Ready to expand? Keep your eye on these hot stars in surgery
Robust growth projected for cardiac procedures, noninvasive diagnostics
How healthy is the outpatient sector of health care? At least one new report on the state of ambulatory care forecasts continued robust growth in new clinical services, particularly in outpatient surgery. And forecasters predict that barring any unforeseen circumstances, such as a severe economic downturn, ambulatory care facilities can expect years of new opportunities ahead.
The trend caps a nearly decade-long wave of optimism over outpatient care, which industry mavens have come to regard as a holy grail in stanching once-runaway inpatient-care costs.
"As hospital inpatient payments continue to dwindle, we’ll see a greater emphasis on shoring up overall reimbursements through the outpatient suites," says David Foster, PhD, MPH, chief statistician with HCIA, a Baltimore-based research firm.
But the optimism may be overstated, according to some industry watchers. Front-line facility managers, who acknowledge that there’s been phenomenal growth in the outpatient sector, tell a different story of counteracting forces:
• Most of the migration of services to the outpatient side has come at a heavy cost in expensive new laser and other technologies and capital investments, they say.
• Managed care, particularly heavy price discounting, has eaten away many of the financial gains, industry officials report.
Look before leaping
Optimism notwithstanding, "administrators would be wise to continue a policy of carefully weighing the costs and benefits of these new services," cautions Lynne Oliver, RN, MBA, CNOR, administrator of the freestanding Bellingham (WA) Surgery Center.
The temptation to achieve higher revenue should not be enough to make one leap blindly into this highly uncertain managed care environment, Oliver warns.
Indeed, it isn’t surprising that most of the projected growth in ambulatory surgery continues to occur in expensive high-tech services, says Foster of HCIA, who extrapolated the data for Outpatient Reimbursement Management.
Clearly, outpatient surgery has moved into the realm of more complex and technically intricate procedures and will continue to do so, Foster says.
Other factors driving the current inpatient-to-outpatient migration, says Foster, include:
• cutting-edge advancements in clinical research;
• alternative surgeries such as laser and keyhole procedures;
• new outcomes-oriented practice guidelines;
• developments such as 23-hour patient stays;
• increasing patient volume (for some procedures);
• patient preference.
"From the data, we can see where these new services are emerging," he adds. Here’s where to look and why:
• Cardiac surgery.
Procedures to watch closely include: aortic resections, arterial catheterizations, right and left cardiac caths, and arterial blood gas measures. Many of these already are achieving high outpatient numbers and are expected to increase, Foster says.
A principal reason is pressure from payers. Cardiac surgery, which ranks among the most costly of inpatient procedures, faces increasing demand for lower-cost alternatives.
In its survey, HCIA examined Medicare hospital data between 1991 and 1994 and found startling percentage growth rates in these four services as they moved from the inpatient to outpatient sector.
For example, out of a total of 126,780 reported aortic resections performed between 1991 and 1994, the number completed in outpatient settings more than tripled, growing to 1.22% from .34% of the total.
Although still small in real numbers, the procedure ranked 15th in HCIA’s top 20 procedures ranked by percentage change and third in total volume among the top 20 behind intravenous disc excisions.
• Minimally invasive and noninvasive diagnostics.
While laparascopic procedures have enjoyed enormous gains and continue to show strong growth potential, intense competition could undercut market share for individual providers, industry watchers say. A battle currently rages between facility-based and physician-office based providers. (For a recent history of surgical volume in the United States, see the graph, above.)
But the HCIA report projects a strong outlook in varied specialties, including urinary cystoscopies, closed-lung biopsies, cerebral arteriograms, and vascular ultrasound.
For example, by 1994 more than 26% of vascular ultrasound procedures were being performed in the outpatient setting compared with 18.2% in 1991. Closed-lung biopsies jumped to more than 45% from less than 35%.
• Laser, imaging, and microsurgical procedures.
The growth of many new same-day surgeries will almost certainly parallel new technology, Foster says. Six out of 10 surgeries now can be performed on an outpatient basis.1 (For a list of top surgical procedures, see the chart at right.)
New techniques such as laser-driven endometrial ablation are catching on in outpatient suites as suitable alternatives to more invasive inpatient procedures such as abdominal hysterectomies.
"The potential for technology in reducing time and improving outcomes is virtually reversing the inpatient-outpatient mix," observes Craig Stewart, chief financial officer of San Gorgonio Memorial Hospital in Banning, CA.
Foster adds, "Technology and better science are clearly leading the charge in determining emerging new procedures."
• Age-related orthopedics and gastrointestinals.
The nation’s graying population will intensify the large, lucrative market for endoscopic and arthroscopic surgeries, Foster says. According to Chicago-based SMG Marketing Group, which follows same-day surgery trends, knee and shoulder arthroscopies were performed at more than 50% of freestanding outpatient surgery centers in 1996. The numbers show a steady increase over time.
Fifty-eight percent of all laparoscopic and endoscopic procedures performed at outpatient centers consisted of colonoscopies and gastroscopies, according to SMG.
Surgery for seniors expected to slow
But expansion isn’t forecast for all segments, especially in the market for seniors. After years of stupendous growth, increases in eye surgeries, especially cataract extractions, are expected to slow to a crawl.1 Already, according to SMG, ophthalmological procedures in general have produced flat results as a percentage of total outpatient specialties.
In Washington state, Oliver of Bellingham Surgery has seen the number of surgeries overall drop by 90,000 between 1992 and 1994 based on state figures. Oliver suspects managed care but isn’t sure.
"Where these surgeries have gone, we don’t know," she says.
The terrain for new business is tricky, says Mary Nash, RN, CNOR, director of outpatient surgical services with Promina Gwinnett Health System in Lawrenceville, GA. Promina operates 10 hospitals in suburban Atlanta. Reimbursements are dropping in both inpatient and outpatient sectors, Nash says.
Therefore, before expanding into a new business line, experts advise assessing how the new service will affect or be affected by the following:
• Existing capacity, especially in your operating rooms (ORs).
• Total cost, including nursing, equipment, supplies, and OR time.
• Current physician make-up: Will you need additional surgeons? Will they be skilled at the new procedure?
• Level of local patient and payer demand for the specialty.
• Current services: Will you be forced to reduce some to accommodate the new one? Can the new service increase volume? Are there possible synergies with existing technology?
• Reimbursements: Will the new service capture higher payments or result in lower aggregate revenue? Do you need the new service to retain or acquire a large provider contract?
• Corporate or nonprofit mission: Will you be forced to curtail charity cases or allowed to increase them?
• Regulatory or certificate-of-need restrictions in your state.
• Competitors: Will rival facilities keep you out of the market?
Of course, underlying all these considerations is a sobering reality, Nash concludes. "Reimbursements for outpatient care have been steadily eroding," she says.
Reference
1. SMG Marketing Group. Freestanding Outpatient Surgery Centers Market Report, 1997 Edition. Chicago; 1997.
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