Vital Signs December 2023: Healthcare Sector Outlook

VITAL SIGNS

Shifting Specialties: Site-of-Care on the Move

With rising demand for outpatient treatment across patient groups, hospitals and MOB operators will need to pay particular attention to which specialties are gaining the most traction in outpatient settings. Historically, outpatient facilities were viewed as options for minimally invasive procedures. Now, patients increasingly seek the convenience and flexibility of outpatient clinics that may be more convenient than a primary health system campus. The Advisory Board has forecasted that total inpatient volumes are expected to dip slightly— down by just less than a full percent (by 0.7%) by 2027—but grow modestly by nearly a percent (0.9 percent) by 2032 2 . Outpatient volumes, however, are expected to increase 10% by 2027 and 18.7% by 2032. Nearly every specialty is expected to see growth in outpatient services, with two critical exceptions: obstetrics (expected to decline by 10% over the next five years, and 18.7% over the next 10 years; and pulmonology, which the Advisory Board expects to decline by 3.4% in five years and 7.9% in the next 10 years). The largest outpatient volume increases are projected to be in psychiatry,

podiatry, orthopedics, ophthalmology, vascular, spine, physical therapy and rehabilitation, and endocrinology. Advancements in clinical care have helped propel much of this growth, allowing for ever more complex procedures to be completed in outpatient settings. Even cardiology is expected to see significant growth—12.8% over five years and 20.7% growth over 10 years in outpatient procedures, as once–inpatient-only procedures, such as electrophysiology, shift to outpatient status. The rise in outpatient procedures is expected to provide growth for the medical office sector, though how much net new medical office space will be needed, as “inpatient” and “outpatient” designations are distinctions based on how procedures are classified for reimbursement, rather than purely geographic or locational ones. Many joint replacements, for instance, are actually performed in hospital facilities, and patients may be admitted for an overnight stay even though the procedure itself is reimbursed as an “outpatient procedure.”

2018 - 2023 Outpatient Growth by Specialty

Dermatology Neurosurgery Trauma Radiology Thoracic Surgery Neurology Evaluation and Management Nephrology ENT Miscellaneous Services Lab Pain Management Cardiology Podiatry Ophthalmology Orthopedics Vascular Physical Therapy/Rehabilitation Spine Psychiatry Endocrinology

23.9%

18.5%

16.5%

15.8%

14.2%

12.8% 12.8% 13.0% 13.1% 13.3%

12.3%

10.9%

10.4%

7.6% 8.1%

6.6%

6.0% 6.1% 6.2%

5.7% 5.7%

Obstetrics Pulmonology Gynecology Urology Cosmetic Procedures Gastroenterology General Surgery Oncology

4.9% 4.9% 5.0%

4.2%

3.8%

1.7%

-3.4%

-10.0%

-15% -10% -5% 0% 5% 10% 15% 20% 25% 30%

Source: The Advisory Board, Cushman & Wakefield Research

2 The Advisory Board, August 2023: “Provider Volume Forecast Update”

VITAL SIGNS 2022: PERSPECTIVES ON HEALTHCARE AND MEDICAL OFFICE BUILDINGS