Payers tell hospital SDS units: We’re taking our patients elsewhere
Hospitals have to do something quick,’ but ASCs not in the clear
For nearly 20 years, hospital same-day surgery managers have watched with concern as many profitable same-day surgery procedures have slipped through their hands and into ambulatory surgery centers (ASCs) and physician offices. This trend has been propelled by technological advances and lower costs because those settings don’t offer emergency or 24-hour care. And with the latest jab from some payers across the country, hospital managers are starting to worry that their same-day surgery units are about to be emptied.
In Maryland, MAMSI, a managed care company, is moving all of its outpatient surgery procedures in Montgomery County out of the hospitals and into a surgery center that it co-owns. While surgery centers nationally have often found it easier to negotiate lower managed care rates because of their lower costs, the situation in Maryland is magnified because it is an all-payer state. Rates for outpatient surgery and other services are set by the state and can’t be negotiated by hospitals.
Other hospitals around the country report that insurance companies are refusing to pay hospital rates for outpatient surgery and insisting that the procedures be performed in surgery centers, according to Stephen W. Earnhart, MS, president and CEO of Earnhart and Associates in Dallas.
Such actions are motivating many hospitals to form joint ventures with physicians to open freestanding surgery centers, Earnhart says. "Hospitals have to do something fairly quick," he warns. Some hospitals are looking at partnerships with existing surgery centers.
Freestanding surgery centers not affiliated with hospitals aren’t in the clear either, says Michael Romansky, JD, partner in the health law practice of the Washington, DC, office of McDermott, Will, and Emery. Romansky represents the American Association of Ambulatory Surgery Centers in Chicago and the Arthroscopy Association of North America in Rosemont, IL.
"The irony is that the biggest challenge facing ASCs today is ameliorating the exclusionary tactics of some managed care plans which have a longstanding relationship with hospitals and often still contract with those providers even though the ASC down the street might offer surgery at a substantially lower facility fee," Romansky says.
To help their centers survive, managers at same-day surgery centers are going to have to become marketers, he says. "Success on the private pay side is going to depend upon effective marketing, not just to the physician and the patient, but to payers as well marketing which presents a strong case for the surgery centers prices, outcomes, new technology, convenience, and patient satisfaction."
So who’s getting hurt? Hospitals!
Is this a trend? Absolutely "especially in states that really have put hospitals in a very difficult position by limiting their ability to respond to the increased demand for ambulatory services," says Frank Cronin, FACHE, FAAMA, president of MCR Healthcare, a McLean, VA, company that works with managed care and integrated health care delivery systems. Past chairman of the American College of Healthcare Executives in Chicago, Cronin is referring to difficult certificate of need (CON) requirements in Maryland and other states.
"It really does not allow hospitals to be able to respond to the managed care plan’s need to provide more cost effective, high quality care because of CON," he says. "The states won’t allow the CON, won’t allow hospitals less costly, high quality alternatives other than inpatient services. And at same time, payers are pressuring providers to do surgery in the surgery centers."
So what’s wrong with a payer sending all of its outpatient surgery patients to a freestanding surgery center it owns, especially if it saves money overall? Hospital costs will go up and hospitals may close, warns Suzanne Richins, RN, MBA, patient care center director at McKay-Dee Hospital Center in Ogden, UT, and immediate past president of the Society for Ambulatory Care Professionals in Chicago.
David L. Smith, senior vice president of planning and marketing at Suburban Hospital in Bethesda, MD, one of the hospitals shut out by MAMSI, agrees. "The procedures MAMSI is shifting are mostly the less intensive procedures. And what that leaves are the high-cost, intensive procedures back at the hospital. That further exacerbates the hospital price and costing structure."
Patients and physicians aren’t going to like the move either, he adds. "The concern for us is that this is not really geographically convenient."
The surgery center co-owned by MAMSI is in the upper part of the country, he says. "That’s inconvenient for doctors and patients in the Chevy Chase area to have to travel up there," he says.
Other managed care organizations have indicated that they also are planning to funnel their patients out of the hospitals, Smith says.
Surgery centers could become overwhelmed, Cronin fears. In fact, some Maryland hospitals have predicted that same-day surgery patients may have to wait as long as seven months to have surgery in Montgomery County because MAMSI is shifting such a great volume of procedures to the surgery center it co-owns.
Also, as technology and payers move more procedures out of hospitals, inappropriate procedures may be done in surgery centers, Richins says. To avoid inappropriate settings for outpatient surgery procedures, managers in freestanding centers need to monitor outcomes in areas such as unplanned admissions and infection rates, she says. In states without a CON process, administrators at hospitals and surgery centers in the same geographic areas need to assess the appropriateness of the settings for same-day surgery procedures, experts suggest.
The current situation lends itself to duplication of services, Smith says. For example, the Maryland situation encourages hospitals to build freestanding surgery centers when they might not normally build them, he explains.
Richins agrees that duplication is a problem. For example, a significant amount of high tech equipment for procedures such as laparoscopic cholecystectomy is duplicated in hospitals and surgery centers.
"Take a community approach, taking the patient’s interest first," she says. "Then everyone wins."
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