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10 Strategic Initiatives for ASCs to Prepare for the Future

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Here are 10 strategic planning initiatives to meet the upcoming challenges of healthcare reform from ambulatory surgery center administrators.

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1. Take a hard line on supply costs.
Implant costs, especially for orthopedics and spine procedures, are the most expensive supplies for many surgery centers. There are several strategies for cutting those costs, including exclusive deals with implant companies on streamlining supplies and purchasing wholesale implants where possible.

"We are taking a very hard look at our vendors, our representatives and our contracts for implants and surgical supplies," says Evalyn Cole, CEO and administrator of Spine Surgery Center of Eugene (Ore.). "Our surgeons are having serious discussions about cost versus quality of implants."

There is an opportunity to carve out implant prices with some private payors, but Medicare's policy does not reimburse ASCs for implants in addition to the facility fee, which is already 65 to 70 percent less than hospital outpatient departments. "Our center is doing some hard negotiations with vendors about reduction on these items," says Ms. Cole.

Other providers are taking a new approach to equipment purchases. OA Centers for Orthopaedics in Portland, Maine, has jumped on the growing trend of medical E-bay, where facilities buy and sell instrumentation online.

Linda Ruterbories on surgery centers"We look to see if anyone is selling the instrumentation we want," says Linda Ruterbories, ANP, ASC Director at OA Centers for Orthopaedics. "They're new items and if there is someone selling it online, we can purchase it there instead of from the vendor. Last year, we purchased all our instruments on E-bay for $5,000. If we had purchased them from the vendors, we would have spent $46,000. That's how we are keeping our costs down."

Surgery centers can sell parts — such as an unused monitor from an old system — and put the profits toward future purchases; even equipment as big as C-arms are bought and sold on E-bay.

2. Make prices more transparent.
New payment models in healthcare are shifting more risk from insurance companies to providers and patients, and many people are choosing either high-deductible plans or cash-pay services. The Surgery Center of Oklahoma has capitalized on this trend by publishing prices online to attract medical tourism.

"We put our prices online in an attempt to draw patients directly to the facility using the transparent pricing as leverage in the marketplace," says Keith Smith, MD, co-founder and managing partner of the Surgery Center of Oklahoma in Oklahoma City. "We feel like we are more efficient and better quality than our hospital competitors. The best way to leverage that for our success is to show people the pricing."

Dr. Keith Smith on surgery centersThe surgery center has drawn patients from across the country and Canada for routine procedures, such as knee arthroscopy.  Price transparency will become a bigger trend as patients comparative shop for providers and accountable care organizations seek the lowest cost, highest quality setting for care.

3. Assist surgeons build their own practices.
Surgery centers that are additions to physician practices, such as OA Centers for Orthopaedics, already have an intrinsic connection between the practice and ASC health. However, when surgery centers aren't associated with one specific group, there is less effort to promote the physician's practice; this needs to change.

"Looking into the future, we see our ASC as a practice builder for the surgeon to help remove some of the negative input third parties have had over them," says Dr. Smith, whose ASC drives patients by publishing prices online. "The patients find us on the internet when they are looking for medical tourism. This drives significant patient volume from places where single payor systems are failing. When they contact us we can send the patients to the appropriate surgeon affiliated with our ASC."

When the physician's practice grows, so does their case volume at the surgery center. "We are driving cases to surgeons who wouldn't normally have contact with these patients," says Dr. Smith. "It is additional business and it's becoming a significant part of our surgeons' practices."

4. Contact big businesses for partnerships.
As large hospitals have in the past, some surgery centers are now seeking partnerships with large businesses to provide care. ASCs can remove third party payors from the equation by inking deals with local companies to provide medical care for a set cost, which must be lower than they are able to achieve elsewhere.

"We are reaching out directly to large employer groups going around the third party payors, and we plan to continue with that strategy," says Dr. Smith. "We are able to carve out their care. More companies are interested in these carve out arrangements where they deal with us directly. The insurance companies aren't always acting in the best interest of large employers and we have basically redirected the patients to us, instead of the expensive hospitals where insurance companies want to funnel them."

OA Centers for Orthopaedics has also reached out to local businesses seeking partnerships, but change is sometimes hard to come by.

John Wipfler on surgery centers"We are finding an interesting problem because even though these businesses have talked for years about driving costs down, they are hesitant to make necessary changes," says John Wipfler, CEO of OA Centers for Orthopaedics. "As an example, they have been slow to step up and modifying their benefit structure to create incentives for employees to use preferred providers like ASC's. It is happening but at a slow pace. As reform efforts accelerate we anticipate a faster pace of engagement from employers. Creating incentives to move surgery from hospital settings to ASCs is such an easy way to create significant savings without compromising quality."

5. Figure out how to fit into new payment models.
Accountable care organizations, bundled payments and other risk sharing arrangements are entering into markets across the United States.

"You have to take a look at what is happening in your part of the country," says Mr. Wipfler. "For us, there is a lot of consolidation between physician practices and hospitals as the hospitals are cornering a lot of the provider market. We are trying to position ourselves for changes and new payment models that come with healthcare reform, which is pushing people to create ACOs and medical home models. You don't want to be cut off from referral sources."

OA Centers for Orthopaedics has aligned with hospital partners and other providers in the community to position itself as a leader in orthopedic care.

"Most providers are engaged in conversations with other physician groups, healthcare systems and hospitals to explore new kinds of partnerships," says Mr. Wipfler. "Our enterprise must be aligned with other physician groups and hospitals to continue to thrive. Hospitals need specialists, and since ASCs cater to specialties we are all affected."

6. Plug into referral sources.
Engaging primary care physicians and other referral sources around the community has become exceedingly important. However, traditional roads of communication may be closed as more primary care providers become hospital employees.

"We see hospitals owning more of the primary care physicians, which forces us to find new ways to partner with the hospital," says Mr. Wipfler. "There are still a number of independent practices, but they are moving toward ACOs and as a result trying in some instances to bring specialists in-house so they are under their control. We need to work on partnership strategies with these providers so they aren't able to replace us."

Additionally, more referrals are shifting from primary care and word-of-mouth to other sources who dictate care settings.

"Historically our patient volume came from happy friends and families, but now more insurance companies and employers are designing plans that go to preferred providers," says Mr. Wipfler. "ASCs need to make sure they are aligned within the new structure or positioning themselves to partner with who controls the patients."

7. Consolidate independent physicians.
Just as hospitals are consolidating into health systems, physician practices are now becoming part of larger physician organizations and health systems. OA Centers for Orthopaedics is a founding member of the only specialty independent physician association in their region, which includes 15 different specialties.

"Our intention with the IPA is to be able to plug in and join an ACO in any community,” he says. "We can provide 'one-stop shopping' for a coordinated set of specialty services. We are the solution to specialty medical care. That has created a lot of interest and I think holds significant promise as a model."

Providers all need to use data to show how using lower site of service can save the system and payors a lot of money. Moving cases from a tertiary care hospital to a community hospital is a significant savings for payers, be they insurers, government, self insured businesses or patients. It generates even more savings to move cases from hospitals to ambulatory settings.

8. Educate patients and other providers on ASCs.
Surgery center administrators are very invested in the ASC industry and understand the potential for increased quality and decreased cost; however, in many communities, patients and even other providers don't understand their benefits.

"Surgery centers need to do a better job of educating people about the huge cost savings and quality benefit of moving into ambulatory surgery center settings," says Ms. Ruterbories. "For ASCs, it's about continuing to show that they are a lower cost site for service and high quality outcomes."

For most cases, performing procedures in a surgery center can save as much as 40 to 50 percent on the facility fee, with the same physicians performing those cases. "Payors have the data and they know what they are paying to whom," says Ms. Ruterbories. "It's interesting that they haven't come to the realization that there is a different cost per case in a hospital as opposed to the ASC. If they are aware of that we all need to push them to act on those cost differences. We need to shine a brighter light on that."

9. Automate wherever possible.
Automation is the next wave of technological advancement for surgery centers, and new software can make collecting patient histories more efficient. OA Centers for Orthopaedics recently began using preopscreening.com, a program that asks patients to electronically enter their medial history.

"We know everything about their medical history before they walk in the door," says Ms. Ruterbories. "From the ASC perspective, there are certain cases we can do here and some we definitely can't. If we know early on in the process that one of our patients isn't a good candidate for our center, we don't book them at the ASC. Instead we have them go into a tertiary care center or another facility with 24-hour coverage."

When cases are canceled on the day of surgery because the patient isn't a good candidate for the ASC, you waste time and money preparing for the case. ASCs can save by knowing the patient's medical history in advance and ensuring it's scheduled in the right setting.

"We are really trying to screen our patients ahead of time and using this program has proven successful," says Ms. Ruterbories. "We've seen less day-of-surgery cancellations, which is a huge savings for our surgery center. It's also providing safer care for patients because we know more about them. If we see something that is of concern for us, we get the notes from their primary care physician."

The system used at OA Centers for Orthopaedics is flexible and Ms. Ruterbories was able to customize the program for their practice

"The program red flags certain medical conditions, so we know who might be at risk just from looking at the patient list," she says. "It also flags MRSA, which is something we didn't have to worry about in the past. Having done this for 25 years, I can see that the health of the patients coming to surgery centers is a lot more complex than 10 years ago and now we are dealing with that upfront, which is how it should be done."

10. Improve employee culture.
One of the hot topics among ASC leaders today is employee culture. A positive patient experience is essential moving toward more consumer-driven healthcare, and cooperative staff members will enhance patient experience tremendously.

"You need to work on staff culture so the patients recognize staff members are happy in the workplace," says Ms. Ruterbories. "When a healthcare provider's attitude is such that they are smiling, even though patients are lying in bed in the recovery room, they notice how our staff members act."

Ms. Ruterbories holds staff meetings every two weeks to help build their team. "The team members are stepping up and presenting about what 'team concept' means to them," she says. "They talk about what they find value in as a team member and share that with the group."

At the heart of these initiatives, Ms. Ruterbories hopes a positive culture will build trust and communication across her team. "It doesn't matter how good protocols and equipment are, if you don't have teamwork you won't have a highly functioning system," says Mr. Wipfler. "Linda spent a lot of time building trust, breaking down communication barriers and getting people to work through issues in real time. If people are happy, you'll see better quality and more efficiency, and they'll be able to do their work better."

More Articles on Surgery Centers:

6 Key Strategies for Profitable ASCs From Regional SurgiCenter

6 Ways to Slash Costs of Spine Surgery at ASCs

30 Statistics on Surgery Center Staff Compensation

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