Edward Gronka, MD, is a board-certified plastic surgeon and co-owner of a freestanding plastic surgery center, Fayette Plastic Surgery Center in Fayetteville, Ga., which is accredited by the American Association for Accreditation of Ambulatory Facilities. He discusses the challenges for surgery centers in Georgia and other tough markets that require a certificate-of-need, as well as an outlook for the future.
Q: What is the most significant challenge your surgery center has faced over the past few years?
Dr. Edward Gronka: It's been a difficult battle for us because we thought when we built this ASC it would be easy to negotiate with insurance companies because our surgery center delivers the same services as the hospital, but we do it more efficiently and for less. However, it has been very difficult to get insurance companies to even look at us. First, it takes a while to find the right person within the organization to negotiate the contract; in one case it took three months and we had to hire a professional negotiator to look at the rates.
After it was all said and done, we couldn't come to an agreement because the rates were so low. We did end up signing contractual agreements with other insurance companies because their rates were better. While we don't know what hospitals are getting reimbursed, we do know that we charge a lot less. However, the insurance companies haven't really cared about that because we are small fries compared to the hospital. The hospital can go in with other bundled packages and it's hard for the smaller guys to compete.
Q: It seems like surgery centers across the country are met with the same challenge. Is there anything you have done to overcome these obstacles with insurance companies?
EG: In the past, insurance companies told us that that they have the same administrative expenses whether they are contracting with a hospital or an ASC to make sure the provider meets their standards and reports quality. They see us the same as hospitals. If we aren't providing a large case volume for them, it isn't worth investing the time and energy. I can see that side of it, but it's frustrating on our end.
You talk about healthcare savings and this is the place where there are significant saving opportunities because third party payors don't have to pay as much. We deliver better services with a lower infection rate. We are looking at out-of-network contracts because sometimes providers that aren't in-network can be reimbursed but patients have to pay a higher deductible. We would like to see a way to improve our reimbursement without penalizing patients.
Q: Georgia is a certificate-of-need state and the market is heavily regulated. How are you able to survive in this type of market?
EG: If you are going to be a successful ASC, you have to deliver high quality services for patients. In Georgia, we have a letter of non-reviewability, so the state will allow us to do plastic surgery services outside of the hospital, but only members of our group are allowed to use our center. There are others in the community who would be willing to operate at our surgery center, which would be good for us, but the state won't allow it. We would have to apply for the next level of service — a single specialty ASC — and there is a two-year moratorium on that in this state.
There is also a lot of expense for the process because we would have to employ a lawyer and make sure everything was filed correctly and application fees are in the thousands. We aren't sure whether it would be worth the expense and time to go through that process just to allow a few more surgeons to use the center.
The Georgia Hospital Association is well-funded and they are reluctant to allow freestanding surgery centers to exist because they determined that would drain money out of the hospital system.
Q: Given the challenging environment, how are you and other surgery centers able to compete with hospitals?
EG: We offer a more private environment away from the hubbub of the hospital. For cosmetics, we have an advantage because hospitals will allow patients to come at a fixed rate; we are able to undercut that because our overhead costs are low. In the healthcare sector where insurance companies are involved we use the same kind of marketing concept. We cater to the outpatient experience and our whole mindset is to help the patients recover as quickly as possible.
We have a full time staff and high success rate with sending patients home the same day. Our anesthesia caters to the patient so they can have a faster recovery and it's rare that we report infections. Whereas the hospital has several types of cases in the same OR, we only have a select few so we have more control.
However, hospitals are now putting pressure on us by hiring plastic surgeons. Part of the contractual deal is that surgeons must do all services at the hospital. It's tough to compete with that.
Q: Surgery centers in some communities are partnering with hospitals. Is there an opportunity for partnerships in your community?
EG: We haven't seen much of it. I think it's going to get tougher for surgery centers because hospitals are going to start building more of their own surgery centers and some have done this already. Their ASCs are right on the hospital campus and with the way contracts are going, hospitals are purchasing physician practices and then they'll be able to further dictate where the procedures are performed.
The independent surgery center's future is in trouble. We have two state-of-the-art operating rooms and we rarely use two at the same time. We have considered selling our surgery center to the hospital and it would be easy for them to expand it under their multispecialty CON. However, we would lose control of our schedule, which has held us back.
Even in free markets, it will get tougher for independent surgery centers because of contractual issues. Further consolidation in the market will mean patients are only operated on within one network. Hospitals will purchase physicians and health systems will purchase hospitals. There is huge consolidation everywhere and I don't know who will come out on top.
Q: Is there anything physicians and surgery centers can do at the state level to advocate legislators on these issues?
EG: Some places have a much more active ASC society or group than we have in Georgia. There is one in Georgia and a fellow plastic surgeon is a past president, but we rarely gather to discuss our options. We need to be more aggressive in getting together and deciding a course of action. We can't win this battle on our own, but maybe there is strength in numbers.
However, I don't see a great future for surgery centers in Georgia and I have my concerns for other states as well.
More Articles on Surgery Centers:
Become an Agent of Change: 6 Steps for ASC Leaders
10 Recent Acquisitions of ASCs
5 Creative Ways for ASCs to Improve Profitability Next Year
Q: What is the most significant challenge your surgery center has faced over the past few years?
Dr. Edward Gronka: It's been a difficult battle for us because we thought when we built this ASC it would be easy to negotiate with insurance companies because our surgery center delivers the same services as the hospital, but we do it more efficiently and for less. However, it has been very difficult to get insurance companies to even look at us. First, it takes a while to find the right person within the organization to negotiate the contract; in one case it took three months and we had to hire a professional negotiator to look at the rates.
After it was all said and done, we couldn't come to an agreement because the rates were so low. We did end up signing contractual agreements with other insurance companies because their rates were better. While we don't know what hospitals are getting reimbursed, we do know that we charge a lot less. However, the insurance companies haven't really cared about that because we are small fries compared to the hospital. The hospital can go in with other bundled packages and it's hard for the smaller guys to compete.
Q: It seems like surgery centers across the country are met with the same challenge. Is there anything you have done to overcome these obstacles with insurance companies?
EG: In the past, insurance companies told us that that they have the same administrative expenses whether they are contracting with a hospital or an ASC to make sure the provider meets their standards and reports quality. They see us the same as hospitals. If we aren't providing a large case volume for them, it isn't worth investing the time and energy. I can see that side of it, but it's frustrating on our end.
You talk about healthcare savings and this is the place where there are significant saving opportunities because third party payors don't have to pay as much. We deliver better services with a lower infection rate. We are looking at out-of-network contracts because sometimes providers that aren't in-network can be reimbursed but patients have to pay a higher deductible. We would like to see a way to improve our reimbursement without penalizing patients.
Q: Georgia is a certificate-of-need state and the market is heavily regulated. How are you able to survive in this type of market?
EG: If you are going to be a successful ASC, you have to deliver high quality services for patients. In Georgia, we have a letter of non-reviewability, so the state will allow us to do plastic surgery services outside of the hospital, but only members of our group are allowed to use our center. There are others in the community who would be willing to operate at our surgery center, which would be good for us, but the state won't allow it. We would have to apply for the next level of service — a single specialty ASC — and there is a two-year moratorium on that in this state.
There is also a lot of expense for the process because we would have to employ a lawyer and make sure everything was filed correctly and application fees are in the thousands. We aren't sure whether it would be worth the expense and time to go through that process just to allow a few more surgeons to use the center.
The Georgia Hospital Association is well-funded and they are reluctant to allow freestanding surgery centers to exist because they determined that would drain money out of the hospital system.
Q: Given the challenging environment, how are you and other surgery centers able to compete with hospitals?
EG: We offer a more private environment away from the hubbub of the hospital. For cosmetics, we have an advantage because hospitals will allow patients to come at a fixed rate; we are able to undercut that because our overhead costs are low. In the healthcare sector where insurance companies are involved we use the same kind of marketing concept. We cater to the outpatient experience and our whole mindset is to help the patients recover as quickly as possible.
We have a full time staff and high success rate with sending patients home the same day. Our anesthesia caters to the patient so they can have a faster recovery and it's rare that we report infections. Whereas the hospital has several types of cases in the same OR, we only have a select few so we have more control.
However, hospitals are now putting pressure on us by hiring plastic surgeons. Part of the contractual deal is that surgeons must do all services at the hospital. It's tough to compete with that.
Q: Surgery centers in some communities are partnering with hospitals. Is there an opportunity for partnerships in your community?
EG: We haven't seen much of it. I think it's going to get tougher for surgery centers because hospitals are going to start building more of their own surgery centers and some have done this already. Their ASCs are right on the hospital campus and with the way contracts are going, hospitals are purchasing physician practices and then they'll be able to further dictate where the procedures are performed.
The independent surgery center's future is in trouble. We have two state-of-the-art operating rooms and we rarely use two at the same time. We have considered selling our surgery center to the hospital and it would be easy for them to expand it under their multispecialty CON. However, we would lose control of our schedule, which has held us back.
Even in free markets, it will get tougher for independent surgery centers because of contractual issues. Further consolidation in the market will mean patients are only operated on within one network. Hospitals will purchase physicians and health systems will purchase hospitals. There is huge consolidation everywhere and I don't know who will come out on top.
Q: Is there anything physicians and surgery centers can do at the state level to advocate legislators on these issues?
EG: Some places have a much more active ASC society or group than we have in Georgia. There is one in Georgia and a fellow plastic surgeon is a past president, but we rarely gather to discuss our options. We need to be more aggressive in getting together and deciding a course of action. We can't win this battle on our own, but maybe there is strength in numbers.
However, I don't see a great future for surgery centers in Georgia and I have my concerns for other states as well.
More Articles on Surgery Centers:
Become an Agent of Change: 6 Steps for ASC Leaders
10 Recent Acquisitions of ASCs
5 Creative Ways for ASCs to Improve Profitability Next Year