Outpatient is IN: The trend toward outpatient care

The trend toward outpatient care and away from the hospital setting has been steadily growing for several decades, creating strong demand for quality outpatient medical facilities. According to studies, more than 50% of health system revenue comes from outpatient visits. Further, outpatient volumes over the next decade are expected to grow by 20% while inpatient volumes are expected to decrease. To sustain this, healthcare real estate is expected to grow and perform in the same resilient manner. A huge plus for the owners of the properties and providers that are shifting their focus to outpatient care.

What is the difference between inpatient and outpatient care?

Inpatient care refers to medical services provided to a patient who is admitted to the hospital or another type of inpatient facility for at least one night. The patient is under the care of physicians and other healthcare professionals until discharged from the facility.

Examples of inpatient care include:
  • Trauma
  • Respiratory, Cardiovascular, & Obstetric Surgeries
  • Other complex surgeries, as well as some routine ones
  • Serious illnesses or medical issues that require substantial monitoring
  • Childbirth, even in cases that don’t require a C-section
  • Rehabilitation services for psychiatric illnesses, substance misuse, or severe injuries

On the other hand, outpatient care (a.k.a. ambulatory care), does not require a hospital stay and patients are able to walk in for the appointment, undergo the exam, test, or procedure, and arrive home the same day.

Examples of outpatient care include:
  • Eye, Ear, Nose, Mouth, & Throat Surgeries
  • Other minor surgeries that use less invasive techniques
  • X-Rays, MRIs, CT scans, and other types of imaging
  • Chemotherapy or radiation treatment
  • Consultations or follow-ups with a specialist
  • Routine physical exams and lab tests, such as bloodwork
  • Same-day emergent care

Why the sudden growth?

There are many tailwinds supporting the shift to outpatient care including breakthroughs in technology, medicine, and healthcare design.

To accompany these advancements, today’s consumer is empowered to make choices in their healthcare delivery more so than ever before. Patients will often choose the convenience, cost, and ease of access that is afforded in the outpatient setting. The results often show an increase in comfort, safety, lower mortality rates, and overall better healthcare outcomes. The COVID-19 Pandemic in 2020 and 2021 further highlighted many of the vulnerabilities of the acute care setting in comparison to outpatient.

As a result, outpatient procedures have become much more widely accepted by commercial payors and CMS. Further strengthening the case for outpatient care from a business perspective.

So, what does this mean for healthcare real estate?

Now that patients have more choices and research capabilities than ever before, healthcare providers are compelled to be more in tune with their patient’s needs and prioritize locations that are convenient. This increases the demand for state-of-the-art medical office buildings. Quality ambulatory buildings are becoming a more significant component in the delivery of care. This means greater reliance by providers and patients on such facilities, making those facilities even more desirable to providers, patients, and long-term investors.

Long considered a “niche” real estate asset class, outpatient medical facilities have now become a darling of the real estate investment world. Institutional demand for quality medical office buildings has never been higher due in part to the outpatient volume growth and “recession-resilient” nature of the healthcare industry. Demonstrating the strong investor appetite for the sector, medical office sales volume totaled a record $19.6 billion in 2021, representing an increase of over 40% from the previous year.