Since the first ambulatory surgery center opened in 1970, ASCs have increasingly gained traction with both payers and patients, gaining ever greater shares of surgical patients for certain types of procedures. Trends like reimbursement structures and consumer preferences indicate that ASCs are likely to continue to gain market share, making it imperative that health systems have an ASC strategy.
At a November executive session sponsored by National Medical Billing Services at Becker's 10th Annual CEO + CFO Roundtable, three ASC revenue cycle experts from National Medical Billing Services shared insights into how health systems can expand their ASC operations and why joint ventures have become the preferred model for health systems to work with ASCs. The speakers were:
- Nader Samii, CEO
- Tim Fuchs, executive vice president of business development
- Scott Allen, senior vice president of managed care contracting
Four key takeaways were:
- Revenue growth is in outpatient services rather than inpatient. Over the past few years, revenue growth from outpatient procedures has eclipsed inpatient. "In most budgets I've seen this year, outpatient volume is exceeding plan while inpatient surgery is missing by six, eight or 10 percent," Mr. Samii said. At the same time, hospitals and health systems have come to see ASCs as a way to extend their geographic reach, essentially increasing their operating room capacity through satellite facilities.
- Favorable ASC economics have led hospitals to pursue acquisitions for outpatient procedures. Historically, hospitals preferred to acquire 100 percent of an ASC, then convert it to a hospital outpatient department, which allowed the hospital to collect higher rates than what ASCs typically received. Mr. Samii said that in 2011, 20 percent of ASCs were hospital-owned; today nearly 30 percent are.
- Increasingly, the business model for hospital-owned ASCs is as a joint venture with physician owners. Hospitals have reduced their use of ASC management companies and now, according to National Medical, some 82 percent of health systems structure their ASCs as joint ventures. "The joint venture model enables hospitals to partner with physicians," Fuchs said. That allows health systems to capture market share and the referrals from physician owners.
Another benefit? Operational efficiencies. A participant from a Manhattan health system noted that physician ownership confers benefits of efficiencies in managing the ASC: "It helps us with efficiencies, like equipment. The second they're paying for something like that, as investors, it's amazing how quickly we streamline what arthroscopy system we're going to use and things like that."
- In forming an ASC joint venture, there are key considerations to keep in mind. An ASC is a different business than a hospital and should be treated as such. ASCs are a great recruiting and retention tool for physicians, but ASCs require different governance. For example, the revenue cycle is very different, and reimbursement methodologies aren't the same. Partnering with a revenue cycle expert like National Medical, who knows the ASC space, can help smooth the transition. "The ASC is essentially going to be the future in surgery," Mr. Allen said. "Low cost, low infection rates, better outcomes."
Health systems stand to benefit greatly from the acquisition of ASCs and formation of joint ventures — they can extend their brand and geographic reach while expanding their operating room capacity and retaining talent. Yet the revenue cycle for ASCs requires expertise. An ASC-focused revenue cycle partner like National Medical can make all the difference.