The promise of ASCs

  | September 9, 2019

Ambulatory surgery centers were once outliers in healthcare, mere upstarts cobbled together by physicians after the first one was started in Phoenix in 1970. They're sometimes seen as merely an afterthought by bustling inpatient hospital centers, but patients are choosing ASCs more and more.

These patients are attracted by the relatively lower costs of the centers and the option to recover at home; even hospital outpatient departments (HOPDS) are pricier than a quick trip to an ASC. In addition, the centers are increasing as loosened regulatory changes are opening the door for more procedures and improved reimbursement rates, according to ambulatory surgery officials and the Centers for Medicare & Medicaid Services.

Investing in ASCs

In 2017, surgical volume at ASCs has increased at a faster rate than at HOPDS for the first time in history. Additionally, the number of Medicare-certified ASCs is now pegged at more than 5,700 — the highest ever. In 2017, the number of ASCs increased by 2.4 percent, higher than the annual rate of 1 percent over the previous four years.

The increasing success of value-based care has piqued the interest of private investors and hospitals alike. Hospitals have an ownership interest in 23 percent of all ASCs, with 2 percent owned entirely by hospitals, MedPAC reports.

Generally, ASCs have been operating at reduced costs and providing more efficient care, and procedures covered for ASCs result in a lower insurance cost than in HOPDs. Physicians also have greater autonomy in ASCs than HOPDs, which allows them to customize their surgical environment and hire specialized staff. Along the way, some hospitals have gone from viewing ASCs as competition to actually partnering with them.

Strategic collaborations are key

To broaden their base, ASCs are entering into these strategic partnerships with hospitals seeking to add new service lines, such as orthopedics . Some ASCs also are moving into cash-based businesses and working with hospitals to coordinate service lines, with the idea of increasing revenue and adding more patients for each.

One example of a bustling ASC is Spectrum Healthcare Partners in Maine, which runs ambulatory service centers and has signed agreements with a hospital system to provide orthopedic care. Spectrum Healthcare Partners includes 220 physicians who have specialties ranging from critical care medicine to radiation oncology.

“I think we're starting to do a good job collaborating with hospital partners to do inpatient surgery and work together," Kelly David, director of marketing and public relations at Spectrum, explains. “Not every joint replacement is appropriate for an ASC. We've worked hard in relationships with hospitals. We're working with hospitals to provide more seamless care."

Promising partnerships

In late 2018, Central Maine Healthcare (CMH), a major hospital system in Maine, opened a hospital outpatient facility designed for cancer patients as well as mental health counseling and also various specialty services.

Jeff Brickman, the company's CEO, called the Topsham Care “an entirely self-supporting medical universe." Even so, CMH continues to grow its longtime partnership with Spectrum Healthcare Partners for expanded orthopedics services. Many of Spectrum's other providers also have longstanding relationships with the hospital.

The Surgery Center of Oklahoma is a cash-based, physician-owned independent surgical center in Oklahoma City that works outside the insurance system. SCO, which posts prices online, also works with local hospitals.

According to Keith Smith, M.D., a partner at SCO, those lower prices are luring in out-of-state patients. Sometimes, these “domestic medical tourists" can find discounted travel arrangements through their employers. “More patients are driving out to the airport and flying for a reasonable price," Smith says. “People are coming from elsewhere for a variety of procedures, whether it's a carpal tunnel or an ear tube procedure for their child because of the differential in price." To accommodate patients, the center also provides for overnight stays if necessary.

The Medicare catch

Some ASCs are closing their doors because Medicare pays just 50 percent of what it pays HOPDs for performing the same procedures. However, changes are coming down the pipeline, with CMS proposing lower fees in the near future. With a more reasonable payment rate, patient and physician satisfaction, and increased collaboration with hospitals, the future for ambulatory surgery centers looks bright.

Joe Cantlupe is a frequent contributor to athenaInsight

The promise of ASCs