6 Advantages to Developing a Hospital-Owned Surgery Center

Lou Lazatin, president and CEO of St. John's Health Center in Santa Monica, Calif., recently led her hospital in establishing the Saint John's Ambulatory Surgery Center, a 12,000-square-foot, multi-specialty ASC. Here she discusses six reasons hospitals should consider developing a surgery center to house outpatient procedures.

1. Minimally invasive procedures are moving out of the hospital. The development of a surgery center makes strategic sense for a hospital as minimally invasive procedures continue to move into the outpatient setting, Ms. Lazatin says. "When you think about the future, everything is going minimally invasive, and more and more procedures are going to happen on an outpatient basis," she says. "For example, 15 years ago, when you had a gallbladder removed, you would have a 6-8 inch incision and you'd have to stay in the hospital for 7-10 days. When they invented laparoscopic surgery, they started taking your gallbladder out with three minor punctures, and now the surgery is done fully outpatient."

She says as technology progresses and instruments and incisions get smaller, hospitals should consider developing surgery centers to house their outpatient procedures.

2. Patient satisfaction will increase. The experience of an ASC is different from that of an acute-care hospital, Ms. Lazatin says. The expense is less burdensome to the patient, and the setting itself is generally more comfortable. "When we provide a service at our ASC, St. John's responsibility is to select the right procedure for the right patient at the right time in the most appropriate location," she says. "The way I look at it is that you have to make the surgery center closer to home and avoid bringing the patient into the hospital if possible." She says surgery centers should generally have more control over turnover times and scheduling, meaning patients should enjoy shorter wait times and a calmer staff.

3. Physician loyalty will improve with more options. Ms. Lazatin says surgeons have asked St. John's administration to create more surgical space in the outpatient setting, prompting the creation of more outpatient care facilities. She says physicians who want to operate in an ASC — but would prefer not to invest in a free-standing facility — may be attracted to a hospital-owned ASC that does not offer investment opportunities.

"You have a group within your medical staff that won't make those investments that would want to be part of a hospital-owned ASC," she says. "They want the hospital there because if there's an emergency, they want to make sure the patient is transferred to the hospital." She adds that the St. John's brand is attractive to physicians who are familiar with the hospital. "Opening the ASC gives another opportunity in the marketplace for physicians to choose an ASC that has St. John's level of service," she says.

4. Outcomes data allows hospital-owned ASCs to compete with freestanding facilities. Hospital-owned surgery centers face competition from their hospital peers as well as free-standing ASCs in the community, Ms. Lazatin says. However, hospital-owned surgery centers have a leg up on free-standing facilities when it comes to outcomes data. "If you're a hospital, you've got measures like HealthGrades and Professional Research Consultants that measure your medical staff's perception of your hospital and the quality of your service," she says. "If you're a freestanding, investor-owned ASC, there are no databases out there that detail the quality of your ASC in infection rates and readmissions." She says wise consumers are continually looking to these data sources when choosing their providers, and hospital-owned ASCs will fare better than freestanding facilities as long as their data demonstrates good quality outcomes.

5. Hospital competition necessitates low-cost providers.
The healthcare industry is moving toward quality care provided at a lower cost, Ms. Lazatin says, and successful hospitals will make an effort to reduce cost for payors and patients. "In today's market, patients want quality, but they want the price point to be reasonable, which is what I think value is," she says. She says St. John's competes primarily with Cedars-Sinai Medical Center and Ronald Reagan UCLA Medical Center, two major hospitals that force St. John's to have a strong strategic plan for lowering cost and improving quality of care.

"In the past, patients would make decisions about [where to receive care] blindly," she says. "They'd just think, 'I'll follow what the doctor says.' In today's environment, they want to know the cost of the care they're receiving." She says the best way to handle competition in today's marketplace is to create value and disseminate information on that value to patients. Developing a surgery center and publicizing that development will make it clear to patients that the hospital is keeping their financial interests in mind.  

6. Surgery centers are naturally efficient for simpler cases. Physicians will respond positively to a more efficient, convenient setting than the hospital, Ms. Lazatin says. "When you work with physicians, the first thing they want is convenience, just like all of us," she says. "They want to be able to come in, do the procedure and do it efficiently so they can take care of the rest of their patients." She says ASCs are naturally built to offer these efficiencies because of the small space, non-emergent procedures and staff expertise on a limited array of cases.  

She says the St. John's surgery center focuses mainly on shorter, less complicated cases because they are most efficient in the surgery center. "When you do a simple case like an eye surgery — cataract surgery or glaucoma — you only have one instrument tray, whereas if you do a total hip, you have about 14 instrument trays," she says. "When the staff turns the room over, it's very easy to turn a room with only one tray of instruments."

Related Articles on Surgery Centers:
Adding a Total Joint Program to a Surgery Center: Q&A With John Brock of Northstar Surgical Center
10 ASC Must-Reads From the Week of Aug. 22
Top 5 Vulnerabilities of Surgery Centers in the Next Few Years

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