Becker's ASC Review

9 grown to view ASC joint ventures as a critical strategy for either freeing up hospital operating rooms, developing closer relationships with physicians and for having a low cost site of services for outpatient surgery. Many hospital systems are quite proactive in their efforts as opposed to sim- ply defensive. Independent surgery centers in some markets have gravitated to hospital partners for much the same reasons the national ASC chains have. Some national chains and independent ASCs have heavily resisted hospital partnership. Of all the ASCs operating in the United States, approximately 20 percent to 25 percent have some ownership by a hospital partner. Ambulatory Surgical Centers of America CEO Luke Lambert says, "Hospitals now see ASCs as essential to a future where quality and cost effectiveness will be demanded. Regulators are beginning to appreciate how important ASCs are to access and controlling costs. Payers have become much more active in creating incentives for patients and physicians to make use of ASCs. With this growing level of recognition and appreciation, hospitals, payers and risk-taking provider groups are buying and partnering with surgery centers like never before." 6. Out-of-network remains a challenge. Each year, there are approxi- mately $600 billion of out-of-network claims that are processed throughout the country. Increasingly, big payers and small payers are clamping down on out-of-network payments. ey either look to pay a smaller amount or don't pay, or the ASC has to fight to get paid. is has become a constant issue with surgery centers and physicians. In fact, certain companies have evolved like CollectRX in part to focus very directly on these issues. Naya Kehayes, CEO and managing principle of Eveia Health Consulting & Management, says, "Payers are being held accountable by employers and are scrutinizing out-of-network claims. As a result, payers are implementing ag- gressive audit procedures and demanding refunds from providers who offer out-of-network patients discounts. Payers are also implementing compensa- tion penalties to physicians utilizers of out-of-network surgery centers and some are terminating contractual relationships with providers to deter physi- cians from providing surgery in an out of network surgery center." 7. The number of surgery centers. ere are currently approximately 5,400 to 5,700 Medicare-certified surgery centers in the country. In contrast, there are about 5,000 acute care hospitals. Of the 5,400 to 5,700 surgery cen- ters, we would expect that approximately 30 percent to 40 percent have a hospital or a management company partner. is means that there are still several thousand that are "independent." John Newman from Constitution Surgery Centers says, "To paraphrase Dick- ens, this is the both the best of times and the worst of times for ASCs. Never have the challenges been greater for the industry. Overall, the ambulatory sur- gery center space reflects a mature market, with fewer opportunities for true de novo development. ere also are a number of challenges for existing facili- ties. ese range from the impact of hospital physician employment to price transparency initiatives and other increased regulatory burdens to third party payor cost-containment measures, including in particular out-of-network constraints. at having been said, I remain bullish on the future for ambu- latory surgery centers. ASCs fundamentally empower physicians to promote efficiency in patient care. As long as ASCs maintain their inherent capacity to be both simultaneously cost-effective and qualitatively superior clinically, they will always have a place in the market. With technological advances, I see this role only growing for well-managed facilities to undertake a broader array of more complex surgical services. e key is for ASC owner operators to really know their markets and be masters of the data and analytics necessary to dem- onstrate and be compensated for their financial and clinical merit." 8. Reimbursement. Medicare reimbursement remains relatively flat for surgery centers. From a commercial reimbursement perspective, the move- ment in reimbursement is all over the place. Surgery centers are oen most at risk in situations where they have received great reimbursement from payers in the past. In contrast, there does not seem be draconian reductions in reim- bursement. e bigger challenge in markets appears to be just getting a good contract at all with payers in certain areas. Ms. Kehayes presents some interesting insight on payer contracting issues and reimbursement. She says, "ASCs may not present an opportunity for sav- ings to payers in certain markets due to market competition and increased rate competition by hospitals for outpatient surgery. With the migration of surgery out of the hospital setting, hospitals focus their efforts on increas- ing reimbursement rates for services they provide and they may reduce re- imbursement rates on outpatient surgery in exchange for increases to rates on services they provide as part of their negotiation with payers. erefore, hospitals may have lower reimbursement rates than an ASC for traditional outpatient surgical procedures. is is impacting the ASC's ability to negoti- ate contracts in markets where hospitals are undercutting surgery pricing." 9. The large chains — Majority and minority investment. e large chains seem to be thriving and recovering fairly well. A couple years ago it seemed like a couple of the chains had negative growth. Now it seems like they have returned to relatively positive growth. Many of them are very strategic in their development and growth. Just this past March, Tenet Healthcare formed a joint venture ambulatory business with United Surgical Partners International, thus forming the largest ASC company in the current market. Further, AmSurg has diversified through acquisition, Surgery Partners and Symbion combined and SCA seems to be growing rapidly and thriving. Many of the chains that focus on minority ownership also seem to be thriv- ing. ese include companies like ASCOA, Regent Surgical Health, Nueterra, Blue Chip Surgical Partners, ASD Management, Merritt Healthcare, Consti- tution Surgery Centers, Physicians Endoscopy, Surgical Management Profes- sionals, Pinnacle III, Foundation Healthcare, Practice Partners in Healthcare and more. MFC and Meridian Surgical Partners, who focus on majority own- ership, also seems to be thriving. Mr. Lambert says, "In the next five years, we'll continue to see physicians sell- ing ownership in their ASCs to hospital systems, specialized ASC companies and risk-taking provider groups. In states where the hospital lobby largely restricted ASC development we'll see hospitals leading the development of new centers in partnership with physicians and ASC development compa- For more information, call 425-657-0494 or visit our website at www.eveia.com Eveia's Clients: · Ambulatory Surgery Centers · Surgical Hospitals · Health Systems with ASC Relationships · Physician Practices · Anesthesiologists ASC Operations Compliance & Consulting Services Preparing for excellence Provider Business Services Optimizing opportunity Provider Contracting Services Reimbursement experts

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