Virginia Women’s Center performs about 1,900 surgical cases a year in hospital settings. Keith Berkle, MD, is an OB-GYN and President of Virginia Women’s Center. He estimates at least 1,500 of them could move to a freestanding ambulatory surgery center owned by the practice.
The Richmond, Va.-based OB-GYN group has the surgical volume, the staff and a track record of financing new buildings. What it does not have is a realistic path through Virginia’s certificate of public need program, known as COPN.
“If the laws change tomorrow, the next thing on my agenda would be figuring out how to stand up an ASC,” Dr. Berkle told Becker’s. “I envision we could have one up and running within a year.”
Dr. Berkle was careful to aim his criticism at the regulatory structure, not at the health systems that operate under it.
“Hospital executives are very rationally protecting their organizations under current rules,” he said. “But the rules themselves are producing the wrong incentives.”
The cost of asking
Under COPN, most new medical facilities and added services in Virginia require state approval, and competitors can weigh in on applications. The state filing fee is 1% of a project’s capital cost, but Dr. Berkle said legal and consulting fees can push the total into the hundreds of thousands of dollars, with no guarantee of approval. Nashville, Tenn.-based HCA Healthcare, for example, won approval for a three-OR ASC in Hanover, Va., on only its third application, after opposition from Bon Secours.
Several states have loosened CON rules for ASCs in recent years. Dr. Berkle said Virginia’s updates to its program have not removed the core barrier for independent groups: proving need while defending the application against health systems with deeper resources.
For his practice, the math is straightforward. Most of its cases now run through hospital-owned outpatient surgery centers, which bill under the same contracts as a hospital’s main operating rooms. Dr. Berkle cited an estimate that commercial payers pay about $1,500 more per common outpatient procedure in a hospital than in a freestanding ASC. Across 1,500 cases, that is about $2 million a year in potential savings to the healthcare system, he said. Under the current rules, those facility payments stay with the health systems.
“It would be a no-brainer if we didn’t have to spend a half a million dollars to probably get told no,” he said.
A recruiting disadvantage
Dr. Berkle said the bigger long-term cost may be talent. Health systems can direct facility fee revenue toward compensation packages that independent groups cannot match, which makes it harder to recruit high-volume minimally invasive gynecologic surgeons, breast surgeons and general surgeons.
“Not having an ownership stake to offer a surgeon that we might be recruiting really negatively affects independent practices all over,” he said.
He expects staffing a center would be the easier part. The practice already employs former OR nurses and surgical technologists for its in-office procedures, and he believes many hospital surgical staff would consider a pay cut for more say in how a center runs — and to stay out of the trauma call pool “on a Friday.”
About 80% of U.S. physicians are now employed by health systems or corporate entities. Dr. Berkle called the independent segment that remains “critically important” to keep alive.
The cherry-picking argument
Hospitals have long argued that physician-owned ASCs draw away healthier, lower-risk patients and leave hospitals with costlier, more complex care. Dr. Berkle called that concern legitimate. His practice depends on financially stable hospitals for deliveries, complex surgery, ICU care and blood bank services.
But he said the argument points to a financing problem, not a reason to block competition.
“If the hospital’s ability to provide essential services depends on charging more for procedures that could safely be performed in a lower-cost setting, the conversation needs to be about how we finance those essential services, not how we prevent competition to preserve that revenue,” he said.
The cases he wants to move — laparoscopic hysterectomies, endometriosis and fibroid procedures, most of which send patients home the same day — would leave the rest of the practice’s work in hospitals.
“That’s not cherry-picking,” he said. “That’s matching the patient and the procedure to the appropriate level of care.”
What would change
Dr. Berkle said the fix he wants is removing the COPN requirement for licensed, accredited ASCs, or at least a meaningful exemption for independently owned centers. He said he would accept conditions: licensing, accreditation, clinical standards and charity care obligations.
If Virginia’s law changed, Dr. Berkle envisions a physician-led, multispecialty center anchored by the practice’s gynecologic surgery program, with room to add breast surgery, general surgery and possibly GI procedures. Clear clinical criteria would decide which patients go to the ASC and which need a hospital.
The practice has nearly doubled its revenue over the past five to six years and recently built a 44,000-square-foot outpatient facility with imaging and in-office surgery, its third new building in a decade.
“The surgical [volume] is there,” he said. “We’re not trying to create surgical demand that doesn’t exist.”
He said the natural path to this growth would be the ability to open and operate an ASC — a goal he has not abandoned.
‘“There are very few of us left who own our own practices,” he said. “I think that’s a critically important segment to keep alive, and it’s an uphill battle.”
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
