How an OON ASC in a CON state multiplied — And now wants to help others succeed

Jeffrey FlynnThe landscape for ambulatory surgery centers is challenging. Especially for centers in certificate-of-need states. Especially for centers in large metropolitan areas. Especially for centers traditionally relying on out-of-network contracts.

Yet Gramercy Surgery Center, based in New York City, experienced success despite these odds to grow from a multispecialty surgery center to a multi-location provider that also includes a management company arm.

"In an ASC model, you have to constantly look for what is new to stay successful," says Jeffrey Flynn, COO of Gramercy Surgery Center and the new Gramercy Healthcare Management. "We now have more than 10 specialties and growing negotiating power with insurance companies. We're also seeing out-of-network versus in-network contracting as a huge issue. But we're collaborating with insurance companies that are seeing the difference between HOPDs and ASC models. We were able to launch a second surgery center, and building such relationships was a key factor."

Gramercy began as an out-of-network center, working with commercial insurance companies while taking Medicare and Medicaid patients. The out-of-network contracts dried up and they went out to begin in-network contracts. They set out to fry the big fish first — the areas biggest payer.

"The first insurance company we did came to the table and saw the amount of procedures we did and the different specialties, so they knew our care coverage was comparable to an HOPD," says Mr. Flynn. "They were able to give us significant rates while still saving money compared to their HOPD contracts. There was even a particular carve out they gave us that we didn't ask for at the time, which was amazing."

As soon as the number one payer in town signed a contract, the number two payer knocked on their door. Gramercy Surgery Center drew up a different contract with the second payer, but was still able to make gains.

"Now we have insurance companies five and six begging to come in network with us," says Mr. Flynn. "ASCs can't miss the boat on in-network contracts. There will still be out-of-network opportunities for ASCs, but they won't last forever."

And Gramercy Surgery Center didn't stop at payer relationships; they've formed several key relationships with local hospitals and health systems to partner on everything from sharing equipment to residency programs. They also work with the hospital to take low-reimbursing cases out of their operating rooms, freeing up space for high-reimbursing cases.

The road to this success wasn't easy, however, and now Gramercy's new consulting company aims to help more ASCs along the way. National companies are unfamiliar with the New York City space and have been largely unsuccessful in building centers. Politics, and sheer geography, get in the way.

"A multispecialty center requires a diesel generator," says Mr. Flynn. "Where are you going to get that in Manhattan? You can put it on the roof, but then it can't be near a residential building. And you're not going to be a freestanding center — you'll have to share a building with other tenants. In some of the boroughs you can get a more traditional freestanding situation, but we're able to help other centers figure out how to navigate this space. That's why we launched the new company — to help ASCs and build a coalition."

A larger coalition of ASCs in New York would be extremely beneficial, says Mr. Flynn. He is already able to collaborate with other centers through his own connections for several purposes:

• Sharing equipment
• Sharing per diem staff
• Sharing best practices
• Cross-referrals

"We sometimes have situations where patients come to the center with three or four different problems, and we can give them referrals to other specialists or ASCs for their future care," says Mr. Flynn. "I had one patient who underwent a lumpectomy at our center and liked it, so when her husband had an issue she immediately went on our website because she wanted him to have his surgery done at our center. We have to build coalitions to make sure patients have access to this type of care."

There will be plenty of opportunity to grow these relationships in the future with accountable care organizations or other collaborations for better quality, low cost care. "A surgery center shouldn't ever have a major infection rate because the environment is so easy to control," says Mr. Flynn. "We are positioning ourselves as an ideal area to go to for healthcare because we won't have the high rates of hospital OR returns or postoperative infections."

Some hospitals are opening their own ASCs, but those centers often aren't as efficient as freestanding centers. Hospital administrators take the hospital mentality into running the center, and the same inefficiencies exist as with the hospital ORs.

Another point to Gramercy's success is its willingness to evolve. The center has reached outside the box for innovative programs such as cancer care, lap band and lithotripsy to drive additional revenue.

"Lithotripsy is allowed in an ASC for Medicare cases," says Mr. Flynn. "You're talking about a very simple, 20 minute, non-sterile procedure. Why would you not bring that in? These types of cases expose new patients as well as physicians to the center."

Making the experience great for physicians also drives case volume. Physicians like ASCs because they are more efficient. The physician can perform more cases per day — or per time slot — at the ASC than the hospital, making their care faster and driving revenue for their practices. The efficiency also gives surgeons extra time to spend in their clinics or with their families.

"You want to develop a good relationship with the physicians, whether they are owners in the center or not," says Mr. Flynn. "Scheduling is very important to that. Additionally, if we're running behind schedule, I encourage our owners to allow the non-owners to go first so their experience at our ASC is good and they'll bring more cases in the future."

Patient experience is also key. Mr. Flynn personally calls patients who report issues or complaints with the center. He also involves the medical director when necessary to take care of the issues.

"If the patient doesn't have the best experience, I feel like it's a failure," says Mr. Flynn. "When you call the patient one-on-one, it really impresses them. They aren't just talking to a nurse, but to an executive and I always let them know what's being done about the situation. In every complaint, there is at least 10 percent validity and we can learn something going forward."

There is a lot of opportunity for ASC growth going forward, says Mr. Flynn; even in New York. "The smaller institutions can build more quickly," he says. "We all go through the same approval process, but we can correct mistakes faster. We don't have to wait for quarterly reports. We can see what works and what doesn't quickly. Additionally, more procedures are coming to the ambulatory-approved list and there are a lot of opportunities ASCs aren't taking right now."

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