Hospitals are looking for new ways to compete with ASCs as outpatient migration continues across the orthopedic space.
Five spine surgeons discuss how care delivery and sites of care will develop as hospitals revamp their strategies to compete with ASCs:
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Note: The following responses were lightly edited for style and clarity.
Question: What actions do you expect hospitals to take as more spine and orthopedic procedures migrate to the outpatient setting?
Michael Smith, MD. Rothman Orthopaedic Institute (Philadelphia): There is a significant payer pressure on the high cost of procedures done in hospitals and hospital outpatient departments. One of the major payers in New York just sent notice to our affiliated health system that they would refuse to authorize payment for procedures in HOPDs that could reasonably be done in standalone ASCs. Regardless of the legality and/or practicality of this move, and understanding there will be ongoing legal/regulatory/political battles, the rationale is quite obvious and clear. Standalone ASCs typically offer substantially lower overall costs for a given procedure compared to hospitals or HOPDs. This is a clear and present threat to the ongoing domination of hospitals and their affiliated health systems given the major contribution margin musculoskeletal procedures provide.
Physician owned- and run-ASCs allow reasonable physician reimbursement and controlled overall cost for the payers to coexist. As well, there are opportunities to maximize workflow efficiency and patient experience given the small, onsite and potentially nimble management structures of these facilities compared to those run by hospital administrations.
The COVID-19 pandemic also helped crystallize that hospitals are needed for sick people and vulnerable to disruption. Many of us were unable to access our hospital facilities for various lengths of time during the pandemic. People needing outpatient musculoskeletal procedures are generally not sick, and providing their care in standalone ASCs minimizes their exposure risks.
So, how will hospitals, hospital systems, hospital associations respond to this trend and to the cost pressure? Some possibilities:
1. Fighting the trend. Restrictive arrangements with physicians, especially employed physicians.
2. Delaying the trend. Political pressure to limit approval of licenses and certificates of need. Compromising with payers to reduce cost on certain procedures while maintaining high cost structures where they can.
3. Joining the trend. Creative structuring, minority co-ownership of ASCs, collaborating on diverting patients appropriately to hospital/HOPD versus standalone ASCs based on the clinical needs of each patient.
The huge cost of the U.S. healthcare system demands we pursue rational ways to provide high-quality, high-value care. Physician-owned and -run ASCs have a clear role to play in evolving our healthcare system to a more sustainable future.
Burak Ozgur, MD. Hoag Neurosciences Institute (Newport Beach, Calif.): I expect hospitals to have a more active collaborative role in the outpatient setting. Outpatient care is part of the continuum of care and thus should be considered an important part of the spectrum of treatment options with providers.
Brian Gantwerker, MD. Craniospinal Center of Los Angeles: Naturally, the hospitals will be more involved in setting up and managing ASCs. But unfortunately, as we have seen, most hospital systems lack the ability to encourage the efficiency and flexibility to manage a profitable ASC. Therefore, venture capital firms and existing big ASC players who have reliably demonstrated the necessary traits for succeeding will continue to do well. Hospitals will likely get out-competed despite the big spend, because it's not how much money you dump into the center, it's how you run it. What hospitals can learn from the ASC companies that do well is the turnover times, delays and shenanigans that are written off as de rigueur at the hospital will lead to a failed ASC.
Alok Sharan, MD. NJ Spine and Wellness (East Brunswick, N.J.): I believe the progressive hospitals will establish joint ventures with physicians to establish and develop ASCs. There is no question that many inpatient procedures will migrate to the outpatient space. Surgeons are becoming increasingly facile in performing many surgeries on an ambulatory basis. Co-owning an ASC with a surgeon will allow for hospitals to share in the value of performing these procedures in a lower-cost setting.
Christian Zimmerman, MD. Saint Alphonsus Medical Group and SAHS Neuroscience Institute (Boise, Idaho): The COVID reprise has certainly redefined postoperative scenarios in most disciplines with past pandemic surges changing admission practices and surgical urgency. The systemically and procedurally complicated folks will require larger, better equipped health system involvement, but more temporary stay units, (Trinty Health System's TOU) are burgeoning in capacity and growth. Spine surgery, with its
indemnification oversights, continues to purport diagnosis and treatment in the outpatient setting with expectations of hospital/ASC compliance.