FORCING CHANGE IN SITE OF CARE
McKinsey & Company's recent paper on the forces pressuring healthcare, including the possibility of margin compression of up to 13 percentage points for health systems, does a good job of putting numbers around what most operators already feel. Two of the biggest drivers they mention are policy shifts in reimbursement and rising utilization driven by an aging population.
The cohort of 70+ year old Americans will grow the fastest over the next 5 years, and it is well established that older patients have more complex needs, more chronic disease, and more touchpoints within the healthcare system. Layer that on top of continued clinical workforce shortages, and the supply-demand gap widens further.
From my perspective, optimizing for site of care is the most important lever we have to address this challenge. We can’t quickly reduce how much care older patients need, but we can change where and how services are delivered. Supporting aging patients in lower-cost settings like the home, ambulatory sites, and virtual environments is no longer just a preference or convenience, it’s a necessity.
This is where the conversation around site-neutral payments becomes so relevant. CMS is moving quickly in this direction, and hospital outpatient departments (HOPDs) are squarely in the crosshairs. The shift will undoubtedly clamp down further on hospital margins, but it shouldn’t be surprising. We’ve been talking about the demise of HOPD reimbursement for years, and the health systems that will fare best are the ones who are working towards aligning their approach with where patients can be treated safely, efficiently, and at lower cost, rather than relying on legacy reimbursement structures to fill the gap.
And just like it doesn’t make sense to try to replicate a hospital or nursing home environment in a patient’s home, we also shouldn’t try to carry the same clinical staffing model into every care setting. Yes, there are non-negotiables when it comes to patient safety and clinical expertise, but there’s also a meaningful opportunity to rethink how teams are built. That means clinicians at every level working at the top of their licenses, thoughtfully involving family members and community resources, and using technology to surround these sites of care with non-clinical operational support.
From my health system days, I understand why rising costs, margin pressure, and site-neutral payments feel like threats. While painful, I’m hopeful they can also serve as a positive forcing function, pushing us toward care models that are better aligned with our aging population and the realities of today’s workforce.
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