The last several years have been a struggle for ambulatory surgery centers, which are not only facing declining reimbursements for patient care but are also faced with many patient safety challenges, such as the revised 2009 CMS conditions for coverage and increased scrutiny over infection control practices. This year is no different, with the economy still on shaky ground and more healthcare reforms taking effect this year. John Wipfler, CEO of OA Surgery Center in Portland, Maine, and Linda Ruterbories, nurse practitioner and director of surgical services, share eight ways ASCs can still stay ahead in 2011.
1. Look at issues affecting your ASC locally and nationally. Since the healthcare industry and the federal government have intensified efforts to control healthcare costs, ASCs must keep a close watch on the issues affecting outpatient surgery — not only on a national level but on a local level as well. Mr. Wipfler says ASCs will want to start with the big picture focus on regulations and initiatives coming out from Capitol Hill and then narrow that focus to initiatives taking place in the immediate community.
"This is an era of finding value in healthcare, which will be determined by the quality-to-cost ratio," he says. "None of us know where the national healthcare reform will end up, but there is a lot of activity going on even at the local level which can affect us right now."
Mr. Wipfler points to one example occurring in his state. "In Maine, there are currently many employers taking on new initiatives to find ways to reduce what they pay for healthcare or find better value for healthcare, including medical tourism; these are opportunities for ASCs if you are paying attention," he says.
2. Contract directly with employers and businesses. The healthcare climate is stiff with competition, so ASCs should do everything in their power to maintain the upper hand in the ASC market. Mr. Wipfler says the OA Centers for Orthopaedics' surgery center is currently working with various employers in his community on direct contracting for orthopedic needs.
"We are having conversations with employers to help them address their orthopedic needs, including both workers' compensation and employees covered by routine healthcare, to help them avoid more expensive costs with healthcare payors," Mr. Wipfler says.
Working directly with employers and businesses ensures a steady stream of volume that is not diluted by cases lost to competitors.
3. Prepare for accountable care organizations. The federal government has yet to release the rules and regulations for ACOs, which means ASCs need to be paying attention in anticipation for ACO development. Mr. Wipfler says ACOs will pose both a challenge and an opportunity for ASCs since patient volumes may be controlled at the primary-care level. Specifically, ASCs have to be creative in thinking about and crafting solutions to thrive in this fluctuating and new environment.
"ACOs are like a newly dressed-up managed care system, and for specialists, such a set-up could be a problem," he says. "One thing we are doing is talking to other specialty practices about how, as specialists, we can come together and create an IPA to be able to work more collaboratively and directly with ACOs. ACOs will be looking to reduce costs, and ASCs have a competitive advantage in that arena compared to hospitals."
4. Consider various transaction opportunities. Many centers are already looking to take on hospital partners in order to maintain financial health during a turbulent economic time. However, ASCs may want to consider such transactional opportunities now more than ever.
"ASCs will want to see whether or not it's in their best interest to remain independent or become a part of a hospital system," Mr. Wipfler says. "There is a huge trend in physicians becoming hospital employees, particularly in Maine, where almost 70 percent of physicians are employed."
Mr. Wipfler says the state of Maine sees a higher percentage of hospital-employed physicians because of the nature of the community and competing payors. "The national trend [of hospital-employed physicians] is somewhere around 50 percent, but it's higher here because northern Maine is extremely rural and the payor mix is not great," he says. He adds that in addition to a high Medicaid population, there is a challenge in recruiting physicians and it has become virtually impossible for physicians in northern Maine to remain independent.
5. Focus on payor contracting. It may be time for ASCs to start getting creative with the business relationships created with healthcare payors. Mr. Wipfler says ASCs who look at opportunities for creative contracts with payors will want to make sure that all parties involved feel they are getting a good deal. The key to that: incentives.
"Creative contracting may mean trying to create incentives to steer patients to surgery centers instead of the hospital for procedures," Mr. Wipfler says. "Surgery centers are paid much less than hospitals for the same orthopedic procedures, so for private payors, why not create monetary incentives to make patients more likely to go to ASCs? That way, patients save money and the insurers save money."
6. Focus on creative vendor relationships. Similarly, ASCs should consider how to make creative business relationships work for both the center and vendors. One way OA Surgery Center has achieved successful vendor relations is by promising their business and sharing costs for delivering supplies.
"If your center is having inventory delivered three days a week, paying for freight expenses can really add up," Ms. Ruterbories says. "If you can get vendors to share the expenses for shipping, it can help tremendously. That way, the vendor gets the ASC's business and the center doesn't have to pay for all freight expenses."
Another way OA Surgery Center is making vendor relationships work for them is through supply storage. Overstocking shelves with inventory is a surefire way to tie up those precious dollars. Ms. Ruterbories says she entered into a working agreement with vendors, who agreed to house supplies at a nearby warehouse so the center would not have to pay expenses for overnight delivery of supplies.
"The vendors promise to have a certain level of inventory stored away in those warehouses, so in case we have any weather-related or back-order problems, the center avoids the risk of being low on supplies needed to run the facility," he says. "On the other hand, that also means we are not paying double the cost to have extra inventory."
7. Stay guarded in vendor relationships. As important as it is to have strong and creative relationships with vendors, it's equally important for ASCs to remain a safe distance from them. Ms. Ruterbories says the surgery center doesn't allow vendor representatives free access to the facility. Doing so allows the representatives to roam from physician to physician, which can create problems in the long run.
"Vendors sometimes just wander into clinics or ASCs and ask physicians to try a new plate or screw. Before you know it, that physician is asking the director to purchase that new plate or screw," Ms. Ruterbories says. "We want to control any unfettered purchasing."
8. Assess opportunities for increased efficiency through health IT. It's no secret that health IT has the potential to make physician practices and ASCs more efficient, which could lead to increased savings and improved patient care. However, Mr. Wipfler says ASCs must stay keen on the cost associated with deploying health IT and carefully assess how health IT fits individual organizations.
"It's important for ASCs to take advantage of federal incentives but understand the cost of implementing electronic medical records," he says. "For high-volume ASCs, such as orthopedic-driven ASCs, practitioners have to pay attention to the potential loss of productivity."
That means taking the time to do the research and choose a system that fits both the physicians and employees, Ms. Ruterbories says. "One of the big issues we carefully assessed [before choosing a system] was if we had to change our patient flow process to match the EMR system it was not going to work in our practice. On the other hand, if the system was flexible enough our patient flow would not have to change at all which leads to a very successful implementation."
Learn more about OA Surgery Center.
1. Look at issues affecting your ASC locally and nationally. Since the healthcare industry and the federal government have intensified efforts to control healthcare costs, ASCs must keep a close watch on the issues affecting outpatient surgery — not only on a national level but on a local level as well. Mr. Wipfler says ASCs will want to start with the big picture focus on regulations and initiatives coming out from Capitol Hill and then narrow that focus to initiatives taking place in the immediate community.
"This is an era of finding value in healthcare, which will be determined by the quality-to-cost ratio," he says. "None of us know where the national healthcare reform will end up, but there is a lot of activity going on even at the local level which can affect us right now."
Mr. Wipfler points to one example occurring in his state. "In Maine, there are currently many employers taking on new initiatives to find ways to reduce what they pay for healthcare or find better value for healthcare, including medical tourism; these are opportunities for ASCs if you are paying attention," he says.
2. Contract directly with employers and businesses. The healthcare climate is stiff with competition, so ASCs should do everything in their power to maintain the upper hand in the ASC market. Mr. Wipfler says the OA Centers for Orthopaedics' surgery center is currently working with various employers in his community on direct contracting for orthopedic needs.
"We are having conversations with employers to help them address their orthopedic needs, including both workers' compensation and employees covered by routine healthcare, to help them avoid more expensive costs with healthcare payors," Mr. Wipfler says.
Working directly with employers and businesses ensures a steady stream of volume that is not diluted by cases lost to competitors.
3. Prepare for accountable care organizations. The federal government has yet to release the rules and regulations for ACOs, which means ASCs need to be paying attention in anticipation for ACO development. Mr. Wipfler says ACOs will pose both a challenge and an opportunity for ASCs since patient volumes may be controlled at the primary-care level. Specifically, ASCs have to be creative in thinking about and crafting solutions to thrive in this fluctuating and new environment.
"ACOs are like a newly dressed-up managed care system, and for specialists, such a set-up could be a problem," he says. "One thing we are doing is talking to other specialty practices about how, as specialists, we can come together and create an IPA to be able to work more collaboratively and directly with ACOs. ACOs will be looking to reduce costs, and ASCs have a competitive advantage in that arena compared to hospitals."
4. Consider various transaction opportunities. Many centers are already looking to take on hospital partners in order to maintain financial health during a turbulent economic time. However, ASCs may want to consider such transactional opportunities now more than ever.
"ASCs will want to see whether or not it's in their best interest to remain independent or become a part of a hospital system," Mr. Wipfler says. "There is a huge trend in physicians becoming hospital employees, particularly in Maine, where almost 70 percent of physicians are employed."
Mr. Wipfler says the state of Maine sees a higher percentage of hospital-employed physicians because of the nature of the community and competing payors. "The national trend [of hospital-employed physicians] is somewhere around 50 percent, but it's higher here because northern Maine is extremely rural and the payor mix is not great," he says. He adds that in addition to a high Medicaid population, there is a challenge in recruiting physicians and it has become virtually impossible for physicians in northern Maine to remain independent.
5. Focus on payor contracting. It may be time for ASCs to start getting creative with the business relationships created with healthcare payors. Mr. Wipfler says ASCs who look at opportunities for creative contracts with payors will want to make sure that all parties involved feel they are getting a good deal. The key to that: incentives.
"Creative contracting may mean trying to create incentives to steer patients to surgery centers instead of the hospital for procedures," Mr. Wipfler says. "Surgery centers are paid much less than hospitals for the same orthopedic procedures, so for private payors, why not create monetary incentives to make patients more likely to go to ASCs? That way, patients save money and the insurers save money."
6. Focus on creative vendor relationships. Similarly, ASCs should consider how to make creative business relationships work for both the center and vendors. One way OA Surgery Center has achieved successful vendor relations is by promising their business and sharing costs for delivering supplies.
"If your center is having inventory delivered three days a week, paying for freight expenses can really add up," Ms. Ruterbories says. "If you can get vendors to share the expenses for shipping, it can help tremendously. That way, the vendor gets the ASC's business and the center doesn't have to pay for all freight expenses."
Another way OA Surgery Center is making vendor relationships work for them is through supply storage. Overstocking shelves with inventory is a surefire way to tie up those precious dollars. Ms. Ruterbories says she entered into a working agreement with vendors, who agreed to house supplies at a nearby warehouse so the center would not have to pay expenses for overnight delivery of supplies.
"The vendors promise to have a certain level of inventory stored away in those warehouses, so in case we have any weather-related or back-order problems, the center avoids the risk of being low on supplies needed to run the facility," he says. "On the other hand, that also means we are not paying double the cost to have extra inventory."
7. Stay guarded in vendor relationships. As important as it is to have strong and creative relationships with vendors, it's equally important for ASCs to remain a safe distance from them. Ms. Ruterbories says the surgery center doesn't allow vendor representatives free access to the facility. Doing so allows the representatives to roam from physician to physician, which can create problems in the long run.
"Vendors sometimes just wander into clinics or ASCs and ask physicians to try a new plate or screw. Before you know it, that physician is asking the director to purchase that new plate or screw," Ms. Ruterbories says. "We want to control any unfettered purchasing."
8. Assess opportunities for increased efficiency through health IT. It's no secret that health IT has the potential to make physician practices and ASCs more efficient, which could lead to increased savings and improved patient care. However, Mr. Wipfler says ASCs must stay keen on the cost associated with deploying health IT and carefully assess how health IT fits individual organizations.
"It's important for ASCs to take advantage of federal incentives but understand the cost of implementing electronic medical records," he says. "For high-volume ASCs, such as orthopedic-driven ASCs, practitioners have to pay attention to the potential loss of productivity."
That means taking the time to do the research and choose a system that fits both the physicians and employees, Ms. Ruterbories says. "One of the big issues we carefully assessed [before choosing a system] was if we had to change our patient flow process to match the EMR system it was not going to work in our practice. On the other hand, if the system was flexible enough our patient flow would not have to change at all which leads to a very successful implementation."
Learn more about OA Surgery Center.