The pendulum has swung away from independent medicine, but will the healthcare industry allow it to swing back in the coming years?
Chairman and CEO of Deerfield, Ill.-based Surgical Care Affiliates, Andrew Hayek, discussed the state of the ASC industry during a keynote presentation at Becker's 14th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference + The Future of Spine. SCA strategically partners with health plans, medical groups and health systems across the country to develop and optimize surgical centers. SCA operates nearly 200 facilities in 35 states, involving thousands of surgeons.
"We have reasons for hope that the independent practice of medicine will strengthen in the coming years," said Mr. Hayek.
The current healthcare landscape does not bode favorably for independent medicine, as Medicare paved the way for tough reimbursements in many specialties, with many commercial payers following Medicare's direction.
"The general mindset has been, we want to lower medical costs and we're going to focus on unit price, and we're going to negotiate as hard as we can on everyone," explained Mr. Hayek. As prices decreased, employment increased.
Mr. Hayek continued to illustrate the changing healthcare environment, noting health plans and the government are realizing the greatest opportunity lies within surgery site of service. Surgery accounts for 30 percent of overall healthcare costs
"If you take surgery and you disaggregate, you find two-thirds of all money spent on surgery is either already outpatient or can and will soon be outpatient," said Mr. Hayek. Delving into the number of surgeries already outpatient or soon to be outpatient, Mr. Hayek added two-thirds of those surgeries are occurring in a higher cost setting, such as an acute care hospital.
With a $45 per member per month addressable commercial spend, the aggregate number totals more than a $50 billion inefficiency in healthcare. The site of service shift in surgery presents a massive opportunity within healthcare to enhance cost and quality.
"Shifting surgery to the surgery center context is consistent with what the Institute for Healthcare Improvement calls the Triple Aim, which is quite simply, goals of improving our healthcare system should be three-fold — improving the patient experience, improving the quality of care and reducing costs," said Mr. Hayek.
5 reasons the future holds hope for independence
"We sense, in different forms and in different breeds of intensity, is this pendulum swinging back, and that more forces in healthcare are aligned and recognizing that the strongest pathway to improve quality, improve patient experience, lower cost is to encourage this migration to a higher quality, lower cost setting," said Mr. Hayek.
1. Hospital employment of specialists is expensive. Many health systems are losing money on employment. Mr. Hayek said hospitals spend about $100,000 to recruit new physicians and experience an additional $150,000 annually in average losses for each employed physician.
"We look at the strategy of employment and in many cases, this does not appear to be sustainable," said Mr. Hayek.
2. Government supports shifting care to surgery centers. The Officer of the Inspector General published a report revealing Medicare could save $12 billion over five years if care and pricing shifted to the surgery center levels.
Legislatively, the Budget Act forbids acute care hospitals from acquiring ASCs and increasing its rates to hospital rates. "This is an important signal that our legislature and executive branch are also taking note of the efficiency of surgery centers said Mr. Hayek.
The government also realizes the inflationary consequences of employment as care is migrated back into hospitals. "This contributes to increasing healthcare costs," said Mr. Hayek.
3. Health insurers are embracing cost-efficient strategies. Mr. Hayek emphasized unit price heavily burdens independent physicians. So, more independent physicians turn to hospital employment to escape the tough price negotiations. In turn, the migration of care trends back to hospitals.
"The goal isn't to control unit price, in and of itself. The goal should be to affect total healthcare spending," said Mr. Hayek. If independent surgeons receive sufficient reimbursement, the industry will see a migration of care into the ASC setting, thus reducing total costs.
"It may, in fact, be worth paying a little bit more, or a lot more, to independent surgeons, if the end result is a migration into the ASC setting," said Mr. Hayek.
For example, SCA worked with Blue Cross of Idaho to establish a clinical network structure in which surgeons qualify based on clinical outcomes and cost efficiency. If surgeons met those criteria, they received a higher professional fee. The network now includes 72 surgeons and has generated $8 million in savings. Blue Cross of Idaho would note for every dollar invested there is a $3 return, said Mr. Hayek.
"This is an example of investing more dollars on behalf of the health plans to encourage this shift to a higher quality, lower cost setting," said Mr. Hayek.
4. Progressive health systems are working with independent surgeons. Some health systems are reconsidering their roles when collaborating with independent surgeons to protect independent medicine.
One of Chicago-based Advocate Health System's core strategies involves migrating cases to the ASC setting. The health system is pushing for contracts that reflect this cost-saving, high quality movement.
"This is certainly not a ubiquitous example, but there certainly are some progressive health systems that truly want specialists and surgeons to remain independent and know that the surgery center environment is the most efficient setting of care," said Mr. Hayek.
5. Independent multispecialty groups are holding on to independence. More independent physicians are holding on to their independence, noticing opportunity to take Medicare Advantage risk or work with commercial payers.
Recent articles:
7 things for ASC leaders to know for Thursday — June 16, 2016
Compensation management: 4 tips to develop an integrated model for enterprise-wide efficiency
Deb Yoder on the risks & considerations for developing a spine program at an ASC