Hospitals have two ways to collaborate with physicians for outpatient surgery centers, says Matt Searles, a managing partner at Merritt Healthcare in Somers, N.Y. They can retain their existing HOPD or build a new one, authorizing physicians to manage it under a co-management agreement, or they can sign a joint venture with physicians for a free-standing ambulatory surgery center. Here Mr. Searles presents four issues for hospitals collaborating with physicians on surgery centers.
1. Case volume often decides the choice. If the hospital facility still controls most of the cases in the area for a particular specialty, it should probably remain an HOPD. "Reimbursement would fall dramatically if the hospital moves from HOPD to ASC," Mr. Searles says. In moving from full ownership to a 50-50 joint venture with physicians in an ASC, the hospital's reimbursement would fall much more than 50 percent, because a surgery center is generally paid 40-50 percent less than an HOPD. However, converting to a joint venture ASC would make sense for the hospital if it has already lost most cases to the physicians' independent ASC. In joint venturing with those physicians, the hospital would be recognizing that it could never win back those cases. The hospital would move its few remaining cases in that specialty to the ASC. "It is not efficient for the HOPD to do only a few cases in one specialty," he says.
2. Rely on outside experts. Rather than rely on its own personnel to plan the new arrangement, the hospital should find outside experts who are very familiar with such deals. "Since surgery center arrangements with physicians are substantially different from arrangements within the organization, the hospital needs seasoned experts to make sure it will work," Mr. Searles says. "Properly structured financial and legal agreements are critical." Attorneys with a special focus on ASC issues are needed to help draft agreements with physicians that will withstand anti-kickback and other challenges. Similarly, experts immersed in surgery center operations are critical because HOPDs are often inefficiently run. "The cost of a struggling operation is too high and is unsustainable in today’s healthcare marketplace," he warns.
3. Collaboration is key. In both co-management agreements and joint ventures, collaboration between physicians and the hospital is essential. All the talents and expertise that each side brings to the table could be hampered by an inability to agree. For example, the hospital team may expect to run the show while the physicians may be used to singlehandedly operating the ASC. "The answer is to listen to your partners and respond to what they have to say," Mr. Searles says. "Collaborate and rule by consensus."
4. Rely on benchmarks. "The hallmark of a successful ASC is continual improvement and high-quality outcomes," Mr. Searles says. "This can only be achieved by actively seeking out best practices and implementing them." Look for benchmarks of various surgery center operations, focusing on ones measuring infection rates, OR turnover time and start-times for cases. Mr. Searles likens benchmarking to playing team sports in high school. When players who think they're the best have to confront a better team, they have to face up to their own shortcomings. Inefficient HOPDs may not be able to change some problems, such as inserting emergent cases into the schedule, but there are many other factors they do have control over and can improve upon.
Learn more about Merritt Healthcare.
1. Case volume often decides the choice. If the hospital facility still controls most of the cases in the area for a particular specialty, it should probably remain an HOPD. "Reimbursement would fall dramatically if the hospital moves from HOPD to ASC," Mr. Searles says. In moving from full ownership to a 50-50 joint venture with physicians in an ASC, the hospital's reimbursement would fall much more than 50 percent, because a surgery center is generally paid 40-50 percent less than an HOPD. However, converting to a joint venture ASC would make sense for the hospital if it has already lost most cases to the physicians' independent ASC. In joint venturing with those physicians, the hospital would be recognizing that it could never win back those cases. The hospital would move its few remaining cases in that specialty to the ASC. "It is not efficient for the HOPD to do only a few cases in one specialty," he says.
2. Rely on outside experts. Rather than rely on its own personnel to plan the new arrangement, the hospital should find outside experts who are very familiar with such deals. "Since surgery center arrangements with physicians are substantially different from arrangements within the organization, the hospital needs seasoned experts to make sure it will work," Mr. Searles says. "Properly structured financial and legal agreements are critical." Attorneys with a special focus on ASC issues are needed to help draft agreements with physicians that will withstand anti-kickback and other challenges. Similarly, experts immersed in surgery center operations are critical because HOPDs are often inefficiently run. "The cost of a struggling operation is too high and is unsustainable in today’s healthcare marketplace," he warns.
3. Collaboration is key. In both co-management agreements and joint ventures, collaboration between physicians and the hospital is essential. All the talents and expertise that each side brings to the table could be hampered by an inability to agree. For example, the hospital team may expect to run the show while the physicians may be used to singlehandedly operating the ASC. "The answer is to listen to your partners and respond to what they have to say," Mr. Searles says. "Collaborate and rule by consensus."
4. Rely on benchmarks. "The hallmark of a successful ASC is continual improvement and high-quality outcomes," Mr. Searles says. "This can only be achieved by actively seeking out best practices and implementing them." Look for benchmarks of various surgery center operations, focusing on ones measuring infection rates, OR turnover time and start-times for cases. Mr. Searles likens benchmarking to playing team sports in high school. When players who think they're the best have to confront a better team, they have to face up to their own shortcomings. Inefficient HOPDs may not be able to change some problems, such as inserting emergent cases into the schedule, but there are many other factors they do have control over and can improve upon.
Learn more about Merritt Healthcare.