ASCs are increasingly frustrated by the payment disparity between ASCs and hospitals, and many feel that without legislative change, surgery centers will falter.
Raghu Reddy, chief administrative officer at SurgCenter of Western Maryland in Cumberland, joined Becker's to discuss why this disparity is the biggest threat to ASCs right now.
Editor's note: This response was edited lightly for clarity and length.
Question: What is the biggest threat to ASCs right now?
Raghu Reddy: The biggest threat is payer reimbursement for ASCs. This topic has been beaten to the pulp lately, but we are not seeing any quantifiable results. Most ASCs struggle to get rate increases from the payers; with rising costs across most cost buckets, the profit margins are decreasing rapidly. To complicate things further, many ASCs are also plagued by anesthesia subsidies that reduce profitability. The common sense legislative question is why the ASCs are struggling to provide high-quality care, outcomes, and patient satisfaction scores while decreasing the cost of healthcare compared to the hospital outpatient department setting. ASCs are a mature market, and we can no longer afford to hide behind the naïve curtain. There are many expert discussions about the payment parity between ASCs and HOPDs, but there has been no actionable response from payers or legislators.
How does one expect to engage the payers when they are so slow to respond to an email and negotiate contracts or rate increases? I believe these tactics are an elusive strategy not to pay for performance. ASC leadership has to find creative ways to put cost items and workflows under a microscope to tame the highest areas of expenditure, but this process will lose steam if the payer reimbursement strategy doesn't change soon. Physician recruitment is also becoming challenging as hospitals develop their ASC strategy and continue to employ physicians. For ASCs to thrive, there must be a change, and the payers must play the game fairly and level the playing field.