Designing for Transition: 3 Healthcare Policy Shifts Reshaping Facility Planning

Healthcare architecture is no longer simply a reaction to evolving clinical models. It is increasingly shaped by reimbursement structures, care migration into outpatient settings, workforce pressures, and ongoing financial realignment, forces that directly influence what we build, where we build it, and how quickly environments must adapt. While uncertainty in healthcare can’t be eliminated, we can reduce its impact by understanding the trends reshaping how that care is funded, delivered, and experienced.

One of the major trends shaping healthcare today is the rapid shift of policy and the consequential ripple effects across coverage, reimbursement, and regulation. Healthcare policy updates can quickly change who is insured, which services are incentivized, where care is allowed or encouraged (or incentivized) to occur, and how providers are paid (or penalized) for outcomes, access, and efficiency.

For health systems, that means strategy and capital planning must be flexible. A change in a variety of factors, from Medicaid eligibility rules to site-of-care policy, can alter demand, staffing needs, margins, and the viability of service lines. For planners and designers, these shifts translate into real facility implications—accelerated outpatient growth, different program mixes, new operational workflows, and the need for environments that can seamlessly adapt.

Three key indicators influencing the way healthcare is delivered and ultimately designed include:

1. Inpatient-Only (IPO) List: As procedures shift to outpatient settings, the design of the outpatient physical environment becomes even more critical to ensuring safe and positive patient care outcomes.
2. Comprehensive Care for Joint Replacement (CJR-X) Reimbursement Model: Better patient outcomes are linked to a continuum of care. Expect health systems to treat the full narrative of care in a single location or across their own network, potentially under one roof.
3. Graduate Medical Education (GME) Support Programs: GME support programs will be indirectly affected by Medicaid cuts. While the reduced availability of these support programs isn’t the sole driver of the projected healthcare workforce shortage, it remains a powerful lever to expand training capacity and ease downstream staffing pressures.

While many of these conceptual structures are outside the control of the health system, provider, and designer, it is important to understand what they are, how they’re changing, and how they impact physical environment design.

Inpatient-Only (IPO) List

Established in 2000 by the Centers for Medicare and Medicaid Services (CMS), the Inpatient-Only (IPO) List includes all procedures that must be delivered in an inpatient setting to qualify for Medicare reimbursement. CMS originally developed the IPO List as part of the Outpatient Prospective Payment System (OPPS).

At its largest, the IPO List contained approximately 1,700 procedures, of which CMS determined generally:

• Require at least 24 hours of recovery or monitoring,
• Involve significant surgical complexity, or
• Are too complex or high-risk for most outpatient departments or ambulatory surgery centers (due to potential complications, infections, and other concerns).

The catalog of procedures is constantly under evaluation throughout the year, with annual revisions taking effect January 1 each year. Over time, CMS has revised the list because advances in surgical techniques and anesthesia have made some procedures safe to perform in an outpatient patient setting. For example, total knee replacements were eventually removed from the IPO list due to advances in surgical techniques, better infection prevention protocols, and faster recovery.
 

What You Need to Know Right Now 

Since its inception, CMS has been moving toward shrinking the IPO List because the agency (informed by data) believes many procedures that once required mandatory inpatient admission can now be performed safely in outpatient settings. Other cited reasons include:

• Advances in medicine and technology have resulted in quicker procedures, faster recovery, and overall shorter hospital stays.
• The nationally fixed list can sometimes be too rigid, not allowing physicians to decide the appropriate setting based on the patient and/or situation.
• Outpatient procedures are often less expensive, potentially reducing Medicare spending/reimbursement.

Due to these reasons and more, 2021 brought forth a large-scale removal of procedures from the IPO list. Later that same year, CMS halted the dismantling efforts in favor of keeping procedures on the IPO List, citing a lack of safety data indicating that outpatient settings were an appropriate setting for complex procedures and financial incentives aggressively pushing/forcing procedures to outpatient settings.

Beginning January 1, 2026, CMS has committed to phasing out the IPO List over a three-year period, with the list being fully eliminated during the 2028 calendar year.
 

What This Means for Planning and Design

The elimination of the IPO list will continue to accelerate the broader migration of care from hospitals to outpatient settings. As more procedures move to Ambulatory Surgery Centers (ASCs), hospital outpatient departments, and community-based clinics, health systems will increasingly rely on distributed networks to capture demand, improve convenience, and reduce the total cost of care while maintaining consistent clinical standards across locations.

As more complex and “higher-risk” procedures move into the outpatient environment, the physical setting must operate at a hospital-caliber level for safety and reliability. Healthcare designers must have heightened awareness and understanding of these procedures to ensure that outpatient facilities are designed to match the procedure risk profile despite the less stringent regulations and “lower-grade” systems/equipment.

Many conventional outpatient facilities were never planned for the level of soiled holding, clean staging, or reprocessing support required by higher-acuity services. This leads to operational workarounds that can compromise efficiency and safety. Teams need to evaluate whether the environment warrants upgraded MEP system performance, including ventilation/filtration strategies, medical gas capacity, and appropriately scaled emergency power. Proper workflows and adequate support infrastructure must be designed to match the actual procedure risk profile, not legacy outpatient norms.

Comprehensive Care for Joint Replacement (CJR-X) Reimbursement Model

The Comprehensive Care for Joint Replacement Model (CJR) is a Medicare bundled payment program, created by CMS and launched in 2016 to improve the quality and, crucially, the coordination of care for patients receiving joint replacements. Instead of reimbursing for each service (potentially to different healthcare providers), Medicare sets a single target price for the entire episode of care. This pilot program represents a shift from fee-for-service medicine toward paying for outcomes, and total episode efficiency rather than volume of services.

The CJR reimbursement model functions as a retroactive bundled-payment system for hospitals performing joint replacements on patients covered by Medicare. The program creates a bundle for the entire episode of care. This includes everything the patient experiences, from preparation to procedure to follow-up care after discharge. CMS calculates a “target price” for care in a particular performance year based on:

• Historical national spending on the same/similar care services 
• Regional averages
• Patient/case complexity
• Procedure type
   

What You Need to Know Right Now

While the CJR model experienced both successes and concerns, CMS ultimately viewed it as strong and beneficial enough for broader use, as studies showed measurable Medicare spending reductions while the quality of care generally held steady.

With that, the CJR-X – an expansion of the original CJR model – was assembled and proposed to begin on October 1, 2027. The core principle of the model remains the same, alongside expansions to permanence and wider applicability. While the original program applied to select metro areas, the expanded model becomes mandatory for most acute-care hospitals nationwide. Similarly, it includes outpatient procedures in addition to inpatient procedures. And finally, this model adds quality and patient-reported outcome measures to compare against the target price. 
 

What This Means for Planning and Design

Under this model, systems with small patient volumes and fewer post-acute care options (skilled nursing facilities, home health agencies, rehab providers, etc.) could be disproportionately harmed. Low volumes cannot absorb a few expensive cases across hundreds of surgeries. Limited post-acute care options hinder a hospital’s ability to reduce episode costs.  

This criterion tends to apply to rural health systems. Healthcare planners and designers must be prepared to accommodate this additional risk by ensuring facilities are designed to the highest safety standards possible. Facility designs must also promote the full utilization of physicians alongside Advanced Practice Providers (APPs) to ensure adequate patient coverage and care.

Regardless of location (rural or metro), some health systems aim to provide care throughout the entire episode of care to ensure quality is delivered at every stage. That means services provided would be within the system and potentially under a single roof. Designers must consider all aspects of care associated with a specific procedure planned for an outpatient facility, either ensuring day-one coverage or the ability to flex space to accommodate future modes of care. 

While the CJR-X model applies specifically to lower extremity joint replacement, like the original CJR, it will continue to be seen as a pilot program, potentially expanding into other types of care. 

Graduate Medical Education (GME) Support Programs

Graduate medical education, the training physicians receive after medical school through internships, residencies, and fellowships, has been heavily supported by many US public policies. State and federal governments have used funding, regulation, and workforce planning policies to support an adequate pipeline of trained physicians to meet the needs of the population.

The largest source of GME funding is through the Direct Graduate Medical Education Program from the Centers for Medicare and Medicaid Services. Since the creation of Medicare, hospitals have received federal payments to offset the costs of training residents. These payments generally come from two sources: direct GME payments to cover resident salaries, faculty teaching costs, and administrative expenses; and indirect medical education payments used to compensate teaching hospitals for the higher costs associated with training residents and caring for more complex patients.

While CMS programs fund a majority of GME, there are many smaller initiatives and policies, like the National Health Service Corps and many more, that supplement CMS funding, especially in high-need situations like:

• Expanding residency positions in underserved specialties such as primary care and psychiatry,
• Funding rural residency programs,
• Providing incentives for training in medically underserved areas, and
• Supporting programs that encourage physicians to practice in shortage regions like Health Workforce Shortage Areas (HWSA) after completing training.
   

What You Need to Know Right Now

The United States is projected to have ~86,000 fewer physicians than needed by 2036, driven by an aging physician workforce, growing patient demand, and staff burnout. Nearly 42% of practicing physicians are age 55 or older, leading to an influx of retirements. The population age 75+ is projected to grow by 54.7%, increasing demand for care.

Healthcare workforce shortages are one of the main reasons policymakers support graduate medical education. The H.R. 1 Act (Big Beautiful Bill Act) and other revised policies do not contain a direct cut to Medicare GME payments. However, several provisions included in these policies would indirectly reduce resources available for training.

The law makes major changes to Medicaid financing, including limits on provider taxes and other funding mechanisms that many states use to support hospitals.  Reduced Medicaid funding can leave academic medical centers with less money available to support residency programs, faculty, and training infrastructure. Hospitals serving Medicaid patients could experience increased financial strain due to eligibility restrictions and other changes.

Residency programs may face pressure to limit expansion or delay new training programs. Organizations representing physicians and medical schools have argued that higher financing barriers could reduce access to medical education for some students, affecting the future physician pipeline. While GME programs aren’t the sole driver of the projected workforce shortage, they remain a powerful lever to expand training capacity and ease downstream staffing pressures.
 

What This Means for Planning and Design

With narrowing availability and access to GME programs, health systems must protect and sustain their existing workforce by actively mitigating burnout. That makes the physical environment a meaningful operational tool. Well-designed staff break areas, access to daylight and nature, and readily available respite spaces support recovery throughout shifts and help retain a healthy, more resilient team – all of which is crucial to maintaining a steady workforce.

To address physician shortages, many health systems are expanding their use of advanced practice providers (APPs). This model depends on a larger, more distributed team, which introduces additional layers of communication and coordination of patient care. Consequently, the traditional centralized team work area alone is often insufficient. It must be supplemented with a range of spaces – huddle rooms, focus rooms, conference rooms – to support handoffs, quick alignment, and interdisciplinary coordination/decision-making.

Team work areas (and other workspaces) must be planned to support higher staff ratios and designed with flexibility in mind to accommodate rotating specialist teams and fluctuating team sizes. 

Higher education facilities play a critical upstream role by reducing barriers to entry and strengthening the healthcare pipeline. Through advanced simulation environments, accessible clinical learning experiences, mentorship opportunities, and student-centered community resources, thoughtfully designed educational settings can support academic success and a sense of belonging, encouraging more students to enter the field despite constraints created by limited GME program availability.

Design for A Constant State of Transition

While the long-term impacts of these changes will continue to evolve, one thing is increasingly clear: healthcare environments must be designed for adaptability.

As reimbursement models, care delivery expectations, workforce realities, and patient behaviors continue to shift, health systems will need environments that support both operational performance and the human experience.

For planners and designers, this means looking beyond individual projects and understanding the larger forces shaping how care is delivered across systems and communities.

BHDP Designs for Tomorrow, Today

Being prepared for the changes of tomorrow’s healthcare environment starts with careful planning today. 

At BHDP, we closely monitor evolving trends to help health systems align facility strategy, operational goals, and human-centered design.

Reach out to BHDP to talk about designing your project for tomorrow, today.