4 Trends Driving the Emergence of ACOs in the ASC Industry
At the 19th Annual Ambulatory Surgery Centers Conference in Chicago on Oct. 26, Jarod Moss, senior vice president of business development for United Surgical Partners, Shelby Decosta, vice president of mergers and acquisitions for San Francisco-based Dignity Health, and James Jackson, senior vice president of operations for United Surgical Partners, discussed how ambulatory surgery centers fit with accountable care organizations.
4 micro trends driving reformMr. Moss began the presentation by covering four micro trends that are driving change and reform in the ASC industry. These four trends are behind the value-based delivery models, which favor ACOs, and are being monitored closely by players in the industry.
1. State of economy and rising healthcare costs. Healthcare costs continue to rise and unfortunately, that rise is exasperated in a bad economy. "Historically, healthcare was recession proof. However, the "Great Recession" had an impact — the first time in 50 years. During the recession, 10 million commercial lives were lost, and the average welfare payment dropped by about 15 percent. In the exact same period, there was a shift of financial responsibility toward patients," said Mr. Moss.
Despite the impact felt by the recession, per capita healthcare spending must come down. Currently, 18 percent of the gross domestic product is spent on healthcare and this is projected to become 20 percent if there is no change in healthcare costs. "There is a belief that the system is unsustainable at its current state — its current pace," said Mr. Moss.
Mr. Moss finished discussion of the economy and healthcare costs by pointing out that ASCs are a small part of the healthcare continuum, but since ACOs are being created as a means to manage the full continuum for a defined population, ASCs will need to define how they fit into the ACO network. The industry will also need to definite the capabilities needed to access that network.
2. Emergence of patient consumerism. Patient consumerism in healthcare has been rising over the last few years. The continued shift of financial burden to the insured is expected to further this consumerism, creating new constituents that ASCs have not had before, said Mr. Moss.
3. Impact of legislation. According to Mr. Moss, the Patient Protection and Affordable Care Act may generate positives for the ASC industry, such as the following:
• An estimated 30 million newly insured lives
• Removal of co-pays for colonoscopies and enhanced preventive employee benefits
• Greater focus on quality and cost
• Enhancement of transparency
4. Transition towards payment for value. According to Mr. Moss, the trend toward payment for value is occurring in a number of markets and may continue regardless of what occurs in the election.
Ms. Decosta agreed. "We are all walking this tight rope between fee for service and value-based. Some folks are jumping in sooner than others based on market pressure, but we all need to be able to improve quality and lower costs. The certainty is that we will get paid less in the future," she said.
Ms. Decosta shared results from a survey of hospital executives, which found that 80 percent of hospital executives believe they will have developed or be involved in an ACO by 2015. Fifty-four percent reported they believe this will happen within the next two years.
In addition to this belief among hospital executives, the numbers show that ACOs are more prevalent. Eighty-nine additional ACOs were awarded for Medicare in July, bringing the total to 154. In addition, Ms. Decosta mentioned that various studies have reported there are 200 ACOs, though not all Medicare related, across 45 states.
"The time of the ACO is upon us. It is probably a little different than we thought it would be when ACO regulations came out a few years ago. [However,] it aligns incentives between physicians, providers and payors in a lot of markets — alignment that has not been there in the past," said Ms. Decosta.
Impact on ASC industryAccording to Mr. Jackson, the ASC industry is showing classic signs of maturation evidenced in the following three factors.
• Development of ASCs bas slowed down — "The growth rate has slowed recently, and we think we will continue to see consolidation in the market place," said Mr. Jackson.
• Increase in physician employment — "Over the last decade there has been a 43 percent increase in the number of employed physicians," said Mr. Jackson.
• Fewer physicians per ASC — There are fewer physicians per ASC. According to statistics presented by Mr. Jackson, from 1990 to 2010 there was a 40 percent decrease in the amount of available physicians per ASC.
Although the ASC industry is positioned to be part of the solution for these challenges and struggles, it must still position itself as part of the solution by providing quality data to demonstrate value, supporting efficient resource utilization and enhancing advocacy efforts, said Mr. Jackson.
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