Hospitals are employing surgeons at a higher rate than ever before, and many surgery centers are competing with these hospitals for physician as well as patient volume. Here, Cliff Deveny, MD, vice president for physician practice management at Catholic Health Initiative; Jim Schafer, managing principal at Rehmann; and Kathy Tayon of Fowler White Boggs, discuss this trend and how surgery centers can position themselves for success in the future.
Q: What are the biggest challenges for ambulatory surgery centers in markets where hospitals are employing physicians?
Dr. Cliff Deveny: Surgery centers in these types of markets tend to be very dependent upon their owners driving volume, or being good at performance on customer service, costs and turnaround time. They are keeping surgeons happy. There are 6,000 ASCs in the country, driven by the motivation of physicians to have a space they can control.
Hospitals are also creating their own surgery centers with the same mindset. Sometimes they are giving surgeons the ability to joint venture with them. When this happens, ASCs now have to think about new payment systems going forward and how they will show value in the future on costs, outcomes and patient satisfaction. They need to figure out how to stay in-network as provider groups stick together.
Jim Schafer: Some states have a certificate of need requirement, and right now the ability to justify additional freestanding surgery centers has been a real challenge. In Michigan, because of the CON requirements and because hospitals have a
pretty good lock on the OR situation at this point, we are having a hard time. Five years ago, there was really rapid expansion of surgery centers, but now that has slowed.
Kathy Tayon: One of the challenges is understanding the independent surgeon's practice and showing him what it could mean from a professional experience standpoint to be part of a successful ambulatory surgery center. There can also be financial benefits if the
surgeon is interested in becoming an investor. From a business and operational perspective, the surgeon should be happy.
Q: Are there steps ASCs can take to overcome these challenges?
CD: Just being a place where physicians come to perform surgery isn't sustainable anymore. Older surgeons are going to retire and there is an issue with younger physicians being in the position to buy in. We are interested in how to partner with ASCs where there is community need as access points and lower the cost of care. We are challenged to provide care at a lower cost. Maybe now it's time for owners of the ASC to find out how they can partner with hospitals instead of competing.
Additionally, ACOs are forming everywhere across the country; typically ASCs aren't the conveners, so they have to be at the table as a participant.
JS: Even though surgery center expansion is slow, ASCs are an attractive recruitment tool for physicians who already have ownership. It's beneficial to have an ASC because the practice is more profitable and bringing on new physicians gives them the opportunity to drive more revenue.
KT: From a business perspective, demonstrate the benefits of being an owner versus being an employee in the hospital to surgeons and physicians. It can be appealing from a financial and psychological perspective. On the financial side, if the surgery center is well-run and successful the surgeon can share in that success whereas they can't with the hospital. From the psychological perspective, surgery centers in some scenarios may be more responsive than hospitals at addressing the needs of the surgeon.
Q: Some surgery centers are seeking partnerships with hospitals that are former competitors. How can they make these relationships positive?
CD: Typically ASC philosophies are a skill set hospitals can benefit from — having a dialogue on turnaround, supply costs, efficiency and labor can pave the way for a nice model of clinical co-management. They may be able to evolve into a services company that will help the hospital with those kinds of issues. They typically compete, but if there is a way to rationalize services the relationship can be mutually beneficial.
Nationally, a specialty like ophthalmology is moving out of the inpatient operating room and into more efficient care settings. The economic model is no longer efficient or appropriate from the inpatient side, so rather than building an ASC that has the same reimbursement model as one that already exists, some hospitals are willing to give this business to the surgery center with the caveat that they can't be selective about who they take. This means taking Medicare and Medicaid patients along with others who need their services.
JS: One of the things surgery centers have to keep in mind is they can demonstrate they are more cost efficient. They get paid less by insurance companies and Medicare because that's recognized. Keeping that in mind, they are attractive for hospitals that are involved in accountable care organizations. Insurers and ACOs are going to seek out the most cost-efficient solution, so the future can be very bright.
KT: The key for ASCs making a positive relationship with the hospital is demonstrating to the hospitals that the ASCs know what they are doing. They understand how to control costs and run a successful ASC. They know how to produce positive outcomes and manage data.
Q: Where should ASCs in these markets focus their attention going forward?
CD: ASCs must get away from a through-put model and move toward a care management philosophy. This might mean ASCs will be doing bundled payment in the future. We are seeing bundled payments with health systems offering packages and companies signing agreements with places like Walmart to provide care for their employees. In the future, there could be packages for professional and ambulatory services that include ASCs.
JS: ASCs should consider becoming a one-stop shop for care. If they are part of a group practice, they might want to think about adding a pharmacy. You can build a lot of activities around the surgery center. I think it's attractive to the physician because it's another investment that will drive revenue. It also makes the center a more convenient destination for the patients. It becomes a marketing tool for the physicians as they compete for patients.
KT: If you are able to develop a facility that controls costs and provides a terrific experience to the professionals that use it, and the patients have good outcomes, that is really appealing. Have a positive environment where the staff enjoys working and patients are satisfied with their care. Strive for positive patient outcomes and to hold down costs; if you are able to accomplish that and get the word out, that's a big selling point.
More Articles on Surgery Centers:
5 Key Trends for ASC Financing Opportunities
5 Common Questions on How to Effectively Market an ASC
5 Steps for ASCs to Make Big Equipment Purchases
Q: What are the biggest challenges for ambulatory surgery centers in markets where hospitals are employing physicians?
Dr. Cliff Deveny: Surgery centers in these types of markets tend to be very dependent upon their owners driving volume, or being good at performance on customer service, costs and turnaround time. They are keeping surgeons happy. There are 6,000 ASCs in the country, driven by the motivation of physicians to have a space they can control. Hospitals are also creating their own surgery centers with the same mindset. Sometimes they are giving surgeons the ability to joint venture with them. When this happens, ASCs now have to think about new payment systems going forward and how they will show value in the future on costs, outcomes and patient satisfaction. They need to figure out how to stay in-network as provider groups stick together.
Jim Schafer: Some states have a certificate of need requirement, and right now the ability to justify additional freestanding surgery centers has been a real challenge. In Michigan, because of the CON requirements and because hospitals have a
pretty good lock on the OR situation at this point, we are having a hard time. Five years ago, there was really rapid expansion of surgery centers, but now that has slowed.Kathy Tayon: One of the challenges is understanding the independent surgeon's practice and showing him what it could mean from a professional experience standpoint to be part of a successful ambulatory surgery center. There can also be financial benefits if the
surgeon is interested in becoming an investor. From a business and operational perspective, the surgeon should be happy.Q: Are there steps ASCs can take to overcome these challenges?
CD: Just being a place where physicians come to perform surgery isn't sustainable anymore. Older surgeons are going to retire and there is an issue with younger physicians being in the position to buy in. We are interested in how to partner with ASCs where there is community need as access points and lower the cost of care. We are challenged to provide care at a lower cost. Maybe now it's time for owners of the ASC to find out how they can partner with hospitals instead of competing.
Additionally, ACOs are forming everywhere across the country; typically ASCs aren't the conveners, so they have to be at the table as a participant.
JS: Even though surgery center expansion is slow, ASCs are an attractive recruitment tool for physicians who already have ownership. It's beneficial to have an ASC because the practice is more profitable and bringing on new physicians gives them the opportunity to drive more revenue.
KT: From a business perspective, demonstrate the benefits of being an owner versus being an employee in the hospital to surgeons and physicians. It can be appealing from a financial and psychological perspective. On the financial side, if the surgery center is well-run and successful the surgeon can share in that success whereas they can't with the hospital. From the psychological perspective, surgery centers in some scenarios may be more responsive than hospitals at addressing the needs of the surgeon.
Q: Some surgery centers are seeking partnerships with hospitals that are former competitors. How can they make these relationships positive?
CD: Typically ASC philosophies are a skill set hospitals can benefit from — having a dialogue on turnaround, supply costs, efficiency and labor can pave the way for a nice model of clinical co-management. They may be able to evolve into a services company that will help the hospital with those kinds of issues. They typically compete, but if there is a way to rationalize services the relationship can be mutually beneficial.
Nationally, a specialty like ophthalmology is moving out of the inpatient operating room and into more efficient care settings. The economic model is no longer efficient or appropriate from the inpatient side, so rather than building an ASC that has the same reimbursement model as one that already exists, some hospitals are willing to give this business to the surgery center with the caveat that they can't be selective about who they take. This means taking Medicare and Medicaid patients along with others who need their services.
JS: One of the things surgery centers have to keep in mind is they can demonstrate they are more cost efficient. They get paid less by insurance companies and Medicare because that's recognized. Keeping that in mind, they are attractive for hospitals that are involved in accountable care organizations. Insurers and ACOs are going to seek out the most cost-efficient solution, so the future can be very bright.
KT: The key for ASCs making a positive relationship with the hospital is demonstrating to the hospitals that the ASCs know what they are doing. They understand how to control costs and run a successful ASC. They know how to produce positive outcomes and manage data.
Q: Where should ASCs in these markets focus their attention going forward?
CD: ASCs must get away from a through-put model and move toward a care management philosophy. This might mean ASCs will be doing bundled payment in the future. We are seeing bundled payments with health systems offering packages and companies signing agreements with places like Walmart to provide care for their employees. In the future, there could be packages for professional and ambulatory services that include ASCs.
JS: ASCs should consider becoming a one-stop shop for care. If they are part of a group practice, they might want to think about adding a pharmacy. You can build a lot of activities around the surgery center. I think it's attractive to the physician because it's another investment that will drive revenue. It also makes the center a more convenient destination for the patients. It becomes a marketing tool for the physicians as they compete for patients.
KT: If you are able to develop a facility that controls costs and provides a terrific experience to the professionals that use it, and the patients have good outcomes, that is really appealing. Have a positive environment where the staff enjoys working and patients are satisfied with their care. Strive for positive patient outcomes and to hold down costs; if you are able to accomplish that and get the word out, that's a big selling point.
More Articles on Surgery Centers:
5 Key Trends for ASC Financing Opportunities
5 Common Questions on How to Effectively Market an ASC
5 Steps for ASCs to Make Big Equipment Purchases