Turf wars between ambulatory surgery centers and hospitals may not be as common as they once were, but healthcare is only becoming more crowded. It is important for ASC leaders to understand what space hospitals occupy in their market, whether they are direct competition or likely partners.
Identifying sources of rivalry
The source of any significant ASC and hospital rivalry will come down to access resources. The main resources the two provider types will battle over are:
• Patients
• Physicians
• Payer contracts
"You have to look at what the hospitals are offering," says John Newman, Senior Vice President and General Counsel of Constitution Surgery Centers. "Do the hospitals have HOPDs offering the same services? Are you competing for the same surgeons? Do hospitals in your market offer opportunities for collaboration in dealing with payers or are they excluding you from networks and opportunities?"
Though hospitals are without a doubt the larger market force, a rivalry by no means spells the death of an ASC. "In the competition for patients, ASCs have some built in advantages in accessibility, quality and patient satisfaction," says Mr. Newman. The quality argument can be presented to payers coupled with the fact that reimbursement is dramatically lower for ASCs than HOPDs. For physicians, the argument centers on the attraction of not only higher quality and patient satisfaction, but also efficiency, productivity and a robust financial opportunity. The key is to present all of the inherent benefits of an ASC in a compelling, data-driven manner. "Being better isn't enough. You have to be able to quantify and effectively present your story," says Mr. Newman.
Transforming rivalry into partnership
While many hospitals have a history of ASC rivalry, healthcare is changing and the savvy hospitals are reevaluating the benefits of working with ASCs rather than against them in every instance. If ASC leaders are interested in convincing a hospital that competition is not in the best interest of either provider, capacity and physician alignment are two of the most effective tactics. "You can position your center as a great physician alignment tool," says Mr. Newman. "Physicians will have a happy home for outpatient procedures and can bring more lucrative inpatient cases to the hospital." If a hospital lacks capacity, ASCs can alleviate this constraint, while promoting quality.
Picking a partner
In many markets, hospitals may not be interested in enmity at all, but rather actively seek ASC partnerships. ASCs are a key to alignment with important surgeons. "ASCs need to consider the benefits they bring to the table as hospital partners and fully consider the potential collaborations they can facilitate across the spectrum of health care delivery. In the world of clinical integration, there also will be additional opportunities to work with hospitals," says Mr. Newman. "Hospitals participating in risk-based arrangements will want ASCs in their portfolios."
While having readily available hospital partners for the ASC seeking that relationship can be a great benefit, the wrong hospital partner can be just as a problematic as a competing hospital. ASC leaders must carefully vet any potential hospital partners. Is the hospital aligned with the same payers? Can the hospital provide improved reimbursement rates? "A hospital partnership is a long-term marriage and any potential partner should not just be viewed as a source of capital infusion, but must be ready to address all the strategic issues before an ASC," says Mr. Newman.