Are ACOs Profitable for Surgery Centers? How to Prepare

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Can ambulatory surgery centers profit from accountable care organizations?

CFO, U.S. Operations for Nueterra Healthcare Jon Friesen and Director of Clinical Workflow Consulting for Versus Technology Jim Stilley discussed how ASCs are preparing for ACOs today at the 20th Annual Ambulatory Surgery Centers Conference in Chicago. The discussion was moderated by Holly Carnell of McGurieWoods.

"Out of our 50-plus ASCs in the United States, we don't have any facilities directly in CMS ACOs today, but they are one step short of that," said Mr. Friesen. "They are looking at certain verticals and one of the orthopedic centers is taking on a capitation relationship. The ASC industry is uniquely situated in the healthcare space to improve quality and reduce costs."

According to Mr. Stilley, there is a small percentage of ASCs contracted with ACOs, and some physician groups that are part of ACOs currently perform their procedures at ASCs. Physicians are taking on significant risk by participating in ACOs and many are searching for the best setting to perform their procedures.

"ACOs put the physician at risk for the entire episode of care, so they have to be good stewards of those healthcare dollars," said Mr. Stilley. "That can be a risky proposition if you don't have the right infrastructure. I think ASCs are the right value proposition for what ACOs are trying to do. The ASC that understands their data and has physician alignment are in a good position."

For ASCs interested in ACOs or other shared savings programs, understanding case costing data at the granule level will ensure you negotiate profitable and successful contracts. "You can't make these negotiations without the right datasets," said Mr. Stilley. "You have to prove why your surgery center has better outcomes and how you can reduce costs. If you guess at this, you are accepting a new ACO payer arrangement blind."

Alignment is another important ACO tenet. If the physicians aren't bought-in and don't want to cooperate with ACO principles, the project won't be as successful. Referral physician alignment is also important to really make progress in quality and cost savings.

"You have to be aligned with your upstream referrals as well as postoperative care," said Mr. Friesen. "You are going to have to have relationships with providers in the ambulatory setting. You must be aligned economically as well. We talk a lot about ACOs being part of ACA — a government program — but don't sit back and wait to see what happens because I can assure you that commercial payers are further ahead than Medicare ACOs in sharing cost improvements and taking on risk."

Payers are shifting risk as much as they can, Mr. Friesen said, and an ASC's involvement will depend on how much risk they are willing and prepared to take on. Some physician groups and hospitals today are all-in for ACOs while others sample the program's success with one specialty.

"You can start with just orthopedics or general surgery, but you don't want to just dip your toe in the water when it comes to ACOs," said Mr. Friesen. "You must understand your costs and take risk, but then you will receive the savings."

To really prepare for ACOs, an ASC must:

•    Understand cost data at a granular level;
•    Align with physicians;
•    Implement technology for optimal efficiency;
•    Prepare for a pay cut;
•    Understand the internal referral pattern.

"A lot of people think an ACO is nothing more than managed care," said Mr. Friesen. "Having been in the payer world and responsible for millions of covered lives, I can say it's truly coordinated care. An ACO starts with the fundamental base of at least 5,000 covered lives and you are looking at the entire episode of care. It's population management in an integrated environment. One thing is for sure, regardless of which side of the [political] aisle you are on, spiraling healthcare costs are out of control. We have to reduce and bend the cost curve while improving quality."

More Articles on Surgery Centers:
4 Tips for Increasing Surgery Center Revenues in 2014

5 Recent Surgery Center Acquisitions

6 Reasons to Be Optimistic Regarding the Future of Surgery Centers


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