Medicare pays hospitals more than it pays independent clinics for identical procedures. That's not a bug in the payment system; it's a feature. And for a decade, providers have been deciding whether to exploit it or avoid it.

Across 20 specialties tracked in Medicare billing data from 2013 to 2023, 18 moved services away from facility settings and toward lower-reimbursed office settings. That's a striking reversal of the hospital consolidation story that dominates healthcare policy coverage. But the magnitude of the shift varies enormously by specialty, and at least one major specialty moved hard in the opposite direction.

18 of 20 Specialties Pulled Services Out of Hospitals

The dominant pattern is unmistakable. Nuclear Medicine saw the sharpest retreat from facility billing: its facility share fell from 49.95% in 2013 to 18.5% in 2023, a drop of 31.45 percentage points over a decade. Hospice and Palliative Care followed, declining 23.07 percentage points (from 82.77% to 59.69%). Diagnostic Radiology dropped 20.18 points, Gastroenterology fell 17.66 points.

These aren't marginal adjustments. A 31-point shift in where services are billed represents a fundamental restructuring of how a specialty delivers care. For Medicare, the direction matters: office-billed services carry lower facility fees, which means lower total reimbursement per encounter. If volume held constant, this shift would translate directly into reduced Medicare expenditures across these specialties.

Licensed Clinical Social Workers moved in the same direction, with facility share dropping from 16.94% to 5.53%, a shift of 11.41 percentage points. That's a specialty that was already predominantly office-based in 2013 and became even more so by 2023.

Nephrology Went the Other Way, and the Gap Is Hard to Ignore

Against this backdrop, Nephrology stands out. Its facility share grew from 24.99% in 2013 to 37.59% in 2023, an increase of 12.59 percentage points. Maxillofacial Surgery also shifted toward facility settings, adding 7.9 percentage points (from 7.63% to 15.53%), though it remains a predominantly office-based specialty.

Nephrology's trajectory is the more consequential anomaly. Kidney disease management, dialysis oversight, and related services are high-volume, high-cost, and concentrated among elderly Medicare beneficiaries. A 12.59-point shift toward facility billing in that specialty means Medicare is paying the facility premium on a larger share of nephrology encounters than it was a decade ago. The financial exposure compounds with volume.

What drove nephrology in the opposite direction from nearly all peers is a question the data raises but doesn't answer. Reimbursement policy changes, consolidation of dialysis and nephrology practices under hospital systems, or shifts in patient acuity could all be factors. The direction is clear; the mechanism isn't.

The Bigger Picture: Volume Could Erase the Savings

The shift away from facility billing across 18 specialties looks, on its face, like good news for Medicare's budget. But the headline finding requires one important caveat: this analysis tracks the share of services billed in facility settings, not total spending. If the volume of services grew faster than the facility share declined, Medicare could be spending more in absolute terms even as the facility percentage falls.

Gastroenterology illustrates the stakes. Its facility share dropped 17.66 percentage points over the decade. But gastroenterology is also a high-volume specialty with expensive procedures. A colonoscopy billed in a hospital outpatient department costs Medicare substantially more than the same procedure in an ambulatory surgery center or physician office. Even a modest volume increase could offset the savings from the site-of-care shift.

The same logic applies in reverse to Nephrology. A 12.59-point increase in facility share, multiplied across the full volume of nephrology services for Medicare's dialysis population, represents real dollars flowing to hospital systems rather than independent practices.

Whether the decade-long migration toward office settings has actually reduced what Medicare spends, or whether volume growth has absorbed the gains, is the number this analysis can't yet provide.