April 7, 2026
A new study, published in Health Affairs and authored by Tim Bulat (ARC) and Sean McClellan and Matt Trombley (Abt Global), found 11 percentage point lower hospital utilization trends under global budgets in Maryland (2013–2023 vs other states). This was driven primarily by outpatient care (19pp lower), especially services that can safely be done in lower-cost ambulatory settings (23pp lower).
Prior studies have shown cost savings under global budgets but didn’t isolate whether those came from utilization vs prices. This study is the first to examine aggregate hospital utilization and discusses several implications of the lage outpatient reductions:
(1) Budgets: Hospital budgets, used often in other countries but rarely in the U.S., can materially reduce use of high-cost outpatient departments without measurable harm to quality.
(2) Site-neutral policy: Incentives to maximize outpatient volume have likely driven unnecessary HOPD use outside Maryland. Maryland’s results suggest more services can be done in lower-cost non-hospital settings without compromising care.
(3) Aggregate payment reform: For hospital budgets to work for both payers and patients, they must be designed recognizing how strong the incentives are to shift utilization to physician offices. That means pairing budgets with safeguards to protect quality and setting hospital budget levels that account for partially offsetting increases in lower-cost settings.
Click here for the study.