Shifting Sites of Care: Why Healthcare Delivery Is Moving Beyond the Hospital

Chris Thonis

Hi everybody. Welcome back to William Blair Thinking Presents. Today is Friday, May 1st, 2026. I'm joined, once again, by Ryan Daniels, William Blair is group head of healthcare technology and services research. Ryan, thanks for joining us.

00:35, Ryan Daniels

Hey, Chris. Thanks for having me on the podcast today. I always very much enjoy our conversation so looking forward to our discussion.

00:41, Chris T

All right. So today we're diving into your latest healthcare mosaic report. It's titled Shifting Sites of Care: Evolving Industry Trends Signal a Major Shift in Points of Care Delivery. So, this is a big thematic piece. They always are. This one looks at, you know, how care in the U.S. is moving out of traditional hospital settings and into outpatient, virtual, and home-based environments.

So, to start us off, Ryan, I thought maybe you could give listeners a high-level overview of what you mean by shifting sites of care, and why this is such an important moment for the healthcare system.

01:16, Ryan D

Yeah. Chris, great question, and thanks again for having me on the podcast today. Before I directly answer your question, however, just a quick reminder for the audience. We do one of these deep dive reports each quarter. This is now our fourth consecutive quarter doing our Healthcare Mosaic. And, as is the case for each report in the series, our intention is really to identify a key megatrend that appears to be gaining momentum in our healthcare coverage universe, and then to provide a comprehensive overview of why that's the case, the near and longer term drivers of the trend that we're highlighting, and what industries and companies can benefit from the trend.

So, the genesis of this report, in particular, relates to the fact that we're seeing just a ton of regulatory changes, technology innovations, and consumer preferences that are literally starting to change where consumers receive care, meaning shifting care from higher cost and potentially less convenient sites of care to lower cost, safer, more consumer centric care delivery locations. So, that's really what we mean by shifting sites of care.

It's literally taking something that used to be performed in an acute care hospital and moving it to an ambulatory surgery center, or a physician's office, or, as you said, even moving care directly into the home with telehealth and remote patient monitoring solutions.

And, there are a few big things to note here. First, we don't view this as an incremental change in where care is provided, but rather something that represent a pretty seismic shift in where healthcare is delivered and where healthcare dollars are going to be spent.

Second, and I'm sure we'll get into this more later in our conversation, but there are a ton of novel forces that are all coalescing, literally at the same time to drive this change. And as a result, we don't view this as something that's going to play out over decades. And that's often the case in healthcare, things progress very slowly. But, in this situation, we think it's something that's in process right now. It's going to play out in very short order. So, I think it's important for our listeners to be aware of.

And third, my final point here, it's really just a follow up to the first two points. There's a ton of near-term implications on who might emerge as winners and losers across the entire healthcare marketplace as this occurred.

So, again, it's a very important topic, not only for my services in HIT universe, but really the entire healthcare marketplace.

03:30, Chris T

So, one of the first major drivers you highlight is policy and reimbursement. So, I figured we could start there. The report spends a lot of time on changes, like elimination of Medicare's Inpatient-Only list. Why is that such a big deal?

03:44, Ryan D

Yeah, it's a great starting point for our conversation, as we believe that's one of the new regulatory developments that's really going to impact procedure volumes and where surgeries are performed over the next two to three years. So first, a bit of background for our listeners. Historically, Medicare has maintained a list of procedures that are only allowed to be performed in inpatient settings, and that's referred to as the Inpatient-Only list, as you said, or the IPO list. And it consists of thousands of medical procedures.

Now, over the years, Medicare has removed a few of these procedures each year, as they were deemed to be safe and alternative settings like surgery centers or doctor offices. And that's due to novel surgical techniques like minimally invasive surgery, and things like better pain management solutions. And what happens when these procedures are moved off the list is that volume tends to flow very, very rapidly to other locations of care that are cheaper and more consumer centric.

So, in the report, we actually provide several examples of what has happened in the past when procedures were removed from the IPO list. One example that share with the audience is hip replacements. So, the market for hip replacements on an outpatient basis as recently as 2019 was 0% because it was on this Inpatient-Only list.

It was removed that year. And by 2024, 60% of all hip replacements had already moved to the outpatient setting. So, you're looking at a massive market share shift, where hospitals lost business over five years and huge gain for surgery centers, or what we refer to as ASCs, ambulatory surgery centers, over the same timeframe.

Now, what's unique about today, and this is real time, is that Medicare recently announced that it's just going to eliminate the IPO list altogether. And they’re going to allow doctors to use their clinical judgment regarding where cases can be performed safely.

So, in effect, recognizing this list is just antiquated now, given the advancements in surgical techniques and pain management, etc.. So again, doctors will be able to really direct, where the care is delivered based on the specific patient, their risk profiles, and the procedure at hand.

And the unique thing here is this already started this year with certain MSK or musculoskeletal procedures. And that began in early 2026. And then the list will gradually be dissolved through the end of 2027. So, by January 1st of 2028, there will be no procedures on the IPO list anymore. It will no longer exist. So again, this is kind of a real time development. It's going to very huge implications on the side of care delivery.

And it should redefine winners and losers in the space. And it's a key reason, in my opinion, that almost every leading hospital in the country is shifting CapEx dollars, or M&A funds, or both, to outpatient operations. So, a really unique trend.

06:31, Chris T

That's a good segue to the next question, which, you know, what does this mean financially for hospitals and health systems?

06:37, Ryan D

Yeah, I mean, it's really interesting. So, I think it could have huge impact in very short order. And, I guess, to add a little context here, let's just go back to that hip replacement example when it was removed from the IPO list. So, the average price of a hip replacement is probably around $50,000. And we know about half a million surgeries occur each year. So that's a $25 billion market alone. That single procedure.

So, if hospitals went from generating $25 billion a year, because they had 100% market share, to only 40% market share, that's only $10 billion. So that was a $15 billion shift in revenue with that single surgical procedure. And these tend to be some of the more profitable procedures for acute care providers.

So, these dollar shifts definitely could pressure their margins. So, what are they going to do?  Well, in our view, again, the way they will look to offset this is invest more heavily in ambulatory operations and alternative sites care. And this could be via joint ventures with existing or new providers, it can be through new facility construction, or what we call de novo builds in healthcare parlance, or via M&A.

And we're actually seeing all these things occur, again, on a real time basis. So, just to give you an example here, and we discussed this in the report, too, the single largest acute care chain in the U.S. added 100 outpatient facilities across its network last year alone, 2025. And it indicated recently it's going to spend $5 billion in CapEx this year with almost all of it dedicated to alternative sites of care.

So, think urgent care clinics, ASCs, freestanding diagnostic clinics, so you can see that they're putting their money where their mouth is. Another example, the second largest nonprofit health system in the U.S., and this is a top five overall health system, as well, just spent$ 4 billion in mid 2025 to acquire one of the country's leading ASC providers.

So, you know, this clearly shows you systems recognize where the pockets heading, if you will. And they're moving in that direction to keep market share in their system, despite this shifting point of care. So, who’s going to suffer is probably going to be the smaller systems or hospitals without the financial wherewithal or balance sheet strength to make this shift, make these investments.

So, they're going to experience huge amount of turmoil over the coming years and will probably have to rework their entire operating models to focus on specific service lines, maybe that need to stay in inpatient. So, a really interesting dynamic with monitoring here.

09:05, Chris T

You also spend time on newer payment models like the CMMI access model and TEAM. How do these programs change incentives around where care is delivered?

09:17, Ryan D

Yeah, those are both great examples of how emerging payment or reimbursement models are going to shift care delivery, as well. And, like the IPO list, the interesting thing is these are both real time developments. These are both programs that are launching over the next year or so. So, we're just about to witness their growth and impact. So, in the interest of time, I won't go into them in detail, but what I will note is that they are both new government reimbursement models that actually change how providers are paid for their services.

In more specific, the real focus is on shifting reimbursement away from episodic care to more outcomes based longitudinal care management. ACCESS you mentioned, for example, that actually stands for Advancing Chronic Care with Effective Scalable Solutions so that’s CMS ACCESS. And that's a model that actually pays providers to do things like use new digital health solutions, like AI, remote patient monitoring or RPM.

And the goal here is to help manage patients at home. And prior to things like this, there are really no good reimbursement structures or vehicles available to do this. So again, it opens up a whole new marketplace.

And you mentioned TEAM, that's a model that actually makes hospitals responsible for the entire cost of a procedure related to a specific care episode. So not just the procedure itself, like the knee surgery or cardiac surgery, but all the associated cost over 30 days. So, if you're on the hook for all the associated costs, even post the procedure, there's a huge incentive to shift care to lower cost settings post-discharge and to use technology to help avoid things like readmissions.

And the reason for that is, again, if hospitals are accountable not only for the procedure but all the follow up care, they're going to start to invest in digital health, remote monitoring, and other things to keep patients safe and avoid expensive readmissions or ED visits they won't get paid for.

So, the quick punchline here is that all these new models really reward care coordination. They reward site optimization versus pure volume. So, naturally, that's also going to promote more consumer centric, lower cost sites of care over time.

11:19, Chris T

All right. So, technology is another major theme in the report. How would you say is technology, particularly AI, in remote monitoring accelerating the shift?

11:29, Ryan D

Yeah. Interesting question. Interesting way you phrased it. And I'll address that in two ways.

First, we're seeing a lot more digital health technology placed directly into the hands of consumers, really to help them make more informed and educated healthcare decisions. And we discuss this in great detail in the report, provide some very specific examples. But, the punchline here is that literally every major health insurer, including Medicare, is launching new AI technologies to help consumers navigate their care needs more effectively and more actively.

So, you know, think of it, today, I can open an app for my health insurer and indicate that I'm over 50. I need to get a colonoscopy. And the app will know my specific plan and benefit design. It knows where I live. It knows my preferences. It has other similar plan members and what they did for this type of care.

And it can actually recommend a in network provider for me to visit. It can also do things like give me a price estimate, tell me my co-payment based on my exact plan and my current deductible. Maybe I've already spent enough that I’ve blown through it and don't have anything, and then it can likely even book the procedure for me all in minutes.

And, as part of this, insurers obviously have incentives to get me to the best, lowest cost provider. So, they can even do things like wave a co-pay for certain high-quality doctors that are in their network, or for something like an MRI, they can show the cost I’ll pay at a hospital versus a freestanding imaging center. And it could be 50% cheaper at the freestanding site.

So, I'm likely to self-direct my imaging request there versus just blindly relying on a physician referral, you know, that they've always made to their hospital that they're part of. And, you know, that's a really good example because it's literally the same procedure. It's the same piece of MRI equipment. But the freestanding center, you know, it's usually open later. It's open on weekends. It's a more convenient location parking, kind of, akin to a drugstore. And that's all they do at that facility. So, the service is a lot faster and cheaper.

And that contrasts to, you know, having to go get this in a hospital where I have to park at a big facility, navigate through the hospital, probably into the basement where the imaging facility is, again, probably wait forever to get my MRI, pay twice as much.

So, it's a great example how care will shift to freestanding centers as more real time, actionable information flows into the hands of consumers. And again, every insurer in the U.S. is doing this, and they have big incentives to drive you to lower cost care delivery and use AI to do that. So, that's, kind of, answer number one to your question.

And then, answer number two, I would say we're seeing a ton of growth in the home and home-based technology. It makes it safer to, you know, be discharged at home or age in place, or to get virtual care for things like chronic conditions. So, another example here for the listeners. Just imagine a heart failure patient has a heart attack, goes to the hospital, gets care, and eventually is discharged to the home.

So, today, this patient's going to get a remote patient monitoring kit. It's going to have a blood pressure cuff. It might have a weight scale. And, each day, patient just takes a few basic biometric readings. It's very easy to do. And behind the scenes, AI is capturing all that data. And what it's doing is using predictive analytics to ID any red flags.

So, let's say that same patient has a rapid weight gain, in a short period of time, which could be a risk for heart failure patient. It means the patient's gaining water weight. So, it would trigger an intervention. It might be a medication change. A provider could maybe dial in and see if a patient's diet has changed, maybe they're eating high sodium foods and retaining water. So, it could trigger social intervention or healthy meal delivery. Perhaps a telehealth visit with a cardiologist to ID any other systems before they exacerbate and the patient ends up in the ED for care.

And yeah, this is really just basic stuff. There's some really cool technology out there for some of the conditions. It almost seems, you know, science fiction. But, it’s coming in the market pretty quickly given these innovations combined with AI, and then all this novel reimbursement support.

So, this is another thing that's just hitting real time. I think it's going to take the market by storm.

15:39, Chris T

Let's talk about patients and consumers. How much of this shift is being driven, not just by policy or technology, but by what patients actually want?

15:47, Ryan D

It's really both. I mean, this is another reason the trend is so powerful and it's going to evolve so quickly. It's not like regulators or insurers are trying to push things onto consumers they don't want or can't benefit from. Consumers all want this.

You know, I want the best info on care delivery. I want the most effective site for that MRI I mentioned. I want to have a virtual follow up versus having to take off work and drive to my doctor for a consultation. And, you know, seniors, in particular, they have very clearly shown a preference to age in pace.

In fact, we actually wrote a mosaic. You probably remember we did a podcast on this topic a few quarters ago, and the data shows that seniors want to age in their homes and communities, even as health risks arise that make more home-based care and assistance needed.

So, again, it's the perfect storm. Here we have a lower cost solution. It is more convenient. Payers want you to use it. You like using it. And we now have the technology capabilities to make it all possible safe. And when all the parties are aligned like this, again, adoption appears very quickly, and that's what we expect to be the case here.

16:51, Chris T

Employers also come up a lot in this report, especially around rising healthcare costs. How are employers influencing where care takes place?

17:00, Ryan D

Yeah. So, I would say in our discussion we spend a lot of time on, kind of, the elderly and chronic care, but you and I will be impacted by this, as well. I totally agree. And employers are seeing the highest healthcare spend ever. They've never spent this much on healthcare and the cost of benefit inflation is about the highest it's been in 20 years. We have the highest dollar amount increasing at the highest rate. It's hitting margins. It's become a C-suite issue, meaning CEO, CFOs are concerned. So, employers are also very interested in inflecting where care takes place. And, again, part of this is just pushing payers to get these AI based tools that we discussed earlier to their workforce in order to get care to lower cost settings.

But, you know, employers are also really investing in other novel solutions, so things like on site care operations run by third parties. And those are effectively, you know, PCP clinics that are either onsite in an employer campus, if they have enough scale, or maybe at a shared location with several employers if they don't have enough scale.  And it's, kind of, a free service to employees. It drives more preventive care. It's very convenient. So, we're seeing a ton of growth in this onsite, near site care.

We're also seeing a lot of investment in things like virtual care delivery. So, virtual physical therapy is a great example. A ton of growth in that space. Help with therapy. And, you know, contrasts to, again, having to take time off work or spend your weekend driving into a PT clinic and do a therapy. You could do it all via your phone.

And then another really interesting area, and we're hosting a call on this in a few weeks, we have the invite and report, if anyone's interested, is centers of excellence. And that's a contractor who works with employers to help direct employees in need of acute solutions, like orthopedic surgery, that’s complex, or, maybe, oncology care, to the best providers in the market.

So, they have analytics to show the absolute best doctors, absolute best facilities you can go to get the best, lowest cost care, and actually reward you for going there. Maybe it's a free care, lower copay, things of that nature, guaranteed pricing. So, I would say, for employers, it's kind of a mix of everything we've discussed, with a little more of a tent towards kind of virtual care delivery.

19:02, Chris T

So, as we wrap up, I wanted to bring this back to investors. When you when you step back from all of this, what are the key implications investors should be paying attention to?

19:12, Ryan D

Yeah, that's a that's a great question to start a wrap up. So, I would say a few things.

First, this is really an emerging trend. And it's just about to hit an inflection point here in 2026. So, again, recall the new IPO list as an example. That just started in January. It's going to roll out over the next three years. These new reimbursement models I discussed were just announced. They're going to start this summer and over the next few years. So, this is all, kind of, a key trend that's really just hitting that inflection point. So that's number one.

I would say number two, this is something that has really broad implications for the healthcare space and where investors should focus their attention.

You know, again, this trend will likely cause massive share shifts as volumes move to lower cost settings. So, investors need to be aware of that, for sure. And we believe it can really augment growth in areas like home healthcare, outpatient surgery, virtual care, and a ton of emerging technologies that really enable all this to take place. And then it's also going to impact other sectors, like the managed care companies or payers, as they should see lower medical spend and better margins.

So, again, it's happening now. It's happening quickly, and it's going to have very broad implications, not just in my sectors, but really across all healthcare would be some of the key takeaways.

20:21, Chris T

If listeners take one thing away from the report, what should it be?

20:26, Ryan D

Well, that's a tough one. This might sound a bit hokey, but hope. You know, I really believe this is a trend that can not only start to bend the cost curve in the U.S. but lead to better care experience for patients. Again, it's really a focus on driving the lowest cost, highest value, most convenient forms of care for consumers, which is a win for the economy, a win for employers, a win for insurers, a win for patients. So, that's, I think, one thing.

The other thing, again, I would emphasize this isn’t a short-term cost cutting tactic, but rather a really important structural shift in how and where care is going to be delivered. And we really believe companies that help enable this shift are going to be strong growth in these going forward to that would be my, I guess, two takeaways.

21:11, Chris T

That's all the time we have today. But Ryan, thanks again for joining us. For those interested in reading the full report, it's called Shifting Sites of Care: Evolving Industry Trends Signal a Major Shift in Points of Care Delivery. You can request a copy by visiting williamblair.com/contact-us. Thanks for listening. We'll see you next time.

21:28, Ryan D

Yeah. Thanks, Chris. Quick shout out to my mom if we’re still on. She's my most steadfast podcast listener, so I have to give her a quick nod to end my session. So, thanks again.

21:37, Chris T

I love it. It's our greatest tradition. It's my favorite thing that you do.

21:40, Ryan D

Absolutely. I can't miss, so got throw that out there, and thanks everyone for joining us. And, again, if you need a copy of the report, just let us know. Thanks so much, everybody.