Becker's ASC Review

9 Becker's ASC 21st Annual Meeting – The Business and Operations of ASCs – Call (800) 417-2035 • Health plans are now required to provide personalized out-of-pocket expense infor- mation to enrollees, which is estimated to reduce healthcare spending by $15 billion to $20 billion because most companies do this already, but many patients don't pay atten- tion to the prices "If you are not changing, you are falling behind," says David Miller, President of Nueterra Global Alliance. "Change is imminent and I think sur- geons and surgery centers have to be aware of what is going on in healthcare. It's better to be early adopters than late to the game." Price transparency isn't a silver bullet to reduce all excessive healthcare spending, notes the re- port, but it can certainly steer patients, payers and providers in the right direction. Medicare now re- leases hospital chargemaster data on highest-cost procedures, and individual physician payments for procedures such as eye surgery, colonoscopy and spinal fusion are available for all to see. ASC data isn't currently released publicly, but with quality reporting requirements some in the industry feel it's a matter of time before that data is released as well. In the meantime, patient de- mand will drive price transparency "I think people are going to become more edu- cated about their healthcare purchases and they will demand transparency on quality, outcome, patient satisfaction and cost," says Mr. Miller. "If you are looking 20 years down the road, every- one's commode will be open and we'll know the price, profits being made, quality and satisfaction scores." There are several ways ASCs can benefit from becoming more price-transparent and creating packaged pricing. "We're bringing in new revenue opportunities for ASCs they wouldn't otherwise have," says Mr. Miller. "Physicians in many mar- kets are now going back to the employed model and ASC revenue is slipping. The biggest play we have is to bring in new patients from self-funded employers or international travelers to seek care at their centers. International patients will pay for the quality they get in the United States and it's a revenue stream free of domestic regulation." Packaged pricing The cornerstone of Nueterra's business is price transparency, as the company does business on an international level to connect patients and self-funded employers to high-quality, low-cost healthcare; many times that includes directing them to ASCs. "As we were vetting our business model, we found that discounts off chargemaster data were not consistent and people didn't want that," says Mr. Miller. "We needed packaged pric- ing and transparency to succeed in the interna- tional market." Much like a "bundled payment" concept, pack- aged pricing includes a base physician, facility and anesthesia fee; the price could vary based on the complexity of the case or unique patient factors. "The customer doesn't want to receive a discount and then be nickled and dimed for band-aids and swabs," says Mr. Miller. "They want to know how much it will cost so they can make an informed decision about where they want to go for care." In May, Bedford (N.H.) Ambulatory Surgical Center partnered with health plan Harvard- Pilgrim Healthcare for bundled rates on routine colonoscopy. The rates include fees for the sur- geon, anesthesiologist and other clinicians. The ASC had bundled payments for colonoscopy and esophagogastroduodenoscopy designed for unin- sured patients for several years prior to the new partnership. "I think more and more bundled programs will be coming down the way — it simplifies the system, reduces confusion, it's all upfront," said Bedford ASC Director of Business Strategy Chris Henderson in an InsuranceNews report. So far, more than 40 patients have used the new bundled payment program. Publishing prices online Another growing trend in the ASC space is pub- lishing prices online. Centers like the Surgery Center of Oklahoma are able to attract medical tourism patients from around the United States and Canada for surgery while pressuring local hospitals to bring their prices down as well. MEDARVA Stony Point Surgery Center in Rich- mond, Va., first posted out-of-pocket costs for 25 to 30 of its most common surgical procedures across several specialties. "There were several fac- tors that motivated us," says CEO of MEDARVA Healthcare Bruce P. Kupper, MHA, FACHE. "First of all: transparency. We want to let people see what things really cost. Recently there have been several articles in the local newspaper examining healthcare costs and comparing prices at nearby hospitals. We felt this was an opportunity for us to educate the community on ASCs, a low-cost, high-quality alternative to the traditional acute care hospital." It took six weeks from making the decision to publish prices online to actually going live on the center's website. The steps Mr. Kupper and his team took included: • Identify most common procedures • Determine pricing for most common pro- cedures • Research prices on insurance company web- sites for comparable pay • Ensure posted prices will cover costs Price Transparency Will Save Healthcare $100B: How ASCs Are Taking Advantage (continued from cover) performed in the first quarter of 2013. "We have ex- ceeded our internal revenue estimated by 8 percent in the first quarter," said Northstar Healthcare CFO Harry Fleming in a news release. The increase in pa- tient service revenue was offset by a rise in operating and administrative expenses. The company invested in growth and diversification. As of March 31, the company owned interest in and managed four ASCs, two imaging centers and one urgent care clinic. Surgical Care Affiliates SCA's total net operating revenues, excluding facili- ties in which the company does not own a control- ling interest, increased 2.1 percent from $192 mil- lion to $196 million. System-wide net operating revenues, including all facilities in which SCA has an ownership, increased 8.7 percent. "We continue to have success in our efforts to develop new am- bulatory surgery centers with our existing health system partners. We have also had continued suc- cess in adding additional health system and physi- cian partners and look forward to the growth that we expect to result from these new relationships," said SCA President and CEO Andrew Hayek, ac- cording to the report. Despite the harsh weather of the first quarter, SCA expects its previous guidance to remain the same, which places EBITDA less NCI in the range of $154 million to $158 million. As of March 31, SCA operated 175 surgical facilities. Symbion For the first quarter of 2014, the company re- ported $133.97 million in revenue compared to $130.38 million in the first quarter of 2013. Op- erating income was $21.34 million, up 3.8 percent from $20.56 million in the first quarter of 2013. Symbion facilities performed 51,970 cases during the first quarter of 2014, up from 51,906 in the same period in 2013. Revenue per case grew 4.3 percent from $2,602 to $2,713. Symbion acquired an additional 13.6 percent ownership stake in an Idaho Falls, Idaho surgical hospital for $24.4 mil- lion. As of March 31, the company owned a 61.7 percent stake in the facility. The company also plans to sell two facilities, one in Lynbrook, N.Y., and one in Worcester, Mass. Surgery Partners an- nounced plans to acquire Symbion in June. United Surgical Partners International USPI reported consolidated net revenues of $145.3 million, compared to $145.1 million during the same period in 2013. "This was a challenging start to 2014 for USPI, with a combination of severe weather in certain markets and continuing change in insurance plan design impacting first quarter volumes," said USPI CEO William Wilcox in a news release. Cash flow from operating activities was $61 million this quarter, compared to $38.6 mil- lion in the prior year period. Despite a slow start to the year, USPI demonstrated active development plans. The company acquired two facilities in the first quarter and completed an additional acquisi- tion after the close of the first quarter. USPI owns and operates 216 facilities, 148 of which are joint ventures with not-for-profit healthcare systems. n

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