John Goehle, MBA, CASC, CPA, chief operating officer of Ambulatory Healthcare Strategies, discusses five warning signs that suggest healthcare reform could catch your ambulatory surgery center off-guard.
1. You couldn't survive if Medicare represented a greater percentage of your volume. Healthcare reform is expected to prompt growth in government programs, meaning your volume of government-paid clients may increase as your volume of commercial-paid clients remains relatively stagnant. This change is concerning to surgery centers who have historically depended on the more lucrative reimbursement provided by commercial payors, Mr. Goehle says. "Expect a growth in governmental programs as healthcare reform progresses," he says. "This might be taking away some of our better-paying payors."
Mr. Goehle recommends looking at your revenue cycle and determining whether your surgery center could survive if you were entirely dependent on Medicare reimbursement. While this exercise is a "worst-case scenario" that will likely not affect your center, it will help you determine how your reimbursement will be affected by Medicare changes. The exercise will also help you determine whether your surgery center could survive under new government programs using a rate similar to Medicare. "You can start analyzing your organization and looking at the mix of patients and the types of procedures you perform," Mr. Goehle says. "You might want to find specialties that are making a little bit more money and find ways to get rid of excess costs."
2. You are unprepared to take on Medicaid patients. Healthcare reform is set up in part to assist low-income patients in attaining health insurance, meaning Medicaid populations are expected to increase. Historically, many ASCs have opted to accept Medicare patients and commercial patients as the bulk of their volume rather than Medicaid patients because of reimbursement issues. However, Mr. Goehle predicts that ASCs will be expected to "step up" and accept Medicaid patients as hospitals are burdened with thousands of additional beneficiaries seeking care.
"We'll be expected to step up because otherwise, hospitals will continue to fault [ASCs] for taking the cream off the top," he says. In recent months, the ASC industry has seen a wave of criticism from hospitals for "cherry-picking" cases. The Hospital and Healthsystem Association of Pennsylvania asked Congress to target reimbursement cuts toward ASCs, criticizing the business model by pointing out the low percentage of reimbursement collected from Medicaid.
Mr. Goehle says while Medicaid is not historically a surgery center's favorite payor, some centers are able to accept a high percentage of Medicaid volume successfully. He says the surgery centers that accept Medicaid patients may have to cut costs significantly to stay profitable, but it is possible. "We expect that the owners of surgery centers are looking for a massive profit, but sometimes it is just about breaking even and providing care," he says. "If the doctors want to work in that more conducive environment, a high volume of Medicaid can work."
3. You have made little progress toward reporting quality outcomes. Mr. Goehle expects quality reporting to be included in November's release of Medicare requirements, with surgery centers receiving penalties to Medicare rates if they don't report quality outcomes data by 2014. "Initially we just have to report, and later on, we have to be prepared to suffer the consequences if our quality doesn't meet the standard," he says. As with many regulations through healthcare reform, the challenge with preparing for quality reporting is that no one is sure what the requirements will look like. Surgery centers can expect Medicare to require quality reporting around outcomes, patient population and even cost, meaning surgery centers without a robust reporting system should start thinking about investment immediately.
Surgery center leaders can also contribute to community-based data reporting by reporting outcomes to local databases, Mr. Goehle says. "We're already seeing initiatives in Rochester, N.Y., where our physicians and physician offices are tying into community-wide databases about patient populations," he says. He says hesitance on the part of surgery center leaders is understandable — quality reporting regulations have been delayed before, and they could be delayed again. Despite the uncertainty, he says ASC leaders should be prepared to receive instructions for reporting in November and implement by January. "It's going to require computer modifications, so a lot of people are wondering, 'How are we going to do this in time?'" he says. "There is some expectation that this will slow down our reimbursement."
4. You haven't talked about ACOs. Mr. Goehle says in all likelihood, not all surgery centers will have to worry about accountable care organizations. The ACO model is designed to target large hospital systems such as the Cleveland Clinic and Geisinger Health System — an interesting situation since both health systems have said they may not participate. Unless your ASC is partnered with a hospital through a joint venture, or your physicians plan to participate in an ACO, you may not be affected, he says.
However, ASCs should still keep an eye on the discussion happening in their communities to determine the potential impact. "A lot of us are wondering if this is really going to happen, because healthcare reform back in the '90s didn't happen the way they thought it was going to happen," he says. "Some sort of reform will happen, but whether it will be under regulator control or whether it will be in the private sector [remains to be seen]."
5. You don't know what your physicians are thinking about the future. Surgery center physicians are the lifeblood of any ASC, and the next decade presents several dramatic changes that could jeopardize a center's core group of physicians. The Texas Medical Association recently reported that half of Texas physicians said they would "opt out of Medicare" if Congress enacts deep reimbursement cuts — an issue for surgery centers with a large Medicare population. Physicians are increasingly seeking hospital employment, and the advent of ACOs means that some physicians are viewing hospital partnership as a survival strategy.
Mr. Goehle recommends talking to your physicians immediately about all these issues. In some cases, your physicians will say they have no intention of leaving the ASC; in other cases, you may find that half your staff is considering employment or retirement in the face of reform regulations. Make sure you have these conversations while you still have time to recruit new partners and ensure steady case volume.
Learn more about Ambulatory Healthcare Strategies.
Related Articles on the Future of ASCs:
What Surgery Centers Should Watch For in 2012: 12 Issues Facing ASCs
Pennsylvania Hospitals Ask Congress to Take Reimbursement Cuts to Surgery Centers
7 Observations on the Future of Ophthalmic ASCs
1. You couldn't survive if Medicare represented a greater percentage of your volume. Healthcare reform is expected to prompt growth in government programs, meaning your volume of government-paid clients may increase as your volume of commercial-paid clients remains relatively stagnant. This change is concerning to surgery centers who have historically depended on the more lucrative reimbursement provided by commercial payors, Mr. Goehle says. "Expect a growth in governmental programs as healthcare reform progresses," he says. "This might be taking away some of our better-paying payors."
Mr. Goehle recommends looking at your revenue cycle and determining whether your surgery center could survive if you were entirely dependent on Medicare reimbursement. While this exercise is a "worst-case scenario" that will likely not affect your center, it will help you determine how your reimbursement will be affected by Medicare changes. The exercise will also help you determine whether your surgery center could survive under new government programs using a rate similar to Medicare. "You can start analyzing your organization and looking at the mix of patients and the types of procedures you perform," Mr. Goehle says. "You might want to find specialties that are making a little bit more money and find ways to get rid of excess costs."
2. You are unprepared to take on Medicaid patients. Healthcare reform is set up in part to assist low-income patients in attaining health insurance, meaning Medicaid populations are expected to increase. Historically, many ASCs have opted to accept Medicare patients and commercial patients as the bulk of their volume rather than Medicaid patients because of reimbursement issues. However, Mr. Goehle predicts that ASCs will be expected to "step up" and accept Medicaid patients as hospitals are burdened with thousands of additional beneficiaries seeking care.
"We'll be expected to step up because otherwise, hospitals will continue to fault [ASCs] for taking the cream off the top," he says. In recent months, the ASC industry has seen a wave of criticism from hospitals for "cherry-picking" cases. The Hospital and Healthsystem Association of Pennsylvania asked Congress to target reimbursement cuts toward ASCs, criticizing the business model by pointing out the low percentage of reimbursement collected from Medicaid.
Mr. Goehle says while Medicaid is not historically a surgery center's favorite payor, some centers are able to accept a high percentage of Medicaid volume successfully. He says the surgery centers that accept Medicaid patients may have to cut costs significantly to stay profitable, but it is possible. "We expect that the owners of surgery centers are looking for a massive profit, but sometimes it is just about breaking even and providing care," he says. "If the doctors want to work in that more conducive environment, a high volume of Medicaid can work."
3. You have made little progress toward reporting quality outcomes. Mr. Goehle expects quality reporting to be included in November's release of Medicare requirements, with surgery centers receiving penalties to Medicare rates if they don't report quality outcomes data by 2014. "Initially we just have to report, and later on, we have to be prepared to suffer the consequences if our quality doesn't meet the standard," he says. As with many regulations through healthcare reform, the challenge with preparing for quality reporting is that no one is sure what the requirements will look like. Surgery centers can expect Medicare to require quality reporting around outcomes, patient population and even cost, meaning surgery centers without a robust reporting system should start thinking about investment immediately.
Surgery center leaders can also contribute to community-based data reporting by reporting outcomes to local databases, Mr. Goehle says. "We're already seeing initiatives in Rochester, N.Y., where our physicians and physician offices are tying into community-wide databases about patient populations," he says. He says hesitance on the part of surgery center leaders is understandable — quality reporting regulations have been delayed before, and they could be delayed again. Despite the uncertainty, he says ASC leaders should be prepared to receive instructions for reporting in November and implement by January. "It's going to require computer modifications, so a lot of people are wondering, 'How are we going to do this in time?'" he says. "There is some expectation that this will slow down our reimbursement."
4. You haven't talked about ACOs. Mr. Goehle says in all likelihood, not all surgery centers will have to worry about accountable care organizations. The ACO model is designed to target large hospital systems such as the Cleveland Clinic and Geisinger Health System — an interesting situation since both health systems have said they may not participate. Unless your ASC is partnered with a hospital through a joint venture, or your physicians plan to participate in an ACO, you may not be affected, he says.
However, ASCs should still keep an eye on the discussion happening in their communities to determine the potential impact. "A lot of us are wondering if this is really going to happen, because healthcare reform back in the '90s didn't happen the way they thought it was going to happen," he says. "Some sort of reform will happen, but whether it will be under regulator control or whether it will be in the private sector [remains to be seen]."
5. You don't know what your physicians are thinking about the future. Surgery center physicians are the lifeblood of any ASC, and the next decade presents several dramatic changes that could jeopardize a center's core group of physicians. The Texas Medical Association recently reported that half of Texas physicians said they would "opt out of Medicare" if Congress enacts deep reimbursement cuts — an issue for surgery centers with a large Medicare population. Physicians are increasingly seeking hospital employment, and the advent of ACOs means that some physicians are viewing hospital partnership as a survival strategy.
Mr. Goehle recommends talking to your physicians immediately about all these issues. In some cases, your physicians will say they have no intention of leaving the ASC; in other cases, you may find that half your staff is considering employment or retirement in the face of reform regulations. Make sure you have these conversations while you still have time to recruit new partners and ensure steady case volume.
Learn more about Ambulatory Healthcare Strategies.
Related Articles on the Future of ASCs:
What Surgery Centers Should Watch For in 2012: 12 Issues Facing ASCs
Pennsylvania Hospitals Ask Congress to Take Reimbursement Cuts to Surgery Centers
7 Observations on the Future of Ophthalmic ASCs