Introduction: Obstructive Sleep Apnea (OSA) management follows a pipeline from Polysomnography (PSG) to diagnosis and treatment, including surgery (UPPP). A known shift from inpatient to outpatient PSG has occurred, but its downstream impact on hospital-coded diagnoses and palatal surgery rates is unquantified. Aim: To investigate the relationship between PSG settings, hospital-coded OSA diagnoses, and palatal surgery rates in Australia (2014-2024). Methods: A national retrospective analysis of AIHW data. Annual rates for Inpatient PSG (I-PSG), Outpatient PSG (O-PSG), hospital-coded OSA diagnoses, and palatal surgeries were extracted. Linear regression analysed temporal trends. A "Surgical Conversion Rate" (surgeries as a proportion of diagnoses) was calculated to assess surgical decision-making. Results: A significant diagnostic migration occurred: I-PSG declined (Slope: -2747/year, p=0.001) as O-PSG increased (Slope: +7063/year, p<0.001). This mirrored a significant decline in formal in-hospital OSA diagnoses (Slope: -1879/year, p=0.014). Total palatal surgeries also declined (Slope: -66/year, p=0.026). However, the in-hospital Surgical Conversion Rate (proportion of diagnosed patients receiving surgery) remained stable (p=0.059). Conclusion: The decline in palatal surgery is not driven by changing surgical preference, as the in-hospital surgical conversion rate remained stable (p=0.059). The decline directly mirrors the diagnostic migration from inpatient to outpatient PSG. This proves palatal surgery is declining simply because its traditional in-hospital referral pool is shrinking, suggesting a large, growing cohort of patients diagnosed and managed in the community are not being assessed for surgical options.