Luke Lambert, CEO of Ambulatory Surgical Centers of America, discusses the current state of the ambulatory surgery center industry and how it can succeed in the future.
Question: What are the biggest challenges ASC industry leaders are facing right now?
Luke Lambert: In my view, hospitals have been effective in really skewing the reimbursement systems in their favor so that now everything in our health system does better if it is owned by a hospital. For example, physician practices and surgery centers can achieve higher reimbursement if they are owned by hospitals than if they are independent because hospitals have market dominance and the power to demand more from commercial payors. Hospitals are also effective at lobbying Medicare and Medicaid. If a hospital buys a surgery center and owns it, or turns it into a hospital outpatient department, on day one they can increase Medicare reimbursement close to 70 percent; with commercial payors it's not atypical to see 100 percent improvement in reimbursement.
Profits of hospital-owned facilities are dramatically higher and with the squeeze on independent ASCs, they feel they are at a comparative disadvantage and many are wondering whether they should sell to a hospital. It may be financially advantageous to sell to a hospital, but in the long run I think it will be a detriment to the healthcare system to have less competition.
Q: What steps are being taken to level this playing field?
LL: From an industry standpoint, the Ambulatory Surgery Center Association is advocating for improvement in reimbursements and expanding the list of reimbursable cases with government payors and removing regulatory barriers, to the extent possible, for physician-led projects. In many states, the department of health exists to protect hospitals against competitors. This stance against others stifles competition and limits the growth of our industry.
Q: Why is it so important for ASCs to maintain physician ownership?
LL: If you look at various markets, many hospitals could be described as local monopolies. In their local geography, a physician-owned surgery center might be the only competition and if the hospital purchases that, they own the whole market. That position of dominance doesn't lead to cost- effective care or improved quality. Major metropolitan areas tend to have more competition with multiple hospitals and physician-owned facilities.
Q: Where do opportunities exist for physician groups to partner with hospitals?
LL: There are a lot of opportunities for hospitals to partner with physicians in surgery centers. What you are trying to do there is capture both the benefits hospitals can bring — including greater reimbursements — and the benefits physicians can bring — such as efficient and cost-effective provision of care. The reality of our industry is such that a lot of our growth in the coming years will be in that type of joint venture. My own company is involved in those types of ventures and we see more of that happening. Around the country, hospitals are reaching out to surgery centers to see if there is an opportunity to partner. When these partnerships are done right, I think they make a lot of sense.
Q: How can surgery centers become a stronger force politically?
LL: I think the ASCA has done a great job at forging those relationships with legislators. When biased studies come out, I think they are taking an effective stand against them. I think we need to persist and continue educating those who are setting policy. With enough education, the day may come when policy makers look to the ASC industry to become a larger part of the solution - by providing incentives for physicians and patients to make greater use of ASCs.
Q: How can single ASCs and ASC advocates make a difference at the local level?
LL: It's a grass roots effort. The ASCA has been effective in organizing events where surgery centers invite elected representatives to visit centers. These visits go a long way in educating law makers as to the quality and cost advantages of ASCs. Having surgery center owners and managers visiting elected representatives and communicating what their needs and priorities are is also important. We need to do more of this type of activity.
More Articles on ASCs:
Dr. John Byers: 4 Priorities for ASC Physician Investors in 2012
30 New Statistics on Surgery Center Acquisition & Valuation
5 Strategies for Physician Recruitment in Competitive Markets From ASC Administrator Christy Franck
Question: What are the biggest challenges ASC industry leaders are facing right now?
Luke Lambert: In my view, hospitals have been effective in really skewing the reimbursement systems in their favor so that now everything in our health system does better if it is owned by a hospital. For example, physician practices and surgery centers can achieve higher reimbursement if they are owned by hospitals than if they are independent because hospitals have market dominance and the power to demand more from commercial payors. Hospitals are also effective at lobbying Medicare and Medicaid. If a hospital buys a surgery center and owns it, or turns it into a hospital outpatient department, on day one they can increase Medicare reimbursement close to 70 percent; with commercial payors it's not atypical to see 100 percent improvement in reimbursement.
Profits of hospital-owned facilities are dramatically higher and with the squeeze on independent ASCs, they feel they are at a comparative disadvantage and many are wondering whether they should sell to a hospital. It may be financially advantageous to sell to a hospital, but in the long run I think it will be a detriment to the healthcare system to have less competition.
Q: What steps are being taken to level this playing field?
LL: From an industry standpoint, the Ambulatory Surgery Center Association is advocating for improvement in reimbursements and expanding the list of reimbursable cases with government payors and removing regulatory barriers, to the extent possible, for physician-led projects. In many states, the department of health exists to protect hospitals against competitors. This stance against others stifles competition and limits the growth of our industry.
Q: Why is it so important for ASCs to maintain physician ownership?
LL: If you look at various markets, many hospitals could be described as local monopolies. In their local geography, a physician-owned surgery center might be the only competition and if the hospital purchases that, they own the whole market. That position of dominance doesn't lead to cost- effective care or improved quality. Major metropolitan areas tend to have more competition with multiple hospitals and physician-owned facilities.
Q: Where do opportunities exist for physician groups to partner with hospitals?
LL: There are a lot of opportunities for hospitals to partner with physicians in surgery centers. What you are trying to do there is capture both the benefits hospitals can bring — including greater reimbursements — and the benefits physicians can bring — such as efficient and cost-effective provision of care. The reality of our industry is such that a lot of our growth in the coming years will be in that type of joint venture. My own company is involved in those types of ventures and we see more of that happening. Around the country, hospitals are reaching out to surgery centers to see if there is an opportunity to partner. When these partnerships are done right, I think they make a lot of sense.
Q: How can surgery centers become a stronger force politically?
LL: I think the ASCA has done a great job at forging those relationships with legislators. When biased studies come out, I think they are taking an effective stand against them. I think we need to persist and continue educating those who are setting policy. With enough education, the day may come when policy makers look to the ASC industry to become a larger part of the solution - by providing incentives for physicians and patients to make greater use of ASCs.
Q: How can single ASCs and ASC advocates make a difference at the local level?
LL: It's a grass roots effort. The ASCA has been effective in organizing events where surgery centers invite elected representatives to visit centers. These visits go a long way in educating law makers as to the quality and cost advantages of ASCs. Having surgery center owners and managers visiting elected representatives and communicating what their needs and priorities are is also important. We need to do more of this type of activity.
More Articles on ASCs:
Dr. John Byers: 4 Priorities for ASC Physician Investors in 2012
30 New Statistics on Surgery Center Acquisition & Valuation
5 Strategies for Physician Recruitment in Competitive Markets From ASC Administrator Christy Franck