Service Line–Specific Forecast for Pediatrics Projects IP Decline, OP Growth

Similar to our forecast for adults, Sg2 projects a downward trend in inpatient pediatric services for both children’s hospitals and non–children’s hospitals. However these trends will vary significantly by disease and service line. Sg2 encourages our clients to identify opportunities in the inpatient space by focusing on niche service offerings, such as neurosciences. However, we also expect stiff competition for pediatrics subspecialists. Organizations should focus on coordinating care along the System of CARE, especially connecting nontraditional outpatient access points like schools, community centers and virtual access points, to grow their pediatrics service lines.

IP Demand Will Decline Across the Board, With the Exception of Neurosciences
While we expect an overall inpatient decline, each service line will be impacted differently by the outpatient shift. Key service lines and associated trends based on our IoC forecast are highlighted below.

Demand for IP neonatology services will decline sharply, –10% over the next decade, primarily due to improved perinatal care guidelines that reduce preterm births and pregnancy complications and result in a higher proportion of normal newborns. The CDC has recently reported an 8-year consecutive decline in preterm births from 2007 to 2014. Elimination of elective deliveries <39 weeks gestation has taken hold across the US, reducing IP demand for neonatology. Declines will be mitigated for children’s hospital NICUs because of the higher proportion of congenital anomalies and surgical conditions, which are not expected to decline as significantly as preterm births.

In medicine and surgery, care redesign and the medical home, combined with emerging payment incentives for care coordination, will result in care delivery changes that improve clinical outcomes and reduce IP demand.

Cardiovascular IP demand is expected to decline for children’s hospitals and non–children’s hospitals, –4% and –11%, respectively. A procedural shift to the OP setting, including observation, will continue due in part to advances in minimally invasive procedures such as hybrid approaches and percutaneous valve replacements (eg, Melody valve). The incidence of congenital heart defects will decline modestly due to expanded noninvasive fetal screening for Down syndrome. However, expanded use of ventricular assist devices as a bridge to transplant will increase demand for niche heart transplant and cardiomyopathy services.

Demand for IP orthopedics and spine is expected to decline modestly at children’s hospitals and non–children’s hospitals, –2% and –5%, respectively, due to a shift to OP and observation for procedural services. Spine surgeries for scoliosis will decrease due to more conservative nonsurgical guideline recommendations for moderate scoliosis.

In contrast to these IP declines, neurosciences remains a solid driver of IP growth, with a growth forecast for children’s hospitals of 8% over the next 10 years. Advances in neuroimaging and neurodiagnostics, along with emerging minimally invasive brain surgery techniques, will expand IP services to a larger pool of infants and children with seizures. Epilepsy surgery, brain resections and neurostimulator implantations will bolster the service line’s IP growth, while medical admissions such as those for headache will continue to decline.

Demand for IP cancer services will decline 7% for children’s hospitals and 16% for non–children’s hospitals over the next 10 years. Expect chemotherapy services to continue to shift to OP infusion centers. Adoption of targeted therapies and immunotherapies that can be administered in the OP setting will result in reduced complications requiring hospitalization, driving IP decline.

Pursue OP Opportunities in Niche Procedures and Imaging
As pediatric care continues to shift outpatient, organizations will differentiate themselves by emphasizing their pediatric expertise. Expanding coordinated care and access to regional OP services will enable IP growth and position organizations to succeed in emerging models focused on value-based care.

OP growth opportunities abound for pediatrics. Specific services to consider follow:

We are expecting strong growth in OP pediatric neurosciences, particularly in neurodiagnostics. As protocols for pediatric conditions and sedation increasingly include sleep studies, we anticipate increased demand for pediatric sleep testing. However, we do expect these studies to shift from hospital sleep labs to home-based testing. Organizations should plan their sleep labs accordingly.

In cancer, expect infusion center volumes to grow as chemotherapy shifts from the IP setting. In the long-term (7–10 years), however, emerging oral chemotherapy that can be delivered at home will temper infusion center growth.

Appropriate use guidelines are being adopted for imaging pediatric patients and will drive down demand for CT scans for pediatric appendectomy and head trauma. We anticipate ultrasound volumes to increase substantially due to efforts to reduce pediatric patients’ radiation exposure, improvements permitting 3D images, and increased adoption of portable ultrasound outside of the radiology department.

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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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