Hawaii hospitals are increasingly moving medical services to less expensive outpatient facilities to reduce health care costs.

“Hospitals are under pressure to reduce the cost of care by moving traditionally hospital-based services to the outpatient setting, including imaging, surgery, lab and even admissions,” said Jason Chang, chief operating officer of The Queen’s Health Systems. “This shift has forced hospitals to build, joint-venture or acquire centers and expand their ambulatory footprint.”

Providers say this lowers medical costs for consumers — in the form of lower copays and potentially even insurance premiums — and makes health care more convenient by bringing it closer to home.

“We used to do an awful lot of stuff (in the hospital) that’s very intense and actually didn’t add value; it added cost,” said Dr. Gerard Livaudais, vice president of Hawaii Health Partners, Hawaii Pacific Health’s accountable care organization, which is made up of 863 doctors, hospitals and other providers coordinating care to improve outcomes.

The move is driven in large part by a change in the way providers are paid — an upfront reimbursement per member per month instead of payments based on volume — so hospitals and physicians profit if they can provide services at lower costs. It is also being driven by patient demand.

It appears counterintuitive for providers to keep more patients out of the hospital, but “if we do better and take better care of people, historically we’ve seen that it’s going to cost less money and we’ll have enough profit to keep hospitals open even if they’re not full,” Livaudais said, adding that HPH in recent years has begun building partnerships with ambulatory surgery and imaging centers and other outpatient services, which keep patients out of the emergency rooms and offset the loss of inpatient revenue.

Hawaii Pacific Health — the parent company of Kapiolani Medical Center for Women &Children, Pali Momi Medical Center, Straub Medical Center and Wilcox Medical Center on Kauai — is aggressively expanding services to where patients live and work.

It expanded a Straub clinic at the First Insurance Center in May 2018 and is building new Straub clinics at Ka Makana Alii in Kapolei and in the Ae‘o residential tower at Ward Village. Both clinics open in July. A new Kauai Medical Clinic at the Kauai Village Shopping Center will open in August, replacing the existing Kapaa clinic. And in May 2020 it will open a new Straub clinic in Kuono Marketplace at Kahala. Expansions of Straub clinics at Pearlridge and Mililani are also in the works.

Meanwhile, Queen’s is broadening outpatient surgeries, diagnostic imaging and other services with a goal of reducing overall costs by 5% to 10%. It is also embarking on a $38 million expansion at its West Oahu campus and acquiring three properties — two in West Oahu and one in urban Honolulu — to build multispecialty centers. Queen’s said revenue is based on about two-thirds inpatient and one-third outpatient services.

“We realize there’s a transformation going on in health care, which helps everybody. It lowers their costs, makes doctors happier and more efficient with safer, better outcomes,” Livaudais said. “In Hawaii everything else is so expensive that any extra money being spent where it doesn’t need to hurts.”