The study analyzed data from 2013 to 2019 from 1 million arthroscopy and 10 million colonoscopy procedures in the U.S. Medicare population to determine how vertical integration changes services.
Here are five key notes:
1. The report found that following vertical integration, there is a 5 percentage point increase in the use of HOPDs instead of ASCs for arthroscopy and a 6.8 percentage point increase for colonoscopies.
2. The report also estimated that vertical integration leads to 3.1 percentage point increased probabilities of choosing an HOPD over an ASC for arthroscopies and 8.1 percentage point increased probabilities for colonoscopies.
3. The report estimated that for those two procedures, changing from “status quo to fully integrated relationships for all physicians” will lead to a $315.4 million increase in Medicare spending and a $63.1 million increase in patients’ out-of-pocket costs.
4. The report focused on Medicare systems because, unlike private insurance markets, vertical integration does not allow providers to negotiate higher reimbursements.
5. “From a purely financial standpoint, performing the same procedure in an HOPD instead of an ASC creates an ‘arbitrage’ opportunity to increase Medicare payment by re-allocating patient volume from ASCs to HOPDs,” the report read. “If vertical integration leads to increases in the use of HOPDs, this site-of-care-based payment differential potentially serves as both a motivation for and a consequence of hospital acquisition of physician practices.”
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.