‘Still crazy after all these years’

By Stephen W. Earnhart, MS

President and Chief Executive Officer

Earnhart and Associates

Dallas

For you oldies buffs, this month’s title is from an old Simon and Garfunkel song. However, I do think it is reflective of the ambulatory surgery market as we celebrate the 20th anniversary of this great newsletter.

I wanted to do something special this issue — something that would show how far we have come in the industry. So I called a dozen or so of my resources and asked them this question: "To help celebrate Same-Day Surgery’s 20th anniversary, what would you like to read about?" Well, not a very good idea. I was hit with, "You gotta be kidding! It’s been 20 years?" "Oh, my. I’m now a grandmother!" "Why did you ruin my day by telling me that I’ve been here for 20 years?"

The overwhelming reaction was that they did not want to be reminded of the passage of time. I myself was childless and only married for three years at the time. My, how things have changed. Here’s an overview of the changes we’ve seen:

20 years ago: 132 ASCs.

The first ambulatory surgery center (ASC) opened in Rhode Island in 1969. And, until the American Medical Association endorsed the use of surgery centers in 1971, there was not much growth in our industry. Twenty years ago there were approximately 132 centers up and running and seriously struggling for their niche in the market and for profitability. You have to give credit to American Health Consultants for having the vision back then to even start publishing SDS newsletter.

Even though the first center was unsuccessful due to a lack of interest and financial backing, the idea was a great one.

15 years ago: 293 ASCs.

There were only 293 ASCs doing 377,266 cases, with an average revenue per case of $442. (About what it is today after managed care contracts. Just kidding? No, I’m not.) The struggles at the time were getting physicians interested in using the centers and getting the insurance companies to recognize us. Very difficult years for the industry.

10 years ago: 853 ASCs.

If there was a heyday for the industry, I would say this was the time. The for-profit chains were flourishing and making serious money. Wall Street loved the concept, and you had the great leaders in the industry like Don Steen of Medical Care International and Joel Gordan of Surgical Care Affiliates. Alas, both companies have since been gobbled up, but the vision of these two greats launched the careers of many of us still in the business.

The 853 centers were performing nearly 1.5 million surgeries then. The average reimbursement per case had climbed to $574, and surgery centers were growing by more than 100 each year.

Five years ago: 1,690 ASCs.

I call 1992 "pH," or the pre-Hillary year. The industry was still rocking, performing nearly 3 million operations per year and growing. The average price per case was nearly $1,000. Then . . . health care reform!

The last five years have been a struggle for almost all of us. With the heat on for cost-effectiveness and managed care profit shifting (from our patients and centers to the managed care companies), it has been a challenge for all of us.

Present day: 2,300-plus ASCs.

We’re doing somewhere in the neighborhood of 4.5 million cases with an average price per case of about $1,100 — which, by the way, is down from nearly $1,400 in 1994.

I believe the big events of the rest of this decade will concentrate on the return of the hospitals (not unlike the return of the movie Star Wars, which came about the same time SDS started) to the ambulatory surgery marketplace. Once again, I believe we will see hospitals dominating the market through closely tied joint ventures with physicians.

I also think we are going to see more consumer dissatisfaction with managed care plans. I think local hospitals and their physician partners are going to come up with their own plans that will rival existing health maintenance organizations and create a new era in health care plans, coverage, and pricing. I think the future is very bright indeed. Hang in there, and happy anniversary Same-Day Surgery!

(Editor’s note: To provide feedback about this column or suggest ideas, contact Stephen W. Earnhart at Earnhart and Associates, 5905 Tree Shadow Place, Suite 1200, Dallas, TX 75252. E-mail: surgery@ onramp.net. World Wide Web: http://rampages.onramp.net/~surgery.)