SIC 8093
SPECIALTY OUTPATIENT FACILITIES, NOT ELSEWHERE CLASSIFIED



This grouping covers establishments primarily engaged in outpatient care of a specialized nature with permanent facilities and with medical staff to provide diagnosis, treatment, or both for patients who are ambulatory and do not require inpatient care. Offices and clinics of health practitioners are classified according to their primary health care activity.

NAICS Code(s)

621410 (Family Planning Centers)

621420 (Outpatient Mental Health and Substance Abuse Centers)

621498 (All Other Outpatient Care Facilities)

Industry Snapshot

Facilities in this category are diverse and include outpatient centers offering alcohol or drug treatment, bio-feedback, family planning, mental health services, rehabilitation centers, outpatient surgery, kidney dialysis, lithotripsy (therapy that reduces kidney stones into small pieces so that they can be voided), and diagnostic imaging environments. Efforts to cut huge medical costs starting in the 1980s led to a movement away from inpatient treatment that continued to the 1990s, resulting in a number of different outpatient services. Growth was expected to continue into 2006 in new areas, most of which are less than 10 years old because of technology that further reduced the cost of providing these services and allowed them to be offered in outpatient facilities.

In the early 1990s, these outpatient and office locations were less regulated and utilized third-party reimbursement. Many were owned by physicians or physician groups and were not subjected to the same oversight as inpatient procedures. This changed in the middle of the decade with the introduction of government legislation to reduce abuses by physicians referring patients to self-owned laboratory services. The Stark Amendment created a list of 11 designated services to which physician owners could not refer Medicare or Medicaid patients. Combined with pressures from managed care companies, many physicians sold their interests in facilities, resulting in many publicly owned companies entering this specialized marketplace offering multiple services at a lower cost.

Organization and Structure

Drug and Alcohol Treatment. The trend of using specialized outpatient facilities is especially evident in substance abuse treatment. Drug and alcohol treatment is increasingly being done on an outpatient basis. The 17 percent growth rate for the service market for inpatient drug and alcohol treatment centers was at its height in 1989, bringing in $3.9 billion in revenues. This area has remained at this economic level through the 1990s.

The industry had been built on inpatient care. But in a cost-cutting environment, reimbursement requests for substance abuse treatment were being subjected to greater scrutiny by insurance companies. More co-payments were required, and lifetime caps were set on reimbursement. Outpatient care was less costly as well, and treatment methodologies changed as a result of all these factors. Now patients are typically treated for only a brief period in a hospital before moving on to outpatient centers, where treatment typically lasts four weeks.

The shift to outpatient care is apparent in the declining numbers of days that patients receive inpatient substance abuse treatment. Formerly the length of stay was 28 days. In the 1990s, inpatient stays averaged 15 to 19 days. The number of treatment beds was also down and, according to industry statistics, substance abuse facilities were operating at about 65 percent capacity, a decline from 80 to 90 percent capacity levels posted in the late 1980s.

Increased regard for civil liberties has also decreased compulsory inpatient treatment. In addition, community-based support groups have become an integral part of drug and alcohol abuse treatment enabling drug abuse patients to avoid hospitalization. Another factor discouraging the use of inpatient facilities for substance abuse is the increasing number of young people with alcohol abuse problems who are seeking treatment. These clients typically have fewer medical problems related to their addiction and are less in need of hospitalization to treat such related problems.

Psychiatric Outpatient Care. Insurance companies and other third-party payers are also taking a harder look at claims for inpatient psychiatric care today, prompting hospitals and other health care providers to set up less expensive outpatient facilities. According to a survey from the National Association of Psychiatric Health Systems (NAPHS), nearly 67 percent of psychiatric centers provided outpatient services. The average length of an inpatient psychiatric stay has gone down, according to the Health Care Institute of America, a health care consulting firm. The average stay in a psychiatric hospital went down to 11.5 days in the late 1990s from 25.7 days in 1987, while total patient rates increased. The number of outpatient admissions rose nearly 21 percent to over 1,200. The number of each patient's visits declined during that time.

Family Planning Clinics. These free-standing centers practice measures designed to assist pregnant women (and families) in making various decisions regarding their condition. Such clinics have a unique history and are at the center of a controversial ethical debate. Abortions are one of the services provided by these clinics since the Supreme Court's Roe v. Wade decision that legalized abortion in the United States. Since that decision, however, debate has raged about the practice. Protests outside family planning clinics of abortion services have grown increasingly frequent. The fortunes of such clinics have thus changed with shifts in political power at the national level. Under the Bush administration, which did not favor abortion rights, regulations were passed preventing federally-funded family planning centers from providing abortion counseling. That regulation was rescinded by the Clinton administration.

Family planning clinics not only provide contraceptive methods but also offer screening services to contraceptive clients since the services are required for prescribing birth control pills. Almost all such establishments provide pelvic examinations, blood pressure tests, PAP smears, and breast examinations.

Planned Parenthood-World Population, formerly the Planned Parenthood Association, is a leading family-planning network, and one which brought organized family planning to the United States. It was founded in 1921 and has centers throughout the United States. Many Planned Parenthood affiliates also offer services such as colposcopy (examination of the vagina and cervix) and HIV testing.

Prospective Payment System In the 1980s, a movement away from retrospective payment for inpatient care began. When Medicare was initiated in 1965, it reimbursed hospitals and physicians based on bills submitted after treatment. But in 1983, that type of payment for hospital inpatient treatment was replaced with the Prospective Payment System. Yet charges for physicians and outpatient services continued to be reimbursed retrospectively, encouraging a shift to outpatient therapy.

The Prospective Payment System for the first time rewarded hospitals for holding down costs and allowed hospital administrators to know before treatment how much a hospital would be reimbursed for illness at rates determined by geographic region as well as by specific procedures and medical problems.

Current Conditions

At the beginning of the twenty-first century, each medical problem was classified by a specialized group of health professionals into a Diagnostic Related Group. If a hospital spends less than is allotted under prospective payment it makes a profit, but if it spends more, the hospital must make up the difference. As a result many believe that doctors may be admitting fewer patients and referring more to outpatient settings not subject to peer review or prospective payment. Indeed, the incidence of outpatient treatment rose dramatically following introduction of the Prospective Payment System.

Many Clinton administration officials expressed determination to eliminate what they viewed as the insurance industry's discrimination against the mentally ill. Both Medicaid and private insurance policies severely restrict coverage of mental health care. Generally the elderly and disabled beneficiaries must pay 50 percent of the bills for outpatient mental health services, a stark contrast with the 20 percent contribution generally required for treatment of physical ailments. Currently the federal government pays for a quarter of the $67 billion spent annually for mental health care, with private insurers and patients paying the balance. Proposed plans for alleviating this problem included the creation of incentives for community-based care and outpatient services rather than hospitalization.

Yet there have been problems with treating the mentally ill as outpatients. During the 1980s, in an effort to cut costs, several states deinstitutionalized mental patients and made plans for them to continue their treatment in outpatient settings. New York hospitals, for instance, made elaborate plans for treatment of mentally ill patients after their release, but those plans fell through. According to a 1993 study of the New York State Commission on the Quality of Care for the Mentally Disabled, 40 percent of the discharged mental patients whose cases were reviewed ended up being rehospitalized within six months of their discharge because they were unable to make their way through the complicated government and health care bureaucracies they needed to help them. The released patients were rehospitalized at an average cost of $30,750. Nine of ten patients had abused drugs or alcohol and received no services for the mental illness or addiction.

In 1998, total industry revenue was reported to be nearly $5.9 billion, with expenses of $5.5 billion. This represented a 1.4 percent decrease in revenue, and a 1.1 percent decrease in expenses from the previous year.

Family Planning. Financial strains on family planning facilities have increased in recent years. There has been less public funding, while expenses have gone up. New contraceptive methods such as the contraceptive implant are expensive. To meet these expenses many agencies have had to raise fees. While the Clinton administration was friendly to these clinics, in contrast to the previous administration, clinics faced long-term economic insecurity. Without public funds, family planning leaders said, their clinics would have to merge with managed care organizations or offer primary care to remain financially viable—and providing primary care would force these clinics to narrow the range of contraceptive care they offer.

Hospital Outpatient Treatment. Outpatient facilities are also being set up by hospitals. Anxious to preserve their traditional centrality in health care, hospitals are establishing health care networks with a variety of outpatient services in addition to the traditional inpatient care. The Berlin Memorial Hospital in central Wisconsin, for example, links women's heath clinics in three separate towns with anesthesiology centers, internal-medicine centers, an extended-care facility, and a nursing home. Information systems in such cases are integrated for ease of handling by insurers and participating physicians. The effort by hospitals nationwide to assume a more important role for outpatient centers is part of the overall trend advancing outpatient care at a time when the nation is taking a critical look at its traditional health care system.

Workforce

The employment pattern for miscellaneous outpatient services underwent accelerated growth during the period from the 1980s through the 1990s and proved to be basically immune to recessionary pressures. This is due, in part, to the large increase in the numbers of middle-aged and elderly in the population. An aging population typically brings an increased incidence of disease and need for outpatient services. For example, employment of radiology technologists is expected to grow faster than average through 2006 because of the vast clinical potential of diagnostic imaging and therapeutic technology. In the late 1990s, the average starting salary was just under $29,000. Department heads' salaries were $68,500.

Further Reading

"Health, United States, 1998." National Center for Health Statistics, 20 March 2000. Available from http://www.cdc.gov/nchs .

"NAPHS Survey Documents Changing Hospital Care Driven by Market." Psychiatric News, 3 October 1997.

Neuer, Anne. "Long-term Healthcare Looks Good, as Long as Washington Behaves." STREETnet, 27 February 1997.

——. "Specialized Service Providers Keep Costs Low for Patients and Managed Care." STREETnet, 27 February 1997.

"Radiology Technologists." Occupational Outlook Handbook, 1 April 1996.

U.S. Bureau of Labor Statistics. 1998-99 Occupational Outlook Handbook, 20 March 2000. Available from http://stats.bls.gov .

U.S. Bureau of the Census. Service Industry Census, 20 March 2000. Available from http://www.census.gov .



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