'The sky is falling, the sky is falling!'
By Stephen W. Earnhart, MS
CEO
Earnhart & Associates
Austin, TX
The Chicken Littles are out in force since the new ambulatory surgery center (ASC) rates have been posted. I have been amused and surprised to hear the reactions of hospitals, surgeons, attorneys, and other industry leaders in this sector of health care. To hear some of them talk, it sounds as if hospitals have struck a major blow against surgeons and their centers. I hear others talk about the horrible new rates the ASCs have: 35% lower than hospitals! Oh, my!
I try to balance my column between the hospital outpatient departments (HOPDs) and ASCs each month, and this might read like it is only for the ASCs; however, anything that affects either of them affects both.
First, most surgical procedures have had a significant raise in reimbursement. It's not where it should be by any means, but it has increased. The focus of the Chicken Littles of the world is tied to the reduction on payments for some specialties.
Secondly, those cost reductions should be there for those cases. Many of these do not require the services of an operating room in a hospital or ASC anyway.
Thirdly, the vast majority (85% based upon our own database) of surgeon preferences in an ASC are not profit-driven but efficiency- driven facilities. Would those surgeons prefer to have an efficient surgical environment and more profits? Of course! Who wouldn't? Yet I have not had a single surgeon investor turn their back on an ASC because of the new rates, including GI, pain, and urology single specialty centers. I tell them that their reimbursement is lower than what it was before, but they don't care. They just want efficiency, whether it comes from their own surgery center or someone else's.
So the fears that surgery centers are going to go away is ludicrous. They only way that is going to happen is if hospitals become unburdened by emergency cases, emergent cases, burned out and overworked staff, and unrealistic budgeting.
After spending my career in hospital and ASC operating rooms I have earned the privilege to make observations. Hospitals waste more money in their surgical environment than ASCs make. Until and unless hospitals recognize their inefficiencies and do something about it, surgery centers will continue to grow and acclimate to the changing reimbursement.
Well-managed ASCs find ways to still be profitable because they can react to the changing environment. They have learned how to control their cost, whereas hospitals need to know their costs.
Surgery center managers have identified their target market as the surgeons; whereas, most hospital administrators still believe their surgical marketing target is the patient. Patients do not walk off the street to have surgery. They are brought to the operating room by the surgeon. And those surgeons mostly have a choice of where they can go.
While on the subject of comparing hospitals and ASCs, I might as well bring up the fact that surgery centers set up their admission process around the needs of the patients. For example, most ASCs have their patients come to the center about 45 minutes before their case is scheduled on the actual day of surgery. The ASCs recognize that it is often difficult for patients or family members of patients make multiple trips to the center or try to juggle day care children or work or school schedules around hospital admission policies.
Hospitals tend to revolve the process around themselves. For example, most hospitals have their outpatient surgical patients come into the hospital several days prior to surgery for their pre-admission testing. Then they are required to come to the hospital hours before their appointed surgical time. I have a hard time believing some hospital department heads who say they are "patient-focused" when they practice such admission policies.
I wish that senior management of hospitals could sit in on meetings we have with their surgeons. Maybe then they would realize they do have the ability to affect their own outcome. Cutting reimbursement on ASCs is not going to make them any less desirable today than they were yesterday.
(Earnhart & Associates is an ambulatory surgery consulting firm specializing in all aspects of surgery center development and management. Contact Earnhart at 1000 Westbank Drive, Suite 5B, Austin, TX 78746. E-mail: [email protected]. Web: www.earnhart.com.)
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