This Is No Time to Go it Alone: Affiliate or Perish

The New York State Association of Ambulatory Surgery Centers in Rochester, representing the state’s 28 freestanding same-day surgery centers, is forming a strategy to meet the expected rush of competition this year. Industry professionals also have been watching developments nationally. Here’s what they advise:

o Focus on high quality. It’s still the best trump card available to licensed facilities, says John Goehle, CPA, administrator of Lattimore Community Surgicen-ter in Rochester. Quality tops the list of concerns from patients, HMOs, and employers. Consultant Phyllis A. Sanford, president of P.A. Sanford and Associates in Cockeysville, MD, says ASCs are "a godsend on both quality and convenience for purchasers of health care."

o Affiliate. Sooner or later, you’re going to have to join a provider network, whether it’s a hospital or a chain of clinics. For this reason, don’t burn your bridges. "The physician you offend today may be your business partner tomorrow," says Terry Hawes, RN, president of the California Ambulatory Surgery Association in Sacramento.

o Get accredited. Facilities that meet high accreditation standards likely will be first in line in forming etworks and getting Medicare certifications and commercial contracts, Goehle says.

The Accreditation Association for Ambulatory Health Care in Skokie, IL, and the American Association for Accreditation of Ambulatory Surgery Facilities in Mundelein, IL, accredit the clinic industry. The Joint Commission for the Accreditation of Healthcare Organizations in Oakbrook Terrace, IL, mostly oversees hospitals but also accredits surgery centers.

o Differentiate yourself. Hospital outpatient departments are good at attracting capitation and other global payment arrangements. Managed care organizations (MCOs) prefer these one-lump-payment systems because they can save money. Freestanding centers can market their relative lower cost, easy access, and high efficiency compared with hospitals. Do what you do best, advises Margaret Alteri, RN, MPA, administrator of Harrison Center for Outpatient Surgery in Syracuse.

o Understand your market. Some facilities, especially those in rural areas, are likely to be unaffected by growing competition, Goehle says. Nevertheless, payers are likely to seize on trends to ratchet down payment rates, either through global fees or case rates that fall below customary charges, he adds.

In fact, payers are likely to reap a windfall from the expected competition in New York and elsewhere, industry observers say. But "they’re shooting themselves in the foot," Sanford says. MCOs will find hospitals and national chains an easy way of lowering their own costs. But at some point, the economics will change, she adds. "Certainly, the larger centers will be able to charge payers less. But their own costs will continue to get higher."