Competition in outpatient surgery + how to prepare for the Amazon of ASCs: 4 Qs with Dr. Manoj Mehta

Given the rapid change taking place in healthcare, ASCs may soon face disruption that has as much impact as Amazon's new healthcare venture, according to gastroenterologist Manoj Mehta, MD, medical director of Wilmette, Ill.-based Endoscopy Center of the North Shore.

Dr. Mehta shared his insights with Becker's ASC Review on the challenges and opportunities ASC leaders may face.

Note: Responses have been edited for style and clarity.

Question:  As an ASC leader, what do you think are the top opportunities for ASC growth in the next 10 years?

Dr. Manoj Mehta: ASC opportunities, like a lot of things in the business world, cycle and evolve. The more urban areas get saturated with businesses, there are fewer opportunities to 'hang a shingle' and start anew. Although ASC opportunities may be present in more rural areas, the difficulty of a large catchment area is that people have to travel far. That works against the core appeal of convenience for most ASCs. But the issue is not just saturation, it's the cyclic and evolutionary nature of these developments. We all know stories of the corner video shops going under due to Blockbuster, or the mom and pop businesses going under as Walmart moved into town. What we don't know is what the ASC equivalent of the video streaming industry or Amazon delivery will do to ASCs as the future evolves. But, in change there is always opportunity for people who think ahead, no matter what happens.

Q: What challenges do you think ASCs will face in the near future?

MM: The main challenge that has and always will face ASCs is competition with organized healthcare systems. Outpatient services are a huge business, and hospitals will only let that go if they get a piece of the pie. You may be able to negotiate that if you can fill a niche the hospital cannot easily do, run an ASC partnership more efficiently than the hospital does, if your patients are loyal to you over the hospital, or if you are in an area where hospital competition is more 'friendly.' Remember, referring doctors are now — more than ever — hospital employees, so the system is stacked against them. The other main issues are insurance reimbursement and contracting. Despite ASCs being a clear winner in the cost-per-service area compared to hospital outpatient departments, insurance companies see almost no benefit in encouraging their patients to come their way. In this, too, there will be opportunity. As pay-for-performance looms on the horizon, ASCs will be well positioned to negotiate greater patient access. If the insurance companies won't see the light, I foresee an era where the public [is] in a position to demand to know why they are not getting the same quality services for a reasonable cost. We have seen a lot of people being forced to explain their behavior in the past few years. Wouldn't it be terrific if the insurance companies were held to higher standards? Educate your patients, and this might happen.

Q: What advice would you give to other ASC medical directors? How can they improve quality of care at their centers?

MM: Not to sound cliché, but quality really does have to be job one. Provide compassionate, thoughtful, personalized service at the height of excellence, and everything else will fall into place. There simply is no faking it. You can't treat the patients as 'one and done,' you can't squeeze your staff to their breaking point and you can't give patients cookbook answers. The patients will see through it. If they perceive your employees enjoy coming to work, you are a good listener and you really care about their experience at your ASC, the reviews will come in, their referring doctors will hear back and they will refer their family and friends. How to achieve quality is a more complex answer, and there has been much published on this. In a nutshell, I would say think big. No matter how small your institution, develop standards that a larger healthcare system would engage in. This puts you in a good position to compete with hard data in the future.

Q: There's been quite a bit of private equity activity in gastroenterology lately; as a gastroenterologist, what are your thoughts on PE opportunities in the specialty?

MM: There is no easy answer to this issue. On one hand, it allows for an influx of operating capital into competitive ASCs, it provides a way for owners to partially or completely cash out on their good investments, it keeps businesses running instead of retiring and it brings in expert management and logistical help. On the other hand, it edges us toward the 'big box' healthcare systems we have been competing with, it might reduce quality over time, it may increase workload on individual physicians and staff — and don't forget what happens when Walmart puts all the mom and pop stores under, and then decides to move out of town.

To participate in future Becker's Q&As, contact Rachel Popa at rpopa@beckershealthcare.com.

For a deeper dive into ASC industry trends, attend the Becker's 17th Annual Future of Spine + Spine, Orthopedic & Pain Management-Driven ASC in Chicago, June 13-15, 2019. Click here to learn more and register.

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