8 Ways ACOs Could Impact Surgery Centers With Healthcare Futurist Joe Flower

At first glance, surgery centers might appear to be an obvious fit for accountable care organizations. ASCs are the low-cost, high-quality provider, which is exactly what ACOs are looking for. But Joe Flower, a healthcare futurist based in Sausalito, Calif., doesn't think it will be that easy for ASCs to adapt to the ACO approach. Keeping in mind that much is still unknown about how ACOs will work, he makes eight points on how ACOs might affect ASCs.


1. New mindset required. "A surgery center is pretty much the opposite of an ACO," Mr. Flower observes. While the ACO is concerned about the entire continuum of care, the ASC is used to focusing on one niche. "A surgery center does certain kinds of procedures efficiently and well," he says. "But in an ACO, providers are incentivized to have a longer-term relationship with the patient." Providers need to spend time tracking patients and staying involved with them over a long period of time, which is the opposite of how ASCs and most specialists are used to working. "The surgeon thinks, the longer the relationship with the patient drags on, the more it costs and thus the less advantageous it is," he says.


2. Lower surgical volume. ACOs will foster a new cost-saving attitude among providers that could tamp down surgical volume. In the 1990s, HMOs tried to save money by using primary care "gatekeepers," directing patients away from costly treatments like surgery, but ACOs will be less draconian. Mr. Flower observes that in some cases, the medical literature shows viable medical alternatives to surgery. He cited his own experience in a closed-panel HMO as an example. When his knee bothered him and a knee replacement seemed a possible option, his physician did not rule out surgery but suggested other strategies, such as cortisone shots, change in diet, occasional use of ibuprofen and stretching exercises. In comparison, surgery would take a long recovery and he couldn't continue high-impact sports like racquetball. Mr. Flower chose the non-surgical approach.


3. ASCs can't afford to ignore ACOs. Mr. Flower thinks surgery centers cannot afford to ignore ACOs. "In the next five to 10 years, ACOs of one kind or another will come to dominate the business of healthcare," he says. In populated areas, ACOs will compete with each other on the basis of cost-effectiveness.


4. Other trends mirror effects of ACOs. Even if ASCs avoid working with ACOs, Mr. Flower believes other healthcare trends will slow down utilization of surgery.


First, patients are assuming more financial risk, through the growth of health savings accounts and high-deductible plans. Thus patients are highly incentivized to look for less costly alternatives, such as a less complex operation or, even if the medical literature calls for surgery, no operation at all. "The patient may choose just to endure the pain, to just to live with it," he says.


Second, insurers are becoming more aggressive in not paying for surgery they deem unnecessary. If the peer-reviewed literature shows a non-surgical intervention or less complex surgery is just as effective, insurer will be more likely not to pay, he says. However, when there is no real medical alternative to surgery and patients cannot forego surgery, he thinks ASCs will flourish, he says.


5. Benefits of joining ACOs. Surgery centers that join ACOs or contract with them could benefit from referral volume diverted from centers that do not cooperate or are rejected by ACOs due to perceived low quality or inability to meet standards such as IT requirements. ASCs that are members of ACOs might also have more influence over the organization's policies on choice of surgery. And if they become involved in patients' decision-making, they might have more influence over the choices patients make.


6. Need to work closely with primary care. Surgery centers and their specialists will be under increasing pressure to work more closely with primary care physicians. In some areas of the country, PCPs and specialists are already forming "physician integration councils" in which they discuss referral policies. In some cases, these physicians make written agreements on referrals, with violators running the risk of losing referrals.


7. Hospitals face conflicts of interest. When hospitals lead ACOs, they will have to deal with inherent conflicts of interest that affect the way they deal with independent ASCs. Under the current business model, the hospital tries to direct patients to its own ORs, which are usually more expensive than ASCs. But if hospitals followed that policy as leaders of ACOs, the ACO would be unsuccessful. Hospitals that truly want their ACOs to flourish would have to farm out operations to independent surgery centers or something like them. "The hospital will have to offer multiple lines of business, some of which compete with each other," Mr. Flower says. Hospitals will need to tolerate ambiguity, but he says they already do this with their hospital-employed physicians, in that the employed physician may not necessarily refer to the hospital.


8. Hospitals will buy more ASCs. One solution for the hospital is to buy up independent ASCs and integrate them into their operations. We're going to see a lot of hospitals offering to buy ASCs or joint-venture with them.


Joe Flower is a frequent speaker on the future of healthcare. Learn more about Joe Flower.

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