Hospitals and health systems are the giants of healthcare, the giants that wield the greatest clout with payers. But, the scales are beginning to tip; quality is beginning to take precedence over sheer size and market control. As this monumental shift takes place, the relationship between payers and providers inevitably follows. Can ambulatory surgery centers rewrite their relationship with payers?
Higher acuity cases
It has taken years to convince payers that higher acuity cases can be successfully, and profitably, performed at ASCs. The fruits of those efforts are truly coming to bear now as Medicare has approved a number of new spine codes for the list of ASC payable procedures and more commercial payers are expressing interest in outpatient total joints and more. "We are seeing things like vascular, spine and cardiology," says Joseph Zasa, managing partner of ASD Management. "Things like pacemakers have been a cost drain on payers and the smart ones understand that ASCs are an option."ASCs may still need to approach payers and fight the uphill battle of carve outs, but the argument of cost and quality no longer falls on deaf ears.
Patient Protection and Affordable Care Act
Every healthcare provider, small or large, has felt the effects of the PPACA, whether through a wave of change or simple ripple. 'The way
payer and ASC relationships are changing is not necessarily a function of the ACA, but quality and integration has an effect," says John Newman, Senior Vice President and General Counsel of Constitution Surgery Centers. The broad changes the PPACA aims to make in the way healthcare is delivered forces providers and payers to reassess their role in the overall system. "The whole focus on quality coupled with efficiency dictates that a lot of surgeries be performed in an ASC," says Mr. Newman.
Consolidation and joint ventures
Driven in part by healthcare reform, as well as natural industry maturation, consolidation has been on everyone's mind in healthcare. "If history is any indicator, the one thing we have seen over the last 15 to 20 years is consolidation on all sides, amongst payers, ASCs and hospitals," says Andrea Woodell, Director of Managed Care with Regent Surgical Health. "I would expect consolidation to continue in the same manner, rewarding larger hospital systems and payers with the greatest market share. A recent example of payer consolidation is Cigna Health's acquisition of QualCare Inc."
Consolidation by its very nature leads to fewer players in the market, and therefore a shift in the payer-provider dynamic. Smart hospitals are looking to the outpatient setting to engage physicians and augment revenue. For those ASCs that become part of a larger system or simply partner up with a hospital they will likely realize a change in payer interaction. As a part of a larger provider, joint venture ASCs often reap higher reimbursements through leverage applied by hospital partners.
ACOs and narrow networks
Accountable care organizations continue to proliferate across the country, with mixed success, but the model has yet to give any indication of falling by the wayside. Payers, health systems and hospitals are actively interested in participating. "As payers are selecting ACOs, there 
is an opportunity to partner with ASCs. The question is: "How do you bring the ASC to the table to talk with that ACO and payer?" says Jennifer Helbock, MHA, Senior Director of Strategy and Payer Engagement with Surgical Care Affiliates (SCA).
When ACOs and payers are discussing ways to better manage the total cost of care of a population while looking for opportunities to provide high quality, ASCs quickly become the solution. Members, employers, ACOs, and payers all benefit from such a scenario as more surgical procedures shift to the ASC setting with lower out of pocket costs to members, she says. It is a matter of maneuvering high quality and efficient ASCs into the right market position to participate with the health systems, payers and ACOs. This could happen through joint ventures, payer, physician and health system partnerships, or contractual relationships. Progressive and innovative ASCs absolutely can push to join the ACO conversation and payers under pressure to reduce healthcare costs will respond favorably. SCA has experienced success in this through joint ventures with medical groups such as Monarch HealthCare (Optum) and DaVita Healthcare Partners.
Bundled payments
Medicare is on track to leave behind much of fee-for-service reimbursement for alternative models of payment. Bundled payments have yet to become the norm, but hold a great deal of promise as such a model. ASCs have already begun to form this type of relationship with payers, often for orthopedic procedures like total joint replacement or laparoscopic procedures. Bundled payments incentivize quality and contain costs creating a predictable price point for payers. "We see an opportunity to participate in the new innovative payment models and increase participation in the payer's high performing narrow networks and new product offerings," says Ms. Helbock.
ASCs are still small players in the market. The transition from accepting payer defined terms and fighting for adequate reimbursement to true partnership will be gradual, but there is significant opportunity for the ASC leaders willing to shoulder risk and push for a different dynamic. "There will be greater depth to these relationships. In the past this was a purely contractual relationship, but is quickly becoming more strategic," says Ms. Helbock.