February 6, 2020

How Baylor Scott & White upped revenue by $1B—while admissions fell nearly 6%

Daily Briefing

    Despite seeing a 5.5% drop in hospital admissions over the past two years, Baylor Scott & White Health has increased annual revenue by $1 billion, thanks in large part to a focus on outpatient care, Mitchell Schnurman reports for the Dallas Morning News.

    Why Jim Hinton, CEO of Baylor Scott & White Health, says 'there isn't a hospital system of the future'

    How Baylor continues to grow

    According to Jim Hinton, Baylor's CEO, "Hospital inpatient stays are no longer the best barometer of health care activity."

    That's why Baylor has focused increasingly on outpatient care, seeing its number of outpatient visits and encounters increased by 3.5 million since 2015 to 12 million in 2019, Schnurman reports. Baylor has seen outpatient surgeries increase by 50,000 per year.

    As a result, Baylor's outpatient business accounted for 63.1% of its patient revenue in 2019, up about four percentage points from four years prior, Schnurman reports.

    "We have several partnerships with companies in the outpatient world," Hinton said. "We've led this market in partnering with others to more dramatically increase business into these ambulatory settings."

    Baylor has also reduced average hospital stays by 10% to 4.4 days over the last four years, Schnurman reports. On top of that, it's cut hospital readmissions by scheduling follow-up appointments with primary care doctors after patients check out, Schnurman reports.

    Baylor also operates an ACO, which is expected to cover over 800,000 people this year. Baylor's ACO has helped keep costs under control in the health system's employee health plan, allowing Baylor to keep premium price growth well below the nationwide growth, Schnurman reports. That performance has garnered interest from customers with employer-sponsored coverage, Medicare, and Medicaid.

    According to Peter McCanna, president of Baylor's health system, if the ACO is keeping patients healthy, then it's working as intended. "These efforts keep people out of the hospital, and they use more outpatient services," he said. "That reduces out-of-pocket costs and reduces the cost of care in the health system."

    McCanna said Baylor has worked to use its increased margins to reinvest in the system, including a $350 million investment in EHRs.

    According to McCanna, the EHR project should be finished by late summer and will allow patient information to be accessed within one record throughout Baylor's entire health system, allowing the records to become "a building block to having much better coordination of care."

    McCanna said, "We really believe that better quality leads to more affordability and lower costs" (Schnurman, Dallas Morning News, 2/4).

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