Hospitals and physician-groups in several markets are exploring accountable care organizations, and many are choosing to participate. As a result, surgery centers are assessing whether they should join or if it would make more sense to go in a different direction.
"I think the healthcare reform has really been a great catalyst for clinical transformation," says Akram Boutros, MD, founder and president of BusinessFirst Healthcare Solutions. "ACOs are Medicare-specific designated entities that are really focused on population management, cost reduction and quality improvement.
At the heart, certainly ASCs can meet this challenge. They cannot become an ACO, but they can become a member of an ACO group, and they should be focused on the idea of overall clinical transformation."
This change in the healthcare environment will force ASCs to confront ACOs, even if they choose not to become part of one.
"I would think that surgery centers would minimally want to think about how to connect with ACOs," says James Fox, director and senior CFO consultant at Warbird Consulting Partners. "If ACOs are streamlining care to patients, that would include referrals to the highest quality and hopefully best priced care going forward. Anybody who relies on referrals from physicians or maintaining business will, at some point, have to consider how to connect with ACOs as more patients will flow through those mechanisms."
The structure of accountable care organizations is left fairly open and ambulatory surgery centers have been left to carve out their own role. "The legislation doesn't speak about ASCs and we don't know where they will end up," says Jodi
Laurence, partner at Florida Health Law Center. "We do know there will be healthcare reform in some way and I would think ASCs need to figure out how they will survive in this new healthcare regime."
Here, industry experts discuss eight points of survival for surgery centers in a post-ACO market, whether they decide to participate or not.
1. Show your ASC can meet ACO goals. Accountable care organizations strive to improve the quality and lower the cost of care by promoting care coordination and asking providers to assume risk for their care. Whether your surgery center participates in an ACO or not, proving quality and cost of care meet ACO standards will be important.
"What I would advise ASCs to do is to no longer look at themselves as standalone entities with separate and distinct relationships with their physicians," says Dr. Boutros. "Become part of a healthcare delivery system where patients and physicians can move easily between sites. They will need to demonstrate they can improve quality and reduce costs better than surgeries done in inpatient hospital departments."
Once you are able to demonstrate these goals, make sure patients and referring physicians know about your facility. "Communicate with primary care physicians about how you can be cost effective for their patients," says Ms. Laurence. "Build a relationship with payors and be smart about your IT system."
2. Implement data-tracking systems. As it becomes more important to track data — with or without an ACO — surgery centers should prepare by implementing electronic medical records or other electronic systems to track their outcomes and cost data.
"Surgery centers need to get their EMR in order if they want to become part of an integrated delivery system structure because they need to track what they do," says Ms. Laurence. "They will need to have data showing they provide good quality care and communicate with the other parts of the network when a patient comes in."
Integrating electronic health systems is an onerous task, but it will benefit surgery centers far into the future. "Spend the money now on developing your IT systems so you are in the position to better coordinate care," says Ms. Laurence. "When you are talking with payors, you can show your performance and that you can provide several services at competitive costs with low complication rates. Be able to sell yourself to the payor."
Even in markets where ACOs aren't present, it will be helpful for surgery centers in the future to implement data management. "An underlying current is getting your ducks in a row for data management, because if you jump on board with an ACO, bundled payments or some other form of risk sharing provisions will follow," says Dan Connolly, vice president of payor contracting with Pinnacle III. "It's obvious that ASCs add to their preparation for these opportunities by managing their reimbursement and cost data. Having the information available at the outset to handle bundled payments or other forms of risk sharing arrangements will provide an ASC with an edge."
"It's important to track both cost and quality data. "Cost and quality are the two key reasons why ACOs will want to include the right ambulatory surgery centers," says Reed Martin, COO of Surgical Management Professionals. "We are gathering this information now to show quality advantages; any work that can be done to improve outcomes and infection rates needs to be reviewed so the ASC can identify how they are better than their competitors."
3. Examine your geography before proceeding with ACOs. Whether your surgery center is leaning toward becoming part of an ACO or seeking another way to grow within the market, it's important to understand your geography. In some markets it makes more sense for surgery centers to become ACOs than others.
"Geography usually trumps everything else," says Dr. Boutros. "Look at the hospitals and health systems closest to you; they are the ones with strongest relationships to the medical staff. That will determine the patient population that is part of CMS and commercial ACOs."
The hospital's presence in the community will have a huge impact on how surgery centers will interact with current and future ACOs.
"If the ACO in a given market includes the hospital that is a substantial employer of physicians who integrate their care, then certainly the surgery center will have to work with the hospital to balance that out," says Mr. Fox. "Hospitals should be incentivized to provide the highest quality, lowest cost care possible, so they will partner with surgery centers for an economic sharing possibility, or build ASCs of their own."
However, if the ACO is driven by physicians in the community, surgery centers will be able to compete with hospitals as a lower-cost provider because the physicians are incentivized to bring cases to the highest quality, lowest cost setting.
"If hospitals aren't a huge part of the ACO, they might be more interested in working with ASCs to provide more surgeries at a lower cost assuming the quality is high, than working with the hospital at a higher cost base," says Mr. Fox.
4. Develop relationships with payors and providers. There are several models ACOs could take over the next few years depending on the relationship between physicians, providers and payors in your community. Physicians and surgery centers that already have a relationship with others are more likely to build on that foundation for an ACO or ACO-like payment model in the future.
"Surgery center administrators should begin by developing a closer relationship with health systems and beginning to manage commercial payor risk models," says Dr. Boutros. "I think the relationship models that the freestanding ASCs should think about developing are participating in a program that puts some dollars at risk but has significant upside potential because it reduces overall cost and improves patient satisfaction and outcomes."
When approaching the hospital about a partnership, Dr. Boutros advises working through a surgery center physician who also has privileges at the hospital. "See who has the best relationships with the hospital administration on your staff and they can help you navigate the process," he says. "I would look for a progressive health system that has had some risk contracting and pay-for-performance experience because their executives understand the value of integration and collaboration."
In some communities, surgeons and surgery centers are concerned that close relationships with hospitals could lead to hospital ownership in the future. In this case, surgery centers could partner with primary care physicians or payors involved in an ACO that would benefit from ASCs as a low cost provider.
"I think it makes sense for surgery centers to align with primary care physicians because they are going to be the new gatekeeper in this system," says Ms. Laurence. "They have to figure out how to compete by finding hospitals that don't have an ASC and working with them as well as finding primary care physicians to network with."
5. Become part of the continuum of care. Many surgery centers only see patients when surgeons bring them in for their procedures — not providing additional care such as imaging services, physical therapy or follow-up visits. As providers in the market move toward a continuum of care model, surgery centers that aren't able to become part of that global care could be in trouble.
"Overall, I would think it's important that ASCs begin thinking of themselves as a part of the healthcare services continuum," says Dr. Boutros. "We have to integrate the processes so consumers are more satisfied because they see improved outcomes and lower costs."
ACOs encourage providers to work together on a cost-containment platform so anything the ASC can do to build a relationship outside of their own walls will be helpful.
"Regardless of their platform going forward, all stakeholders know we are all in this together. The only way we are going to impact change is to form a collaborative relationship where everyone has skin in the game and works together effectively," says Mr. Connolly. "First, target the gaps in service to form a partnership that will help in the future, such as physical and occupational therapy for orthopedic-focused surgery centers, and connect the dots for referral patterns to develop relationships with primary care physicians."
In addition to cost and quality metrics, payors and ACOS will be looking for patient satisfaction levels. "Patient satisfaction will be very important for ACOs because providers want to know their patients are satisfied," says Mr. Martin. "We think that the use of an outside, unbiased third party to send the information and gather information tabulated electronically is very helpful."
6. Move more procedures into the surgery center. The more types of procedures that can be performed in the outpatient surgery center, the more cases an ACO will bring them. Surgery center administrators should consider expanding services to higher acuity cases that were traditionally done in the hospital, as long as the patients would be good candidates for the outpatient setting.
"The more surgeries that can be moved out of the expensive acute care setting into an ambulatory setting, the more money that will be saved," says Mr. Fox. "That will benefit the ACO as well as the surgery center."
In some cases, this will mean purchasing new equipment and recruiting new surgeons who perform cases such as minimally invasive spine surgery or total joint replacement.
"ASCs are seeking opportunities for their affiliated surgeons to move high cost procedures out of hospitals and into ASCs," says Mr. Connolly. "The potential cost savings could lead to reward sharing among the involved entities. We've been negotiating fee for service rates for spine and total joint cases with payors who are eager to identify opportunities to save money. There is a dual effect — costs are contained and the overall system benefits."
Some payors will be familiar with bringing these cases into the ASC while others will be more skeptical. Meet with the medical directors who work for wary payors to educate them about the safety and effectiveness of these procedures. "Convince them this is safe by pointing out all the criteria that is set up to ensure only appropriate patients are seen for these procedures in this setting," says Mr. Connolly. "Educate them about the cost savings as well as how making this kind of move will benefit the system, the payors and their members. Many times this starts with the surgeon who will be performing the procedures having a 'collegial talk' with a payor's medical director."
7. Protect yourself from taking on too much risk. Being part of an ACO will require surgery centers to take on a portion of the risk for providing care. This could mean capping the cost of an episode of care so the surgery center would have to cover the cost of care associated with complications. However, don't take on too much risk.
"Many providers are going into ACOs with eyes wide open so they are not taking full capitation risk," says Mr. Fox. "They are gain sharing or if they take risk it is often bracketed risk so they are not fully exposed."
The contract shouldn't push too much risk onto the surgery center, or eat up too much of the surgery center's costs. "One of the things to be concerned about is if the ACO is trying to shift too much of the risk or costs onto the surgery center," says Mr. Fox. "Our concerns are primarily the financial ones."
Additionally, you don't have to fully enter into the ACO right away.
"You don't have to do an 'all-in' relationship," says Dr. Boutros. "You can pick one carrier with one product and work to establish the relationship to test the water and see how well things work out with the organization, and expand if it works."
Some surgeons are skeptical or ill-informed about ACOs, but it seems they are trending as the way of the future. "If there is a movement toward ACOs in your community, surgeons need to figure that patients will be part of the ACO," says Ms. Laurence. "Some surgeons don't want to join, but you want to be on the cutting edge of healthcare reform; be in a situation where you can profit and not die by the wayside."
It's important to know your cost data so you can negotiate rates that aren't too tight for the surgery center to handle. "We look at the variable costs associated with the case," says Mr. Martin. "We want to make sure we'll still make an acceptable profit, so we have to understand what the costs are. ACOs will want ASCs for lower costs and higher quality, so for ASCs to negotiate effectively they need to understand their own costs by procedure."
8. Avoid red flags that would have a negative impact on ASCs. Before taking the leap into an ACO, make sure the organization will provide the right type of patients at a healthy volume. You also want to make sure that ACO surgeons will use your facility.
"Getting the right types of patients is important," says Mr. Fox. "Also be aware of who else in the network is providing the same types of services as you are and how those mixed incentives are balanced. You don't want the ACO to play you off of the other providers; you want to be the primary ambulatory setting of the ACO because at some point capacity will have to be managed and you don't want to be excess capacity."
Additionally, if the ACO is primarily concerned with Medicare or Medicaid patients, or another type of charity care, they may not be beneficial for the surgery center in high volume. "Have an understanding of the payor mix that will come through the ASC and payments attached to them," says Mr. Fox.
Finally, consider whether you will be able to communicate with the other providers in the system through several channels, including electronic health records. "It will be important to evaluate the size and capability, as well as technical abilities and interactive abilities, of the ACO to distribute information," says Mr. Martin. "Choose your partners well and identify throughout agreements if there are any risks or costs in joining the ACO. Also think about the potential upside with respect to potential patient volume growth."
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"I think the healthcare reform has really been a great catalyst for clinical transformation," says Akram Boutros, MD, founder and president of BusinessFirst Healthcare Solutions. "ACOs are Medicare-specific designated entities that are really focused on population management, cost reduction and quality improvement.
At the heart, certainly ASCs can meet this challenge. They cannot become an ACO, but they can become a member of an ACO group, and they should be focused on the idea of overall clinical transformation."This change in the healthcare environment will force ASCs to confront ACOs, even if they choose not to become part of one.
"I would think that surgery centers would minimally want to think about how to connect with ACOs," says James Fox, director and senior CFO consultant at Warbird Consulting Partners. "If ACOs are streamlining care to patients, that would include referrals to the highest quality and hopefully best priced care going forward. Anybody who relies on referrals from physicians or maintaining business will, at some point, have to consider how to connect with ACOs as more patients will flow through those mechanisms."The structure of accountable care organizations is left fairly open and ambulatory surgery centers have been left to carve out their own role. "The legislation doesn't speak about ASCs and we don't know where they will end up," says Jodi
Laurence, partner at Florida Health Law Center. "We do know there will be healthcare reform in some way and I would think ASCs need to figure out how they will survive in this new healthcare regime."Here, industry experts discuss eight points of survival for surgery centers in a post-ACO market, whether they decide to participate or not.
1. Show your ASC can meet ACO goals. Accountable care organizations strive to improve the quality and lower the cost of care by promoting care coordination and asking providers to assume risk for their care. Whether your surgery center participates in an ACO or not, proving quality and cost of care meet ACO standards will be important.
"What I would advise ASCs to do is to no longer look at themselves as standalone entities with separate and distinct relationships with their physicians," says Dr. Boutros. "Become part of a healthcare delivery system where patients and physicians can move easily between sites. They will need to demonstrate they can improve quality and reduce costs better than surgeries done in inpatient hospital departments."
Once you are able to demonstrate these goals, make sure patients and referring physicians know about your facility. "Communicate with primary care physicians about how you can be cost effective for their patients," says Ms. Laurence. "Build a relationship with payors and be smart about your IT system."
2. Implement data-tracking systems. As it becomes more important to track data — with or without an ACO — surgery centers should prepare by implementing electronic medical records or other electronic systems to track their outcomes and cost data.
"Surgery centers need to get their EMR in order if they want to become part of an integrated delivery system structure because they need to track what they do," says Ms. Laurence. "They will need to have data showing they provide good quality care and communicate with the other parts of the network when a patient comes in."
Integrating electronic health systems is an onerous task, but it will benefit surgery centers far into the future. "Spend the money now on developing your IT systems so you are in the position to better coordinate care," says Ms. Laurence. "When you are talking with payors, you can show your performance and that you can provide several services at competitive costs with low complication rates. Be able to sell yourself to the payor."
Even in markets where ACOs aren't present, it will be helpful for surgery centers in the future to implement data management. "An underlying current is getting your ducks in a row for data management, because if you jump on board with an ACO, bundled payments or some other form of risk sharing provisions will follow," says Dan Connolly, vice president of payor contracting with Pinnacle III. "It's obvious that ASCs add to their preparation for these opportunities by managing their reimbursement and cost data. Having the information available at the outset to handle bundled payments or other forms of risk sharing arrangements will provide an ASC with an edge."
"It's important to track both cost and quality data. "Cost and quality are the two key reasons why ACOs will want to include the right ambulatory surgery centers," says Reed Martin, COO of Surgical Management Professionals. "We are gathering this information now to show quality advantages; any work that can be done to improve outcomes and infection rates needs to be reviewed so the ASC can identify how they are better than their competitors."3. Examine your geography before proceeding with ACOs. Whether your surgery center is leaning toward becoming part of an ACO or seeking another way to grow within the market, it's important to understand your geography. In some markets it makes more sense for surgery centers to become ACOs than others.
"Geography usually trumps everything else," says Dr. Boutros. "Look at the hospitals and health systems closest to you; they are the ones with strongest relationships to the medical staff. That will determine the patient population that is part of CMS and commercial ACOs."
The hospital's presence in the community will have a huge impact on how surgery centers will interact with current and future ACOs.
"If the ACO in a given market includes the hospital that is a substantial employer of physicians who integrate their care, then certainly the surgery center will have to work with the hospital to balance that out," says Mr. Fox. "Hospitals should be incentivized to provide the highest quality, lowest cost care possible, so they will partner with surgery centers for an economic sharing possibility, or build ASCs of their own."
However, if the ACO is driven by physicians in the community, surgery centers will be able to compete with hospitals as a lower-cost provider because the physicians are incentivized to bring cases to the highest quality, lowest cost setting.
"If hospitals aren't a huge part of the ACO, they might be more interested in working with ASCs to provide more surgeries at a lower cost assuming the quality is high, than working with the hospital at a higher cost base," says Mr. Fox.
4. Develop relationships with payors and providers. There are several models ACOs could take over the next few years depending on the relationship between physicians, providers and payors in your community. Physicians and surgery centers that already have a relationship with others are more likely to build on that foundation for an ACO or ACO-like payment model in the future.
"Surgery center administrators should begin by developing a closer relationship with health systems and beginning to manage commercial payor risk models," says Dr. Boutros. "I think the relationship models that the freestanding ASCs should think about developing are participating in a program that puts some dollars at risk but has significant upside potential because it reduces overall cost and improves patient satisfaction and outcomes."
When approaching the hospital about a partnership, Dr. Boutros advises working through a surgery center physician who also has privileges at the hospital. "See who has the best relationships with the hospital administration on your staff and they can help you navigate the process," he says. "I would look for a progressive health system that has had some risk contracting and pay-for-performance experience because their executives understand the value of integration and collaboration."
In some communities, surgeons and surgery centers are concerned that close relationships with hospitals could lead to hospital ownership in the future. In this case, surgery centers could partner with primary care physicians or payors involved in an ACO that would benefit from ASCs as a low cost provider.
"I think it makes sense for surgery centers to align with primary care physicians because they are going to be the new gatekeeper in this system," says Ms. Laurence. "They have to figure out how to compete by finding hospitals that don't have an ASC and working with them as well as finding primary care physicians to network with."
5. Become part of the continuum of care. Many surgery centers only see patients when surgeons bring them in for their procedures — not providing additional care such as imaging services, physical therapy or follow-up visits. As providers in the market move toward a continuum of care model, surgery centers that aren't able to become part of that global care could be in trouble.
"Overall, I would think it's important that ASCs begin thinking of themselves as a part of the healthcare services continuum," says Dr. Boutros. "We have to integrate the processes so consumers are more satisfied because they see improved outcomes and lower costs."
ACOs encourage providers to work together on a cost-containment platform so anything the ASC can do to build a relationship outside of their own walls will be helpful.
"Regardless of their platform going forward, all stakeholders know we are all in this together. The only way we are going to impact change is to form a collaborative relationship where everyone has skin in the game and works together effectively," says Mr. Connolly. "First, target the gaps in service to form a partnership that will help in the future, such as physical and occupational therapy for orthopedic-focused surgery centers, and connect the dots for referral patterns to develop relationships with primary care physicians."
In addition to cost and quality metrics, payors and ACOS will be looking for patient satisfaction levels. "Patient satisfaction will be very important for ACOs because providers want to know their patients are satisfied," says Mr. Martin. "We think that the use of an outside, unbiased third party to send the information and gather information tabulated electronically is very helpful."
6. Move more procedures into the surgery center. The more types of procedures that can be performed in the outpatient surgery center, the more cases an ACO will bring them. Surgery center administrators should consider expanding services to higher acuity cases that were traditionally done in the hospital, as long as the patients would be good candidates for the outpatient setting.
"The more surgeries that can be moved out of the expensive acute care setting into an ambulatory setting, the more money that will be saved," says Mr. Fox. "That will benefit the ACO as well as the surgery center."
In some cases, this will mean purchasing new equipment and recruiting new surgeons who perform cases such as minimally invasive spine surgery or total joint replacement.
"ASCs are seeking opportunities for their affiliated surgeons to move high cost procedures out of hospitals and into ASCs," says Mr. Connolly. "The potential cost savings could lead to reward sharing among the involved entities. We've been negotiating fee for service rates for spine and total joint cases with payors who are eager to identify opportunities to save money. There is a dual effect — costs are contained and the overall system benefits."
Some payors will be familiar with bringing these cases into the ASC while others will be more skeptical. Meet with the medical directors who work for wary payors to educate them about the safety and effectiveness of these procedures. "Convince them this is safe by pointing out all the criteria that is set up to ensure only appropriate patients are seen for these procedures in this setting," says Mr. Connolly. "Educate them about the cost savings as well as how making this kind of move will benefit the system, the payors and their members. Many times this starts with the surgeon who will be performing the procedures having a 'collegial talk' with a payor's medical director."
7. Protect yourself from taking on too much risk. Being part of an ACO will require surgery centers to take on a portion of the risk for providing care. This could mean capping the cost of an episode of care so the surgery center would have to cover the cost of care associated with complications. However, don't take on too much risk.
"Many providers are going into ACOs with eyes wide open so they are not taking full capitation risk," says Mr. Fox. "They are gain sharing or if they take risk it is often bracketed risk so they are not fully exposed."
The contract shouldn't push too much risk onto the surgery center, or eat up too much of the surgery center's costs. "One of the things to be concerned about is if the ACO is trying to shift too much of the risk or costs onto the surgery center," says Mr. Fox. "Our concerns are primarily the financial ones."
Additionally, you don't have to fully enter into the ACO right away.
"You don't have to do an 'all-in' relationship," says Dr. Boutros. "You can pick one carrier with one product and work to establish the relationship to test the water and see how well things work out with the organization, and expand if it works."
Some surgeons are skeptical or ill-informed about ACOs, but it seems they are trending as the way of the future. "If there is a movement toward ACOs in your community, surgeons need to figure that patients will be part of the ACO," says Ms. Laurence. "Some surgeons don't want to join, but you want to be on the cutting edge of healthcare reform; be in a situation where you can profit and not die by the wayside."
It's important to know your cost data so you can negotiate rates that aren't too tight for the surgery center to handle. "We look at the variable costs associated with the case," says Mr. Martin. "We want to make sure we'll still make an acceptable profit, so we have to understand what the costs are. ACOs will want ASCs for lower costs and higher quality, so for ASCs to negotiate effectively they need to understand their own costs by procedure."
8. Avoid red flags that would have a negative impact on ASCs. Before taking the leap into an ACO, make sure the organization will provide the right type of patients at a healthy volume. You also want to make sure that ACO surgeons will use your facility.
"Getting the right types of patients is important," says Mr. Fox. "Also be aware of who else in the network is providing the same types of services as you are and how those mixed incentives are balanced. You don't want the ACO to play you off of the other providers; you want to be the primary ambulatory setting of the ACO because at some point capacity will have to be managed and you don't want to be excess capacity."
Additionally, if the ACO is primarily concerned with Medicare or Medicaid patients, or another type of charity care, they may not be beneficial for the surgery center in high volume. "Have an understanding of the payor mix that will come through the ASC and payments attached to them," says Mr. Fox.
Finally, consider whether you will be able to communicate with the other providers in the system through several channels, including electronic health records. "It will be important to evaluate the size and capability, as well as technical abilities and interactive abilities, of the ACO to distribute information," says Mr. Martin. "Choose your partners well and identify throughout agreements if there are any risks or costs in joining the ACO. Also think about the potential upside with respect to potential patient volume growth."
More Articles on Surgery Centers:
8 Steps to Promote Growth & Innovation at Surgery Centers
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7 Revenue Cycle Best Practices for Surgery Centers