1. Each is deathly afraid of their key admitting physicians being hired by competitors. Most independent hospitals are very reliant on their top 25 admitting physicians. Most ASCs are very reliant on their top 5-7 admitting physicians. Today, both facilities have great concerns regarding larger systems or hospitals attempting to employ their physicians. The loss of just a small number of physicians can literally be the difference between being profitable and losing money for ASCs and independent hospitals.
2. Each does not have a clear sense as to how they will fit into a changing managed care/ACO world and if they will have a real place in it. According to a 2011 survey of 200 provider organizations, 48 percent reported they were not sure how an ACO would affect their organization. Even some hospital systems that seem ideal for ACO involvement — including the Mayo Clinic, Geisinger Health System and Cleveland Clinic — have declined to participate in "pioneer" ACO programs. Smaller hospitals and surgery centers are feeling pressured to build relationships with hospital systems and payors without knowing exactly how ACO involvement will affect their business.
3. Each has limited resources to invest in capital, plant, equipment and information technology. Increasingly, independent hospitals find themselves in a situation where they have limited profits but have to make large capital investments to improve their physical plant, improve their technology or buy physician practices. ASCs similarly often have limited profits but increased need for improved technology and equipment.
4. Each is often heavily reliant on a small number of physicians or a specific service line. Experts agree that hospitals can rarely be "all things to all patients." This means many facilities rely on revenue from one or two major service lines, a strategy that can work well if the hospital has a significant market share in that specialty. However, this reliance on a small service line can endanger a hospital if physicians move elsewhere, reimbursement drops or a competitor moves in. Similarly, VMG Health reports that the average surgery center relies on its top two physicians for 32 percent of case volume.
5. Each is often strategically asking the question: Should they stay the course or sell. Independent hospitals, which are often dependent on too few physicians and experiencing rapidly changing capital needs and a changing managed care environment, are increasingly having to decide whether they should stay independent or sell to a larger system or for-profit chain. For the same reasons, ASCs are asking whether they should stay the course or sell to a hospital or national chain.
6. Each may have limited ability to withstand big changes in reimbursements and exclusions from contracts due to efforts by systems working with payors. The proposed merger between Pittsburgh-based West Penn Allegheny Health and Highmark made headlines this year, prompting questions about the future of payor-provider relationships. Without the leverage or negotiating clout of large systems, smaller hospitals and surgery centers are sometimes forced to accept inadequate reimbursement and make up for the profit loss with extreme cost-cutting. Contract negotiation is all the more important for surgery centers as historically profitable "out-of-network" centers are forced in-network or drained of case volume.
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2. Each does not have a clear sense as to how they will fit into a changing managed care/ACO world and if they will have a real place in it. According to a 2011 survey of 200 provider organizations, 48 percent reported they were not sure how an ACO would affect their organization. Even some hospital systems that seem ideal for ACO involvement — including the Mayo Clinic, Geisinger Health System and Cleveland Clinic — have declined to participate in "pioneer" ACO programs. Smaller hospitals and surgery centers are feeling pressured to build relationships with hospital systems and payors without knowing exactly how ACO involvement will affect their business.
3. Each has limited resources to invest in capital, plant, equipment and information technology. Increasingly, independent hospitals find themselves in a situation where they have limited profits but have to make large capital investments to improve their physical plant, improve their technology or buy physician practices. ASCs similarly often have limited profits but increased need for improved technology and equipment.
4. Each is often heavily reliant on a small number of physicians or a specific service line. Experts agree that hospitals can rarely be "all things to all patients." This means many facilities rely on revenue from one or two major service lines, a strategy that can work well if the hospital has a significant market share in that specialty. However, this reliance on a small service line can endanger a hospital if physicians move elsewhere, reimbursement drops or a competitor moves in. Similarly, VMG Health reports that the average surgery center relies on its top two physicians for 32 percent of case volume.
5. Each is often strategically asking the question: Should they stay the course or sell. Independent hospitals, which are often dependent on too few physicians and experiencing rapidly changing capital needs and a changing managed care environment, are increasingly having to decide whether they should stay independent or sell to a larger system or for-profit chain. For the same reasons, ASCs are asking whether they should stay the course or sell to a hospital or national chain.
6. Each may have limited ability to withstand big changes in reimbursements and exclusions from contracts due to efforts by systems working with payors. The proposed merger between Pittsburgh-based West Penn Allegheny Health and Highmark made headlines this year, prompting questions about the future of payor-provider relationships. Without the leverage or negotiating clout of large systems, smaller hospitals and surgery centers are sometimes forced to accept inadequate reimbursement and make up for the profit loss with extreme cost-cutting. Contract negotiation is all the more important for surgery centers as historically profitable "out-of-network" centers are forced in-network or drained of case volume.
Related Articles on Surgery Centers and Hospitals:
14 Achievable Goals for Surgery Centers Before Year's End
Texas Hospital in Arlington Relicensed, Reopened as Surgery Center
7 Key Points on Hospital Physician Joint Ventures in ASCs