Outpatient care is defined as any health care services that do not require an overnight hospital stay. Key changes shifting the balance between inpatient and outpatient care include reimbursement policies, technological advances, utilization control factors, and social factors. It is important for hospital administrators to regard outpatient care as a key component of their business strategy because the number of inpatient stays are declining. Outpatient services help reduce costs and the survival of hospitals depends on outpatient care services growing to offset declining inpatient revenues.

1. Topic: Health Care Systems - Part I
Prompt: Define outpatient care. What are several key changes that have been
instrumental in shifting the balance between inpatient and outpatient services?
Why is it important for hospital administrators to regard outpatient care as a key
component of their overall business strategy?
“If you will diligently listen to the voice of the Lord your God, and do that which is right in his
eyes, and give ear to his commandments and keep all his statutes, I will put none of the diseases
on you that I put on the Egyptians, for I am the Lord, your healer” (Exodus 15:26, NIV).
Outpatient care is defined as “any health care services that do not require an overnight
stay in an institution of health care delivery” (Shi & Singh, 2013, pg 160). Outpatient care
services can be done in hospitals are other long-term care facilities. Examples of outpatient care
services include primary care, surgeries, urgent care, etc. Outpatient care has many benefits
which may offer “patients and families the benefit of better quality of life for a longer period of
time in that they increase the potential for symptom improvement with the added benefits that
come from allowing palliative care interventions the time necessary to have their greatest effect,
a common problem noted with late-referrals for hospice or inpatient palliative care services”
(Rabow, Kvale, Barbour, Cassel, Cohen, Jackson, & Spragens, 2013, pg 1541). Since outpatient
services usually specialize in a specific treatment or procedure, a patient can be confident that
they will be getting the highest quality care. Outpatient care will also be cost-effective and
convenient for the patient obtaining these services as well. Key changes that have been
instrumental in shifting the balance between inpatient and outpatient services include
“reimbursement, technologic factors, utilization control factors, and social factors” (Shi & Singh,
2013, pg 163).
Outpatient services cost significantly less than inpatient care and hospitals have used
outpatient series to offset declining inpatient earnings. Research shows that 12 percent of
Medicare’s total payments go to hospitals directly for outpatient services (Reinhardt, 2006).
Originally, Medicare reimbursed hospitals for incurred costs before switching over to the
prospective fee schedule which is what is used today. In regard to outpatient services research
shows that “Medicare bases both provider payments and standardized cost estimates for
outpatient on payments weights and assigns these weights to units of utilization based on
Healthcare Common Procedure Coding System (HCPCS) codes for non-facility outpatient
services, and Ambulatory Payment Classifications (APC)” (Schousboe, Paudel, Taylor, Kats,
Virnig, Ensrud, & Dowd, 2015, pg 207).
Technologic factors provide proper tools and methods that allow services to be performed
in an outpatient setting now instead of an inpatient setting. Outpatient care expanded its need
based on “the development of minimally invasive surgery alongside short-acting anesthesia has
made it possible to treat surgical patients without the requirement of an overnight stay in a
hospital” (Vitikainen, Linna, & Street, 2010, pg 395). Many office-based physicians have also
been able to use technology to perform these outpatient services It is said that many office-based
physicians are able to perform outpatient services now due to the cost-effectiveness and

2. convenience. The advancement in technology has also allowed for outpatient services to be less
traumatic and require less recovery time. Utilization control factors consist of doing whatever is
necessary to minimize the time an individual spends staying in a hospital. Social factors have
helped increase outpatient services by allowing care to be in their home or in a community
facility. This in turn allows them to keep their sense of independence and while still being able to
maintain control of their own life.
It is important for hospital administrators to regard outpatient care as a key component
because the survival of a hospital depends on the outpatient care services. This is due to the fact
that the number of inpatient stays are declining and therefore outpatient care is needed. Hospital
administrators face growing costs and are constantly trying to figure out how to take control of it.
So “transferring activity to outpatient settings helps to reduce overall costs” (Vitikainen, Linna,
& Street, 2010, pg 403). In conclusion, it is important for hospital administrators to incorporate
more outpatient services in their facilities, as the shift toward outpatient care will continue to
grow.
Rabow, M., Kvale, E., Barbour, L., Cassel, J. B., Cohen, S., Jackson, V., ... & Spragens, L.
(2013). Moving upstream: a review of the evidence of the impact of outpatient palliative
care. Journal of palliative medicine, 16(12), 1540-1549.
Reinhardt, U. E. (2006). The pricing of US hospital services: chaos behind a veil of secrecy.
Health Affairs, 25(1), 57-69.
Schousboe, J. T., Paudel, M. L., Taylor, B. C., Kats, A. M., Virnig, B. A., Ensrud, K. E., &
Dowd, B. E. (2015). Estimating True Resource Costs of Outpatient Care for Medicare
Beneficiaries: Standardized Costs versus Medicare Payments and Charges. Health
services research.
Shi, L., & Singh, D. A. (2013). Essentials of the U.S. health care system — with access (3rd ed.).
Burlington, MA: Jones & Bartlett Learning.
Vitikainen, K., Linna, M., & Street, A. (2010). Substituting inpatient for outpatient care: what is
the impact on hospital costs and efficiency?. The European Journal of Health Economics,
11(4), 395-404.