The ever-shifting ambulatory healthcare landscape presents several challenges for ASCs and their owners, among them varying reimbursement, whether or not to seek out an affiliate and physician recruitment are among some of the biggest.
Houston-based Athletic Orthopedics & Knee Center Founder Jack Jensen, MD; Chicago-based Illinois Pain Institute President and Medical Director John Prunskis, MD; and Regent Surgical Health Chief Development Officer Jeffrey Simmons shared their thoughts on the issues at Becker's Spine Review 15th Annual Spine, Orthopedic & Pain Management-Driven Conference on June 22 in Chicago.
The ASC market has matured, Dr. Jensen said. Center revenues have reduced to parallel U.S. market growth and although payers are open to shifting procedures from inpatient to outpatient settings, the variation in reimbursement rates between hospitals and centers is still large. The renegotiation process can also be cumbersome.
Those problems are heightened by a decreasing physician pool. As hospitals and health systems increase their recruiting efforts, surgery centers are facing a physician shortage because a center can't match the high salaries offered through hospital employment.
That said, surgery centers are sustainable and are already established, Dr. Jensen commented.
"The biggest take home is we're a mature industry. When we were first starting everything was new and de novo, but at this point it's what's the disruptive technology we can utilize? How can we do things better?" Dr. Jensen said.
Market saturation plays a very important role when considering reimbursement and a surgery center's bottom line. With more centers competing for a contract, it becomes more important for a center to focus on its reimbursement rates.
"It used to be if your volume went down or your profits reduced, you recruited a couple extra doctors. … There was a time our company, maybe 25 or 30 percent of our business was out of network. Today it's less than 1 percent," Mr. Simmons said.
Narrowing reimbursement networks coupled with surgical centers' lower reimbursement rates caused Regent Surgical Health to shift towards hospital affiliations. Ten years ago, Regent had one hospital partnership, today that number is at 19.
Mr. Simmons and Regent see the partnerships as an effective way to negotiate better contracts. After finding a proper affiliate, Regent has been able to successfully negotiate its reimbursement rates, and in every case except one — which only achieved a 25 percent increase — Regent doubled its rates.
Independent ASCs like Dr. Prunskis and Illinois Pain Institute adopted and changed with the landscape as well. Up until 2016, Illinois Pain Institute had a majority of its cases out of network.
"In Illinois we were doing well out of network and we got hit so hard last year and it happened so fast that it was just so difficult to perform cases out of network," he said. "I have to say we were blindsided by it. … We had a bad year."
But Dr. Prunskis and the other Illinois Pain Institute administrators looked at that year and came up with a solution — demonstrate value.
"[We were] able to demonstrate savings to the insurer compared to other practices using clinical outcome data and what that means to the bottom line, [and] we were then able to negotiate contracts that actually paid us virtually as much as the out-of-network cases did," he said. "We bounced back quite nicely."
Dr. Prunskis reiterated for a center to succeed out of network, it's essential to demonstrate savings relative to not only a hospital but also to similar surgery centers.