Ambulatory surgery centers are on an unstoppable rise as surgical cases are shifting from inpatient to hospital-based outpatient settings, and also to freestanding ASCs.
Although an ASC may be independent or affiliated with hospitals, their operational and financial singularity makes embedding a total joint and spine service line an attractive option.
During the Becker's ASC Review and Becker's Spine Review 19th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference, in a session sponsored by ECG Management Consultants, three of ECG's leaders led a discussion about key drivers for adding total joints and spine to ASCs and common pitfalls to avoid. Panelists were:
- Chaz Bates, senior manager
- Matt Kilton, principal
- Catherine Ruppe, RN, associate principal
Three key takeaways were:
1.) The migration of surgeries away from hospitals is presenting growth opportunities for ASCs. Ongoing cost pressures are driving a shift in surgical case volume from high-priced hospital-based services to more competitively priced ASC-based surgeries, often performed under alternative payment models. Stakeholders throughout the healthcare ecosystem are all aligned to this trend:
- Employers and payers are looking for cost savings, which ASCs can offer.
- Surgeons see opportunities for equity and ownership along with increased case volume.
- ASC leaders see opportunities to improve financial performance.
- Hospitals and health systems want to partner with ASCs to keep case volume in the system.
- CMS is decreasing the gap in reimbursement between hospital outpatient and ASC settings for total joints.
- Patients prefer ASCs and outpatient settings.
Mr. Kilton highlighted one additional intangible metric that favors the growth potential of ASCs: "Patients will follow the surgeon to the location that the surgeon suggests. So, while price transparency matters, the relationship between the surgeon and the patient can override cost."
2.) Despite the favorable clinical and reimbursement environment, ASCs have to make important operational considerations. First and foremost, these key operational considerations include securing buy-in from staff. Ms. Ruppe said that when she previously oversaw ASC operations for a health system, the biggest resistance to integrating a total joint and spine service line came from ASC staff. "They were naysayers. Even the schedulers were like, 'Your doctor wants to [do your surgery] at an ASC, do you really want to go there?'" she recalled.
To overcome the resistance, her team delivered an extensive staff education program as part of a broader strategy that included revising and updating space, equipment and instrumentation; preference cards; medical staff credentialing; establishment of clinical protocols; drugs, medical supplies and implants; and scheduling and block time. A key consideration that cut across all of these components was including the anesthesia team throughout the planning process.
3.) To optimize a center's financial performance, begin by setting competitive rates. To accomplish that, leaders must know where they are within the market from a reimbursement standpoint. For example, ECG uses an analytics tool that allows us to benchmark NR/case across specific markets at the specialty level. "It allows us to see if you're competitive and if there are any opportunities to ensure your contracts are competitive with the market — maybe they need to be renegotiated if they're below all of the benchmarks in the market," Mr. Bates said.
Other elements that can be optimized to improve financial performance include net revenue per case, direct operating expenses, utilizing your preference cards to analyze your costs to better understand which case types are profitable and which ones present opportunities and lastly, expansion of key operating statistics monitoring. In all, the three key factors that impact operations and performance of an ASC are net revenue, case volume and case costing.
As ASC operators evaluate opportunities for future growth, expanding into total joint replacement and spine procedures can be an important strategic decision. With proper planning and preparations, they can set their facilities on a path to success.
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