Should your HOPD convert to an ASC? Here are 4 strategic benefits

The transition to value based care is driving hospitals to convert hospital outpatient departments into ASCs, reversing the previous ASC-to-HOPD trend, according to a recent whitepaper from Regent Surgical Health.

Beginning in 2017, a regulation change from the 2015 budget deal helped encourage the trend reversal by removing an incentive for providers to buy off-campus ASCs and convert them into HOPDs.

However, hospitals considering the switch face two challenges: giving up traditional, short-term advantages for longer-term gains and getting all parties aligned in a deal, said Thomas Crossen, Regent's chief development officer.

Hospitals that break through those barriers can reap four strategic benefits.

1. Operational efficiency

With a narrower scope of work than HOPDs, ASCs help cut down on expenses for the two most expensive budget line items: supplies and staffing. Whereas HOPDs handle emergencies that make it difficult to predict inventory needs and where personnel will be wanted, ASCs can stock supply closets with precision, assign employees to multiple duties or part-time schedules and send staff home. ASCs also foster scheduling efficiency due to short patient stays.

"The profit opportunity is selecting the most cost effective care setting, and that's where ambulatory care options drive value," said Regent CEO Chris Bishop.

2. Physician alignment

Joint venture partnerships with ASCs benefit both hospitals and physicians, according to Regent's report. For hospitals, financial investment and risk is minimized. Physicians gain management resources, entrepreneurial opportunities and greater control. These perks lead to another reward for hospitals — fewer "physician splitters," or independent physicians that admit to both a hospital and one or more competing facilities.

Hospitals sharing ASC ownership can also free up operating rooms for more severe, higher reimbursing cases by routing less severe cases with lower reimbursement — such as ophthalmology and GI procedures — to the ASC.

"Hospitals understand that declining reimbursement can be offset by case volume and physician loyalty in a JV partnership," said Mark Murphy, chief strategy officer at Syracuse, N.Y.-based St. Joseph’s Health.

3. Payer cost sharing

Payer cost sharing arrangements can ease the HOPD to ASC transition for hospital leaders apprehensive about giving up high reimbursement rates. For example, nonprofit systems can reinvest the savings to fund unreimbursed ER care or update inpatient facilities.

4. Market relevance

Joint ventures can help hospitals stay in front of healthcare changes, observe competitors and keep pace with a marketplace ripe for disruption.

"The Amazon initiative is a shot across the bow at tradition, while Teladoc is changing the way we think about treating flu and improving the quality of care," said Mr. Bishop. "With the emerging trend toward HOPD [to] ASC conversions, we're seeing hospital systems shifting into the paradigm of healthcare disruption as well."

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