Surgery Migration — Catching the Confetti

Naya Kehayes, Principal, ECG Management Consultants and Sean Hartzell, Associate Principal, ECG Management Consultants - Print  |

Medicare, commercial payers and employer groups are demanding reduced healthcare costs. Employer groups are tracking their healthcare spend and holding payers accountable, comparing cost differentials between sites of service and demanding accountability from payers. Providers must be responsive and proactive as payers and employer groups seek alternative sites of service and providers that can demonstrate value and the ability to reduce cost while offering high-quality care to their members and employees.

Rapidly Changing Ambulatory Surgery Center (ASC) Regulations
Surgery is one of the most expensive cost centers in the hospital, but it is also one of the highest revenue generators. The momentum to support and direct surgery out of the hospital setting to ASCs presents significant opportunity for CMS and commercial payers to realize savings. The number of CMS rule changes supporting surgery migration and new insurance policies and benefits that financially incentivize and reward providers for delivering cost-effective care are growing. These changes circumvent physician employment by hospitals and mitigate primary care strategies. Migrating surgery to ASCs presents a significant threat to the financial health of a hospital or health system if a sound ASC strategy is not in place.

As rules and policies change, technology and surgical techniques advance, incision sites become smaller and new opportunities emerge to access extended postoperative recovery care in an outpatient setting, ASCs continue to be a meaningful part of the solution to reduce overall healthcare cost. They are well positioned to realize increased volumes and financial success, while hospitals are at eminent risk of surgery migration and financial losses.

Key factors affecting the future of ASCs and the need for health systems to embark on a sound ASC strategy are outlined below.

The Risk and Reward of Surgical Migration
The paradigms are changing, with more and more payers—both private and government—considering and implementing policies that allow for formerly inpatient surgeries to be performed directly in an ambulatory setting. This bypasses the old model of migrating surgeries from inpatient to hospital-based outpatient to ambulatory. While this change poses challenges for hospitals and health systems given its reliance on surgical-related revenue to drive overall performance, ECG Management Consultants has deployed its surgical migration methodology5 into numerous client organizations to quantify their exposure to surgical volume migration. Example findings are listed below.

These examples highlight the critical nature of understanding migration and provide context for a robust ASC growth strategy. With this understanding in place, hospitals and health systems can begin the journey of developing a comprehensive strategy. Opportunities for hospitals to take advantage of related to surgery migration include the following:

Institutions with a cogent plan for addressing surgery migration and the ability to implement and partner with its physician community can take advantage of emerging opportunities in this transformative time. Developing partnerships between physicians and hospitals can allow both parties to bring their sustainable competitive advantages to the ASC venture and work collaboratively for long-term success.

Naya Kehayes and Sean Hartzell will be presenting on this topic at Becker’s ASC Review 26th Annual Meeting: The Business and Operations of ASCs in St. Gallen 1 on Oct. 25 and at Becker’s Hospital Review: 8th Annual CEO + CFO Roundtable in Columbus EF on Nov. 12.

References

1 https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/Inpatient2016.html.

2 Ibid

3 https://www.govinfo.gov/content/pkg/FR-2018-11-21/pdf/2018-24243.pdf

4 https://www.uhcprovider.com/content/dam/provider/docs/public/prior-auth/Site-of-Service-MSK-FAQs.pdf

5 This proprietary methodology examines inpatient and outpatient cases to determine whether any commercial or government payer will support or has a policy in place allowing a surgical encounter to be performed in an ambulatory setting. 

More articles on turnarounds:
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Stark Law changes in the works & 4 other must-read articles 

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