Sg2 Pediatric Forecast Emphasizes Lower-Cost, Ambulatory Care

Each year at Sg2, we debut the latest health care projections from our Impact of Change® (IoC) demand forecast. Growth trends for pediatrics differ from adults in some important ways. That is why Sg2 has a 10-year history of forecasting for the 0- to 17-year-old population from the ground up. Sg2’s pediatric Impact of Change forecast considers the unique conditions, care pathways and utilization patterns of the 0- to 17-year-old population and tracks the adoption timing of key trends impacting this population. The result is the most robust pediatric forecast of its kind that has accurately predicted, well in advance, the reversal in NICU growth, IP demand declines in infectious disease due to new vaccines, and growth opportunities in epilepsy and sleep disorders.

Children’s and Non–Children’s Hospitals Will Experience Inpatient Declines
Recent historical data show a slowdown in inpatient pediatric growth and declines for select high-volume conditions, such as asthma, appendicitis and viral infections, according to data from the 2009 and 2012 Health Cost and Utilization Project (HCUP) Kids’ Inpatient Database (KID). The need to reshape care delivery continues, as demonstrated by Sg2’s projections for ongoing decline in IP utilization and softening of growth for ED visits and advanced imaging. At the same time, expect sustained growth in observation and virtual visits and services focused on the management of chronic conditions. As such, we project an 8% decline in overall national pediatric inpatient discharges and a 7% growth in outpatient pediatric volumes over the next 10 years.

Contrary to the past 10 years, when overall pediatric discharges remained flat but children’s hospitals increased market share and overall volumes, Sg2 projects IP declines for both children’s hospitals (–4%) and non–children’s hospitals (–10%). This is in large part due to an ongoing shift to observation for short-LOS conditions and mid- to long-term improvements to access, care coordination, standardization and disease management that will prevent complications of acute and chronic diseases requiring IP care.

In comparison to the adult health care landscape, adoption of value-based payment in pediatrics is evolving more slowly and differently. There are few pediatric episodic bundles and shared savings accountable care organizations, and pediatric services are immune to federal penalties for readmission rates or value-based purchasing performance. Medicaid value-based initiatives tend to vary greatly by state in terms of quality measures and payment incentives. However, Medicaid continues to adopt comprehensive managed care programs (per member per month [PMPM]), which are now the major plan in 43 states, enrolling over 75% of the children in those states. Expect the rollout of value-based payment overall in pediatrics to be slow and to adopt more prospective PMPM models.

While the road to risk-based payment for pediatrics is a gradual and long journey, consumerism and price sensitivity are rapidly impacting pediatrics today. Low-acuity services are shifting to lower-cost sites of care as a growing number of families on high-deductible plans make choices based on access, convenience and price. In addition, high-acuity and IP services are not immune to price scrutiny, as payers in narrow networks across the US increasingly contract with lower-priced pediatric hospitals.

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As of February 11, 2016, Vizient, Inc. has completed its purchase of MedAssets Sg2 and spend and clinical resource management segments from Pamplona Capital Management, LLC. MedAssets revenue cycle business will continue to operate as a wholly-owned subsidiary of Pamplona Capital Management LLP.

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