The driving force behind prosperous ASC-hospital partnerships: Q&A with Surgery Partners EVP, Chief Administrative and Development Officer Jennifer Baldock

For decades, ASCs have been the high value setting for elective surgeries and procedures across the U.S. In recent years, technology advancements made it possible to perform more complex procedures in the ASC, and the pandemic accelerated this outpatient migration.

Since 2004, Brentwood, Tenn.-based Surgery Partners has provided investment and management services to surgical facilities nationwide. The company is among the fastest growing in the industry with more than 180 surgical facilities including ASCs, surgical hospitals and physician practice locations in 30 states. The company is affiliated with 4,000 physicians and realized 10 percent same- facility growth in the past five years. It has also seen an uptick in calls from health systems interested in partnering with physicians on ASCs or refining their own ambulatory strategy during the pandemic.

Several factors collided in 2020 to make the environment particularly ripe for joint venture ASCs. CMS added total knee replacements to the ASC payable list, making it possible for physicians to perform total knees on appropriately selected Medicare beneficiaries in the ASC this year; the agency proposed adding total hips in 2021. CMS has also placed increasingly complex spinal surgeries and heart procedures on the ASC payable list, encouraging physicians to transition these high acuity, high reimbursement procedures into the outpatient setting.

For hospitals to continue capturing a portion of this revenue, many see partnerships with ASCs as a valuable aspect of their business strategy in the future. When the pandemic hit and elective surgery bans surged across the U.S., many hospitals needed a safe place to send patients who couldn’t wait for surgery. ASCs stepped in as a safe site of care for orthopedic surgeries in particular and providers quickly built an infrastructure that allowed patients to return home within 24 hours of surgery with remote monitoring, physical therapy and home care.

Over the past few years, Surgery Partners has invested significant resources to transition more high acuity orthopedic and spine cases to the ASC. The company’s musculoskeletal service line represented nearly 44 percent of procedures in the second quarter of 2020 and remains resilient. For the first half of this year, the number of orthopedic cases at Surgery Partners centers increased

18 percent year-over-year and adjusted revenue per case was up 21 percent as well. The company’s pipeline remains heavily focused on orthopedics, cardiology and other key specialties, CEO Eric Evans said during the company’s second quarter earnings call on Aug. 5.

There are abundant opportunities for hospitals, ASC companies and other investors to align with surgery centers; currently, around 72 percent of ASCs are independent and the market remains largely fragmented, according to the 2020 VMG Health Healthcare M&A Report.

Surgery Partners is the largest independent surgical services company in the U.S., which gives it clear advantages as a partner large enough to bring value and nimble enough to customize services. Here, Surgery Partners Chief Administrative and Development Officer Jennifer Baldock outlines the key trends and concepts for joint venture partnerships between hospitals and ASCs today.

Question: How has Surgery Partners’ strategy for hospital partnerships changed over the past few years?

Jennifer Baldock: For years, we have had great partnerships with health systems like Vanderbilt University Medical Center in Nashville, Baptist Health System in Memphis and UCLA in Southern California. We are very proud of these partnerships. I would say that our partnership strategy has not so much changed as grown in the past few years. We’re now to a size and scale that our company comes into conversations with health systems more and more often. We are the largest ASC company that is independent of a provider or payer parent company and that has really helped us become involved in more health system partnership conversations.

Q: What factors drive successful hospital partnerships with ASCs?

JB: There are many factors that drive successful partnerships with ASCs. Regardless of who the partner is, whether it’s a hospital or corporate partner or both, the partnership has to be based on common goals. In this case, we would expect the goal to be providing superior quality care in a cost-effective environment for our patients and for the healthcare system broadly. Once we’re all aligned around that goal, the other factors fall in line. Partnering hospitals and ASCs have to work together to provide the right treatment to the right patient in the appropriate environment.

We all know that there are surgeries that should always be done in the hospital setting for safety reasons, and there are surgeries that should be done in an ASC setting. A successful partnership between an ASC and hospital relies on making the transition between the two seamless for the physician. That particular aspect of the partnership takes a lot of work and transparency between the hospital and ASC, but the goal is to have the physician choose the appropriate site of care for their patients and then have convenience, whether that comes from common preference cards or policies across the system, for all parties to work together.

Q: I imagine during the pandemic having hospital partners was beneficial for many ASCs. Can you share an example or two of times when that relationship with hospitals was advantageous for ASCs?

JB: Our hospital partnership with Vanderbilt is a great example. Our surgery center in Nashville provided them with a safe and COVID-free environment in which the physicians could perform surgeries during the pandemic. Even during the original shutdown of elective surgeries, our facility stood ready to provide our supplies and other resources that Vanderbilt may have needed to care for patients. That ability to work together has helped both sides during this very unusual period of time.

Q: Why are hospitals more interested in ASC partnerships today than in the past?

JB: There are a lot of factors at play today in this dynamic – some of which weren’t even around nine months ago. I believe that health systems are feeling more pressure than ever from all of their constituents — their patients, affiliated physicians and payers, including Medicare — to provide high quality, cost effective care. ASCs are a clear solution to that pressure.

When you add in the current healthcare crisis, providers, hospitals and physicians are looking for a safe place to perform surgery and serve their patients. ASCs are the perfect solution to that as well because we have always been the high quality, high value setting for care. We also see physicians who, as a result of the current crisis, are looking for more opportunities. There are some procedures that accelerated the move to the outpatient setting and physicians are not likely to return to the hospital setting for those cases after the crisis. Those cases can be safely done in ASCs. Those are a few of the factors that are causing the uptick in ASC and health system partnerships.

Q: How do you anticipate the ASC’s role in the healthcare ecosystem will change in the next 12 to 24 months?

JB: I believe ASCs will continue to grow their role in the healthcare system. All constituencies are looking for solutions to the challenges in the current healthcare system, and ASCs are a high-quality provider of value- based care. This is being recognized more among hospitals, physicians and payers, including Medicare, and most importantly among the patients. I see the future of ASCs being bright.

Q: CMS recognized ASCs as the high-quality site of service and proposed several changes to the 2021 fee schedule, such as eliminating the inpatient only list. What does this mean for ASCs?

JB: Obviously that change is very exciting for ASCs. Those of us who have been in the ASC industry for any length of time know the high quality and value that ASCs have and will continue to provide for the system. It’s very nice to have that acknowledged by CMS, not to mention the commercial payers. Many of the procedures CMS is now moving to the ASC payable list have been done in ASCs with great results for years on the commercial side. With CMS acknowledging the ability of ASCs to provide services to the patient with the highest quality at a lower cost is an exciting step. We expect this to lead to significant growth in the ASC.

Q: What are the big strategic advantages ASCs will have by partnering with Surgery Partners in the future?

JB: Whether it’s a standalone ASC looking for a corporate partner or health system looking for a partner to build out their ASC strategy, we provide a lot of big advantages. We are very flexible in our approach with our partnerships. In our current partnerships, we have arrangements where our ownership interest is high and some where it’s low. We don’t have a cookie-cutter approach. Instead, we look at each market and each partnership differently and we believe that sets us apart from other companies in our field.

Secondly, we are independent of other influences. We wake up every day and our only goal is to help our partners run their surgical facilities in a way that provides quality of care to our patients in a cost-efficient environment. We are laser focused on that, and being independent allows us to pursue these initiatives without other pressures. We are very proud of this and believe it’s a significant advantage of partnering with Surgery Partners. 

This article is sponsored by Surgery Partners.

More articles on surgery centers:
Tony Mira named Entrepreneur of the Year finalist
The big opportunities for ASCs today: 2 physician perspectives
The legacy of COVID-19 on ASCs: Pros and cons


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