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10 Words of Wisdom for ASC Success in Changing Healthcare Markets

As the healthcare environment changes over the next year, there are several steps ambulatory surgery centers can take to position themselves for success in the future. Traditionally, a few simple tweaks could make a big difference for ASCs, but not all initiatives are that simple.

"We've got heavy lifting to do," says Jim Stilley, former CEO of a large ASC, currently a management consultant and Director of Clinical Workflow Consulting for Versus Technology. "If we just focus inwardly, we are going to be chopped by insurance companies and governmental bureaucracies. The irrefutable value I've seen from decades in this industry would be lost. It's time for us to get new skill sets because what worked 10 years ago isn't working now."

Here are 10 words of wisdom from ambulatory surgery center industry experts for ASC administrators in 2013.

1. Stay ahead of ObamaCare.
The next four years will be focused on the implementation of the Patient Protection and Affordable Care Act. While certain Congressional members and lobbies will seek repeal for aspects of the law, the Supreme Court's decision to uphold the individual mandate and the re-election of President Barack Obama ensures much of the law will go forward as planned.

Glenn Cozen on ASC management"The ASC needs to stay ahead of this as much as possible," says Founding Partner of Physicians Surgery Centers Glenn Cozen. "Right now, it is still unclear exactly how ObamaCare will impact each center as we all try to get our hands around it. We do know it is the law of the land and we need to embrace it as best we can."

ASC administrators can rely on outside expertise from management companies or healthcare consultants to help them navigate today's healthcare landscape and prepare for upcoming changes.

"There are potentially some good benefits ahead, one of them being the increased number of patients in the system," says Mr. Cozen. "If down the road, the physicians can look back and say their ASC managers played a key role in assisting them in understanding and implementing ObamaCare, then we did it right."

2. Stay true to your core values.
Ambulatory surgery centers became successful because they were able to provide better quality care and higher patient satisfaction than other healthcare delivery settings. The economic success driven by ASCs is another important aspect of their success, which shouldn't be overlooked.

The keys to success in the future really haven't changed except for the understanding and implementation of ObamaCare," says Mr. Cozen. "The priorities remain quality of patient care comes first, physician satisfaction second and economic success third. These core values will always drive the success of an ASC, and the economic success cannot occur if the first two priorities are not met."

While ASCs already have a proven track record in quality and cost-effectiveness, they will need continual growth to meet the demands of new healthcare markets.

"Our industry has a big advantage when it comes to the ongoing growth of our centers, which is the continuous addition of new specialties that we are allowed to service and the increase in the types of procedures within our current specialties that are added each year," says Mr. Cozen. "Continuous growth, effective overhead management and forward thinking with respect to ObamaCare are key as we look forward."

3. Learn to navigate ACOs.
Accountable care organizations are taking hold across the country. Some are part of the Medicare pilot programs while others are in partnership with private payors. Each ACO is slightly different but has the same goal of incentivizing higher quality care at a lower cost.

"We need to accept that ACOs are an integral part of the new healthcare legislation," says Mr. Cozen. "We then need to find ways to incorporate each ACO into the ASC's business strategy. We know that each ACO is being designed in its own unique way, usually to benefit the party that has taken the lead role in initiating it — i.e., the hospital. The physicians need to be informed that any party, including a group of physicians, can take the lead in creating an ACO and then the subsequent management and control of that ACO."

Wherever possible, ASC physicians and administrators should take a seat at the table to discuss ACOs and become a part of their decision-making process. Denying their existence or refusing to work with others in the marketplace is no longer a viable strategy for ASCs.

"We can be a part of that plan working with physicians, and then the ASC can be on the inside of the decision-making process," says Mr. Cozen. "The ASC must be proactive in developing a strategy which allows more cases to come to the center, not fewer. The concept of bundling payments is not new and there is no reason the ASC cannot be part of a global payment, capitated payment or bundled payment strategy. Again, it is preferable to be part of the design of the plan from its inception."

4. Advocate on behalf of the ASC community.
As elected representatives structure new healthcare policy, it will be important for advocates of the ASC industry to make their voices heard.

"We must continuously work with our political and legislative system to ensure that physicians are allowed to participate in the ownership of the ASCs," says Mr. Cozen. "All we need is a level playing field and the rest will take care of itself. It has been proven time and again that physician-owned centers provide the highest level of patient care and patient satisfaction as well as the highest level of physician satisfaction."

Other interests have strong lobbies in Washington, some competing with ASC interests. "As an industry, our public relations efforts need to be continuously improved, our legislators need to be educated and informed," says Mr. Cozen. "We cannot allow the hospitals to wage a campaign against our industry solely to benefit their bottom line."

ASCA and state ASC organizations have begun to take the lead on behalf of the industry, but more cohesion would carry weight in Washington. "Large organizations are becoming more effective, but we are still behind the curve," says Mr. Stilley. "We don't have full time advocates because our margins are so low. However administrators and leaders need to take a strategic time out and learn advocacy skill sets they might not have to become more effective."

5. Communicate ASC industry growth to other providers.
The ASC industry has grown drastically over the past decade and new technology allows surgeons to bring new types of cases into the outpatient setting. While the rapid development is beneficial for ASCs, not all providers or referring physicians are aware of these capabilities.

"Primary practice needs to be in good communication with specialty surgeons so they know what is available for technology in their procedures," says Senior Consultant at IOL Conversions Marc Barbier. "Some people still think cataract surgery is an eight hour procedure, when most surgeons perform it in 10 to 15 minutes with a laser."

Primary care physicians are the gateway for 60 percent of the referring patient-base for specialty surgeons, so a positive relationship with them imperative.

6. Focus on improving what you can control.
There are several aspects of the healthcare landscape ASCs can't control, such as payor rates. If you are unable to negotiate more favorable in-network contracts, work on improving efficiency to make an impact on your bottom line.

"Pick your battles — the only thing administrators can control is productivity," says Mr. Stilley. "You can control productivity by optimization. Ensure you have the optimal amount of quality and value from your staff."

While surgery centers have always focused on efficiency and increasing patient volume to stay in business, there could be new areas to enhance productivity that have become lax over the years.

"Surgery centers for the past 20 years have gotten into second or third gear in their organization," says Mr. Stilley. "There are other gears that will require capital investment. When I work with ASCs, we pull apart their processes and look at individual steps to see the opportunities for increased efficiency that they didn't realize before."

There are often structural issues with the organization or staff that make a surgery center inefficient. Those areas must be patched to ensure survival.

7. Prepare for patient volume increases.
There will be opportunities for ASCs to capitalize on the aftermath of healthcare reform, which will bring millions of new patients under insurance coverage. Coupled with the increasing aging population, ASCs should expect patient volume to increase.

"When you look at the travel of patients through the healthcare system, at the end of the day the cases and pathology are just increasing in numbers," says Mr. Barbier. "The number of applications for permits to open ASCs is on a higher request. In most communities, larger ASC companies are expanding their business within a five-mile radius so patients don't have to travel as far. This also allows the same surgeons to primary locations to get a second date at the smaller locations."

Hospitals are also looking to localize care and improve efficiency. In some communities, hospital executives are looking to ASC industry veterans to work with their departments in lowering costs and improving efficiencies. Sometimes this means partnering on joint venture surgery centers while other times ASCs are purchased outright with a service agreement for the physicians.

"Hospitals may have a main center reserved for more complex cases, but there is a need for surgical centers for more routine procedures where they need certain critical life systems in place," says Mr. Barbier. "Hospitals are tacking on to territories for what are the bread and butter of ASCs."

8. Make EMR work for you.
Surgery centers are now required to report quality data for Medicare cases and reimbursement from private payors may also depend on meaningful use data in the future. Electronic medical record systems can help gather this data, but are expensive capital purchases for freestanding ASCs. Make sure you select a system that will work for your ASC.

"We need to replace nursing labor where they are chasing patients and entering data into the patient's charting, because that isn't helping patient care," says Mr. Stilley. "In the future, technology will be able to help with this. The question is how to finance this technology when you are worried about margins."

EMR is designed to increase productivity and efficiency, but there is a learning curve for physicians and surgeons. Even after proficiency, it will take several key strokes for nurses to enter patient data.

"I think EMRs can help patient care, but we have to figure out how to make them work for us," says Mr. Stilley. "After ICD-10 and meaningful use, ASCs need to focus on getting the greatest output for the least input. Cut the parts of the process that don't add value to the patient care and find a system you can design around your workflow."

9. Lower implant costs by any means necessary.
Implant vendors have become inculcated to the ASC's message of lowering prices, says Mr. Stilley. They are able to sell to the hospital at 400 percent, but don't have a sliding scale for ASCs, which receive significantly lower reimbursement per case.

"The large vendors, who are subsidized by the government in research and development, aren't scaling the pricing of the products to the scale of the facility," says Mr. Stilley. "Then we are left with few choices. The device may be superior, but if you have to pay hospital prices that case may not come to the ASC. I would try to leverage costs at small ASCs to incentivize reduce prices."

ASCs can incentivize lower prices by cutting an exclusive deal with the device company, streamlining implants used by all surgeons. Another opportunity to cut costs is purchasing commodities at wholesale prices from vendors, which can realize a significant cost reduction.

10. Make pathways into the private sector spenders.
ASCs will depend on revenue to keep their centers open, and in markets where payors make it difficult to capture this revenue surgery centers should consider making roadways into cash-pay services.

"At the end of the day, it's all about the bottom line and if there is no profitability, there is no way ASCs can keep their doors open," says Mr. Barbier. "There are some patients who won't want to jump through the insurance company's or government payor's hoops to obtain care. Doctors have to become available to say they have additional services at additional costs. ASCs can market themselves within the private sector and capture additional revenue from those cases."

Some surgery centers are already publishing their cost data online to capture medical tourism from around the United States and Canada; others are working on deals with private companies to bundle care while cutting the insurance company out of the equation.

More Articles on Ambulatory Surgery Centers:

Constructing a Functional Narrative for an ASC: Q&A With Amy Mowles of Mowles Medical Practice Management

10 Steps for ASC Surgeon Investors to Beat the Fiscal Cliff

10 Ways to Negotiate Better Rates for Orthopedic Cases

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