Ambulatory Growth, Reshaping Healthcare

April 30, 2026

Health systems across the country are aggressively expanding ambulatory access adding surgery centers, clinics, and distributed care networks to meet consumer demand and protect market share.

But in doing so, many are unintentionally creating a new problem: a growing layer of stranded capital embedded in their acute-care footprint.

This is not a cyclical issue tied to reimbursement pressure or post-pandemic recovery. It is structural. And for many organizations, it is already reshaping their long-term financial trajectory.

The shift is real and accelerating.

Over the past three decades, outpatient care has steadily captured a larger share of healthcare delivery. Today, more than half of hospital revenue is generated outside the traditional inpatient setting.

More importantly, the pace of change is accelerating. Since 2021, outpatient revenue growth has outpaced inpatient growth by more than 2.5 times, with cumulative growth of approximately 31% compared to just 12% for inpatient services.

This divergence is expected to continue. Demographic trends, consumer preferences, payer incentives, and clinical innovation are all pushing care into lower-cost, more convenient settings.

Yet while care delivery is rapidly shifting, the capital footprint of many health systems is not.

The Core Problem: Cost Structure Lag

Most organizations are not redesigning their enterprise to reflect this new reality. Instead, they are layering ambulatory growth onto an unchanged acute-care cost structure.

The result is a fundamental misalignment between where care is delivered and where cost resides.

When volume migrates out of the hospital:

  • High-acuity cases remain
  • Fixed infrastructure remains
  • Staffing models lag behind
  • Cost per case increases
  • Margin compresses

This is not a story about empty beds. It is a story about under-absorbed fixed cost.

Health systems are successfully solving access and growth challenges while unintentionally creating long-term structural inefficiencies within their core platform.

Introducing the Stranded Capital Index

To better understand and quantify this risk, we have developed the Stranded Capital Index (SCI)—a practical framework for evaluating how exposed a health system is to enterprise dilution as care shifts outward.

At its core, the SCI assesses three factors:

  • Excess Capacity (E): How oversized is the asset relative to future demand?
  • Convertibility (C): How easily can the space be repurposed or right-sized?
  • Rigidity (R): How much fixed financial and operating burden remains attached?

Each factor is normalized and weighted to produce a composite score, with higher scores indicating greater exposure to stranded capital risk.

What makes this framework powerful is not the formula itself but what it reveals.

Consider three common scenarios:

  • An orthopedic operating room with recent capital investment and declining case volumes
  • A cath lab with flexible use and growing demand
  • An endoscopy suite with moderate utilization and limited repurposing potential

On the surface, each may appear operationally viable. But when evaluated through the SCI lens, their financial trajectories diverge significantly, ranging from positive EBITDA contribution to meaningful margin erosion depending on backfill requirements and cost rigidity.

The insight is clear: not all capacity is created equal and not all capital is recoverable.

Designing for the Wrong Future

Compounding this challenge is the way we continue to see organizations design and build acute-care facilities.

Recent hospital projects average approximately 2,800+ square feet per bed, reflecting decades of layered requirements, redundancy, and operational complexity.

Much of this space is not directly tied to patient care:

These designs made sense in a hospital-centric model of care. But in a distributed, ambulatory-driven environment, they create a cost structure that is increasingly difficult to sustain.

In effect, we are building hospitals for yesterday’s demand curve while funding tomorrow’s care model somewhere else.

The Financial Impact Is Material

The implications of this misalignment are not theoretical, they are measurable.

Our research indicates that rethinking the acute-care footprint and reallocating appropriate functions to lower-cost settings can generate:

  • Up to $1.25 million in capital savings per bed
  • Hundreds of millions in avoided or reallocated capital across a single system
  • Significant reductions in ongoing operating expense

Even modest changes have meaningful impact. Shifting just 700 square feet per bed from high-cost hospital space to lower-cost ambulatory space can reduce annual operating expense by approximately $14,000 per bed.

At a 3% operating margin, that equates to nearly $500,000 in required revenue per bed just to offset inefficient space.

Few organizations can grow their way out of that math.

From Facility Planning to Enterprise Design

Addressing this challenge requires a fundamental shift in how health systems approach capital planning.

This is no longer about optimizing individual projects or improving departmental efficiency. It is about redesigning the enterprise.

Four principles are emerging as critical:

1. Stop Expanding Both Platforms Simultaneously

Growth must replace cost—not layer onto it. Expanding ambulatory capacity without recalibrating the acute footprint compounds structural inefficiency.

2. Tie Ambulatory Strategy to Acute Recalibration

Every outpatient investment should trigger an inpatient question:

  • What volume is migrating?
  • What space becomes redundant?
  • What cost can be removed or repurposed?

3. Move Beyond Facility Planning

Facilities are not just physical assets—they define workforce models, cost structures, and capital velocity. Planning must integrate strategy, operations, and finance.

4. Sequence Capital Intentionally

A phased approach can help organizations reposition without destabilizing performance:

  • Phase 0: Stabilize revenue and generate near-term margin
  • Phase 1: Migrate appropriate services and realign operations
  • Phase 2: Reconfigure the acute-care chassis to reflect future demand

This is not about abandoning the hospital. It is about right-sizing its role within a broader, more dynamic care delivery model.

A Narrowing Window

Health systems are navigating unprecedented pressure—from workforce shortages and capital constraints to reimbursement uncertainty and shifting consumer expectations.

In this environment, ambulatory growth is not optional. It is essential.

But without a corresponding redesign of the acute-care platform, that growth can become enterprise dilutive—eroding margins even as volumes increase.

The window for proactive action is narrowing. Site neutrality, value-based reimbursement, and continued cost pressure will eventually force these decisions.

The organizations that act now—intentionally aligning strategy, capital, and operations—will define the next generation of healthcare delivery.

Those that do not may find themselves with high-performing ambulatory networks… sitting on top of structurally unsustainable cost platforms.

The Bottom Line

The real issue is no longer whether care will continue shifting outward. That trajectory is already clear.

What matters now is whether health systems are willing to redesign the enterprise around that shift, or if they will continue stacking new growth onto a legacy cost structure built for a different era.

The gap between those two approaches is far more than incremental. It is structural, and it is quickly becoming one of the defining factors in which organizations lead and which struggle to keep pace.

Jim Medendorp

Managing Director, Management Consulting

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Connect with ERDMAN to explore how market intelligence, payer strategy, physician alignment, and real estate planning can come together early to create outpatient platforms built for long-term performance.