Hospitals will continue to lose orthopedic cases to ASCs; here's how they will react

Practice Management

Hospital officials knew outpatient migration was on the horizon for many years, but are now rethinking strategies quicker than expected as many factors, including the COVID-19 pandemic, accelerated the trend.

Other factors driving the momentum include technological advances, surgeons becoming more facile at minimally invasive techniques, as well as patients' and payers' demand for lower-cost care.

Hospitals and health systems have a long history of pushing back against ASCs, claiming that the unfair competition would hamper their ability to provide care. Hospitals occasionally found success slowing the development of the ASC industry, but recent years have seen the outpatient industry boom.

The Ambulatory Surgery Center Association reports that there are about 5,700 ASCs in the country, compared to 6,090 hospitals, according to the American Hospital Association. And that gap has been narrowing each year.

While the ASC industry continues to migrate more cases, many hospitals are struggling to keep their lights on; the American Hospital Association estimated that the pandemic cost hospitals more than $323 billion in lost revenue in 2020.

"Hospitals are not going to stay on the sidelines. They can't let their golden egg leave the goose," Daniel Lieberman, MD, of Phoenix Spine & Joint, told Becker's. "They're going to have to be heavily involved in ASCs, so they're going to be another stakeholder that will get even more fired up and involved in our industry."

Spine and orthopedic procedures once considered complex — and often requiring days of recovery in the hospital — are now being done at ASCs, with patients going home the same day.

Over the past decade, spinal fusions, disc replacements and total joint replacements are among the procedures that have migrated to the outpatient setting, along with many other higher-acuity cases.

Today, hospital operating rooms are becoming the location for only the most complex procedures and highest-risk patients. This has stopped some hospitals from investing in new technologies, such as robots, because they expect to lose so many elective cases in the next five years, according to Vladimir Sinkov, MD, of Sinkov Spine Center in Las Vegas.

To recapture some of this lost revenue, hospitals will need to become more involved in setting up and managing ASCs.

"The progressive hospitals will establish joint ventures with physicians to establish and develop ASCs," Alok Sharan, MD, of NJ Spine and Wellness in East Brunswick, N.J., told Becker's. "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."

Other hospitals may hire their own surgeons to maintain their inpatient volume and invest into their own outpatient surgery centers, according to Erkan Alci, MD, of OrthoSC in Conway, S.C.

It's not a matter of if hospitals get more involved in ASCs; it's a matter of how and when.

"But unfortunately, as we have seen, most hospital systems lack the ability to encourage the efficiency and flexibility to manage a profitable ASC," said Brian Gantwerker, MD, of Craniospinal Center of Los Angeles. "Therefore, venture capital firms and existing big ASC players who have reliably demonstrated the necessary traits for succeeding will continue to do well."

When making the transition, hospitals must learn from ASC management companies. Turnover times and delays — often written off as the norm at hospitals — will lead to a failed ASC.

"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," Dr. Gantwerker said.

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