How to remain an independent ASC in 2016

Overwhelmed by a competitive healthcare market, many ASCs seek assistance through a hospital partnership or third-party management company to stay afloat. But some surgery centers face the industry's challenges alone, and won't relinquish independence anytime soon.

The Surgery Center of Oklahoma in Oklahoma City is one such independent ASC. The surgery center opened as a physician-owned establishment in 1997 and has remained so since the beginning. It is a multispecialty center with eight types of specialists and owned by about 40 surgeons and anesthesiologists.

Escaping the hospital's shadow
Hospitals may encroach on ASC territory by monopolizing all referrals in the area or strategically bar ASCs from negotiating payer contracts.

"We decided to take a completely different path which removes all the leverage that all the hospitals have," says Keith Smith, MD, managing partner of Surgery Center of Oklahoma.

About seven years ago, the Surgery Center of Oklahoma implemented price transparency. By publishing its procedure prices online the ASC pushed the payers aside and offered a high quality service at a lower price.

"We feel like we have a quality, real value here," says Dr. Smith. "And it really does undermine and interrupt where the hospital really does have a lot of muscle."

Dr. Smith says his ASC has seen a lot of traction for the price transparency model in the last 18 months, both locally and nationally. However, the model is still a new concept that many are uncomfortable with for various reasons.

"I think it just takes time for people to give credence to ideas," says Dr. Smith. "It's a very out-of-the-box thing. A lot of people think you can't put a price on healthcare."

Even though the Surgery Center of Oklahoma offers prices lower than Medicaid rates, payers still avoid the ASC. Payers are not currently incentivized to work with ASCs, which bring in less revenue and patient volume than hospitals. With payers and other leaders resisting price transparency for various reasons, the initiative has experienced a slow popularity.

"We've decided that we are going to be transparent with our pricing. We are going to embrace the market discipline that every other industry must observe and let the chips fall where they may," says Dr. Smith.

Committed to independence
Larger, multispecialty ASCs present a stronger front against a hospital. If an outpatient surgery center only has one specialty, it's much easier for a hospital to buy off all the surgeons.

"I think a small, single specialty [ASC] can do it, but it is more vulnerable to attack by the big hospital system," says Dr. Smith.

He discourages ASCs from teaming up with hospitals, labeling it a short-sided move. While hospital affiliation helps a facility owner maximize revenue, it doesn't offer any value to the buyer. And in an industry trending toward value-based care, this message isn't attractive to consumers. Instead, maximize value to maximize revenue.

"Everyone is sharpening their pencils right now," says Dr. Smith. "Once the buyers of healthcare discover the providers who are being honest and trying to deliver extreme value — that is a long-term success proposition for that provider."

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