Editor’s Note: A North Carolina trial court has upheld the constitutionality of the state’s certificate-of-need laws in a Dec. 12 ruling.
Charlotte, N.C.-based OrthoCarolina is already mapping out its ASC growth plan after North Carolina lifted its CON restrictions last month.
With the changes, the orthopedic group can build new orthopedic outpatient centers, providing high-quality care at a lower cost for patients, while giving independent surgeons another stream of revenue.
At this point, the organization has two orthopedic ASCs that will look to optimize and expand, along with two new facilities that construction has already started on.
Leo Spector, MD, CEO of OrthoCarolina, recently connected with Becker’s to share – how the regulation reform will shape the way orthopedic care is delivered, the advantages of ASCs for physicians and patients, as well as the short- and long-term ASC goals the company has.
Note: Responses were lightly edited for clarity and length.
Question: What is the significance of CON law reform in North Carolina? How will the changes impact the way care is delivered?
Dr. Leo Spector: ASCs are typically going to be high quality, if not higher, sometimes than the hospital. Especially in single specialty orthopedic ASCs, which we’re focusing on, you’re hyper focused on just doing one thing. If you do the same thing the same way, over and over again, you learn how to make it reproducible and how to make it better. Waste comes out of the system. Quality improves, and at the same time you’re also lowering cost. We know that ambulatory surgery centers are lower-cost sites of care than inpatient centers or HOPDs. The CON reform in the Carolinas is just really a tremendous opportunity for us to create greater access to these sites of lower cost and higher quality care for the entire community that we provide services to. That is first and foremost.
The second part of it is that prior to CON reform, all ASCs had to be done in joint ventures, typically with a hospital system, in order to be able to get those operating rooms. For the most part, what the hospital typically was bringing in that relationship was the OR room as an asset, and then the surgeons were bringing our patients. But I think there were some inherent misaligned incentives in those relationships. I think that’s a difficult situation that hospitals were in, because, although I’m sure that the hospitals do want to improve the quality of care and lower the cost of care for patients, they are still running a business. Every time a case that is being done outpatient has moved from the HOPD in their hospital to an ASC joint venture, they’re losing money on that. Putting myself in their shoes, it’s tough to run the business that way.
Q: What are the biggest advantages of ASCs, from a patient and provider perspective?
LS: A big advantage is that it gives us the opportunity to lower the total cost of care. Healthcare expenditure in the United States is a huge issue. While it is a big part of the economy, it also puts a strain on the other part of the economy, from the federal government that pays for Medicare, to the state level with Medicaid, to corporate America and all the self-funded plans. Our ability to help lower that total cost of care helps to alleviate some of that burden. The hope is that this translates back to the patients, who have increasingly high out of pocket deductibles, who are facing increasingly expensive healthcare plans.
As practitioners that are providing that care, it also allows us a revenue stream to maintain our status as independent practitioners. I think there is value and importance to having both employed positions that are working for large universities or healthcare centers as well as independent providers. We need our hospitals, and we need the physicians who are in those models. The independent practice of healthcare is also important. We know that independent practitioners cost less to the system. We know that that lowers the total cost of care. Because we don’t have the same economies of scale that these large healthcare systems or universities have, our ability to collect some of the facility fee through ASC ownership helps to enable us to stay independent and provide high quality, elective surgical care through the ASC access point.
Q: What are some of the short- and long-term goals for ASC growth at OrthoCarolina?
LS: In the short term, the goals are for us to expand the two existing centers that we do have because the four walls were already built. In the near term, it’s to expand those and really to begin to optimize those. Second, we really want to take the time to analyze where we want to build and partner in the future, where I envision us, is that we have a significant syndication of ASCs, in the population centers across the state. We want to have a large syndication of multiple single-specialty orthopedic ambulatory surgery centers that are either 100% owned by OrthoCarolina or are joint ventures with the right partners in those communities.
