The value ASCs bring to the healthcare system is undeniable, and buyers are watching.
Health systems, ASC chains and private equity firms are jockeying for position in the consolidating healthcare market, and willing to pay a premium for the high quality, efficient and low-cost site of service. But what looks like a good deal now for owners could end up raising healthcare costs in the future.
At the Becker's Orthopedic, Spine + ASC Virtual Event Aug. 12, a panel of ASC executives and surgeons discussed how centers weigh independence versus making a sale, and how the consolidating market fits into value-based care.
Below is an excerpt from the conversation, lightly edited for clarity and length.
Question: How are ASCs preparing to navigate the changing healthcare landscape, as more facilities are consolidating and payers are pushing for value-based care?
MIchael Ast, MD. Assistant Professor of Orthopedic Surgery, Adult Reconstruction and Joint Replacement at Hospital for Special Surgery (New York City): If you're running a freestanding, unaffiliated ambulatory surgery center, I would stand there with a big empty bucket and wait for people to pour money into it. Right now, between private equity, surgery center management companies and health systems, there is no question people are trying everything they can do to get surgery centers in their network. We've seen health systems start to go out and buy up surgery centers. That's not just in New York, but also New Jersey is an incredible example of it. There's a large health system picking up surgery centers. That's happening all over the country.
What I don't want to see is everyone get all wrapped up into one big group so there is one big health system that owns everything in the area, and all the surgery centers. That would only create the same inefficiencies that occur in the hospital and simply drive up the price of what goes on in the surgery center. The payers aren't going to pay more for surgery, but the profit margins will go down, and that great place to work that had excellent outcomes and happy staff will be told if they finish their day early, they go to the hospital and cover cases.
Steven Jascewsky. COO of Wellspring Pain Solutions (Columbus, Ind.): It's a double-edged sword. My job is to make us attractive for purchase, but in essence, that would probably be the end of my career. There's a reason we do things better [at ASCs], and that has to be preserved. Everybody's getting bought up and it's going to drive up healthcare costs. If the hospital buys us, there's going to be two added levels of bureaucracy above me, with nine vice presidents of the hospital, and that's going to drive up the cost per case.
We're going to get into conversations about whether the center is a hospital outpatient department and they're truly going to deserve the higher reimbursement, or whether it's a true outpatient ambulatory surgery center. Every hospital is pining for the legalities to try to make [surgeries go to the] HOPD so they don't have to take a cut in reimbursement. They can cut their costs by 25 percent but still get 100 percent reimbursed under their HOPD rates. Is that better for the community or a value-based care system? Not really.
I'm a tiny bit cynical when it comes to big healthcare systems. I would love to stay independent or partner with like-minded people. That's going to require some pooling of resources, contracting, credentialing and centralizing of things that are just expensive for small organizations to do.
Austin Cheng. CEO of Gramercy Surgery Center (New York City): I live in New York and there have been announcements by major players there that certain procedures will not be approved for the hospital outpatient setting and they are going to try to push those procedures into the freestanding ambulatory surgery center setting. I think that has scared a bunch of different providers and they are trying to figure out how to react to this.
Surgery centers are situated well to absorb a lot of the case volume. I don't think it's a zero-sum game. I don't think we're pulling away from one provider and that provider is losing. There's a lot of alignment that can be done, it's just a matter of the players figuring out how they fit into each other's roadmaps and development maps. That's a big puzzle to solve.