60

90

120 150

180

56 43 99 31 33 64

2008

2009

70 46 116 72 61 133 70 59 129 69 71 140 68 56 124 66 64 130

2010

2011

2012

2013

2014

2015

51 45 96 47 31 78

2016

2017

Outpatient

Hospital

Total

Source: Capital IQ

26 Desire for Cost Savings and Changing Patient Preferences Drive Consolidation in Healthcare