EXECUTIVE SUMMARY

Next year’s big challenge will be to lower costs and raise quality, even as surgery centers face merger and acquisition pressure.

• ASC procedures have been on the rise over the past decade.

• Medicare is sending more dollars to ASCs, but also is increasing regulatory scrutiny of such facilities.

• ASCs are fee-for-service entities, but their mission is evolving and will be different in coming years.


What is the biggest issue ASCs will face in 2018? They will be challenged to sustain growth at a time when administrators are focused on lowering costs and raising quality during an era of mergers and acquisitions.

“How do they stay relevant and maintain their contracting ability, and how do they maintain an infrastructure with decreasing reimbursement rates?” asks Michael J. Patterson, RN, MSN, FACHE, president and CEO of Mississippi Valley Health in Davenport, IA. “ASCs are, by nature, pretty lean operations.”

As the ASC industry matures and ages, there are more challenges related to new services and increased growth and demand. Healthcare claims data, including 24 billion records dating back to 2002, show that ASC procedures have been on the rise over the past decade, says Robin Gelburd, JD, president of FAIR Health in New York. A nonprofit, FAIR Health provides an independent, national database of healthcare claims and a public website that educates consumers about healthcare insurance and costs. FAIR Health’s data include more than 150 million privately insured individuals and more than 55 million people enrolled in Medicare.

“There’s an uptick in terms of utilization nationally,” Gelburd says. “We’re starting to see increasing claims associated with services performed.”

The nonprofit’s ASC and benchmark modules provide cost comparisons among peers and offer a look at the ASC market in other regions. “What we tend to track are the most common procedures performed in an ASC,” Gelburd explains.

FAIR Health’s data can track common procedures for a window into how a segment of the healthcare market is evolving. For ASCs, the national procedure codes most often used in 2016 included endoscopic procedures and cataract removal. These include colonoscopy and esophageal endoscopy, Gelburd notes.

“ASCs play a certain and valuable role in the healthcare ecosystem,” she says. “When FAIR Health was created, it was clear that ASCs were emerging on the scene with their own strategic and operational needs.”

Technological improvements make it possible for increasingly complex procedures to move to an ambulatory setting. Medicare is approving additional surgeries in an ASC setting each year. These trends suggest brisk growth for ASCs.

Regulatory scrutiny increases with Medicare-covered procedures, notes Lori Callahan, director of Algonquin Road Surgery Center near Chicago. (See story on making your ASC more efficient in this issue.)

“Medicare now is shifting dollars toward ASCs, so they’ll want to see more data,” Callahan says. “Regulatory scrutiny is not ever going to stop.”

Increased Opportunities Raise Other Issues

“How can ASCs continue to invest in facilities and infrastructure and have the ability to meet rising demand over the next decade for services that haven’t traditionally been provided in surgery centers, like total joint replacement and cardiology?” Patterson asks. “The value proposition they can make to providing safe, quality services is pretty compelling.”

On the other hand, hospitals will face economic problems without their bread-and-butter procedures in orthopedics and cardiology. “As hospitals see more of those things turn to outpatient, how will they survive without those services?” Patterson asks.

This prospect will continue to propel health systems to partner with surgery centers to maintain some of their lost revenue stream and to provide care in the lowest cost setting, Patterson adds.

Both ASCs and hospitals must learn from the Blockbuster vs. Netflix battle that ended badly for the company that did not adapt to changing times.

“Fifteen to 20 years ago, we all went to Blockbuster video if we wanted to rent a movie,” Patterson says. “Then, the emerging companies of Netflix and Hulu said there was an easier way to do it, and it was less costly and more efficient.”

Surgery centers could be the metaphorical Netflix in this scenario, unless they also do not adapt as technology and medicine changes.

“If Blockbuster had learned from Netflix, things would have been different. But Blockbuster said, ‘No, never going to do that,’” Patterson says.

For instance, ASCs must learn from hospitals about how to take care of a larger patient population. ASCs have not evolved as quickly as hospitals away from the fee-for-service mentality.

“We’re still a fee-for-service type of organization, but that’s changing, and ASCs need to learn from hospitals how to do bundled payments and manage care beyond the date of service,” Patterson says. “Hospitals will change, and ASCs will have to also.”

Some of the cost pressures ASCs face concern major costs of which they have little to no control, including implant and cath lab equipment expenses, he notes.

“How do we find a balance?” Patterson asks. “You partner with a hospital, and say this book of business belongs in the surgery center. But how do we steer payers and patients?”

For these reasons, ASCs might find that their biggest opportunities for growth are to partner with hospitals and others, learning how to treat patients with the type of care and service that is appropriate for each person, Patterson offers.

As accountable care organizations and bundled payments become more prevalent in ASCs, surgery centers must learn to help patients become as healthy as possible prior to surgery and better educate patients post-surgery to contain hospital readmissions, Patterson says.

“That’s the context of the greatest opportunity for ASCs in the next decade,” he adds.