Convenience. Cost-effectiveness. Low-infection rates. Many reasons exist as to why consumers are increasingly choosing to have surgeries done in outpatient clinics. Healthcare is steadily moving towards a value-based payment model, so naturally the appeal of Ambulatory Surgery Centers (ASCs) is increasing.  In the midst of this trend we see moves for expansion in some states, a discussion on adding procedures like joint replacements to ASCs, and acquisition moves.

If we as a society are trying to bend the cost of healthcare, we need to push more volume out of the inpatient and toward the outpatient, and surgical centers do that.

With the mounting attraction to these types of outpatient healthcare services, more attention is being paid to their operation; whether or not the services provided by outpatient surgery centers should increase; and whether or not Medicare should cover a total joint replacement at such facilities. We take a look at recent news surrounding ASCs to attempt to uncover what the future holds for these healthcare facilities.

Massachusetts to Witness an Expansion of ASCs?

Independent ASCs provide an alternative to hospital care by offering outpatient surgeries at their locations. Types of surgeries routinely performed at these locations include joint surgeries, biopsies, cataract surgeries, colonoscopies, orthopedic procedures and diagnostic care. Recent government regulations are expanding the opportunities available for outpatient surgery centers in the United States.

Medfield recently reported that in the state of Massachusetts under new regulations approved January 11, people may start to see more and more surgery options outside of the traditional hospital setting. Under the new laws, ambulatory surgery centers that are already in operation, will be allowed to expand and offer new lines of patient services without the affiliation of an acute care hospital. The article from Medfield explains that these regulations repeal a 20-year moratorium on new outpatient surgical capacity according to Ronna Wallace, executive director of the Massachusetts Association of Ambulatory Surgery Centers.

Should Medicare Fund Total Joints in Ambulatory Surgery Centers?

As the popularity of outpatient total joint replacements grows, a question that is receiving more attention in the healthcare community is whether or not Medicare should remove total joint replacements from the inpatient only list.

Recently, Becker’s Ambulatory Surgery Center Review interviewed both Derek Johnson, MD, an orthopedic surgeon and secretary at Denver-Vail Orthopedics and Barry Waldman, MD, director of the Center for Joint Preservation and Replacement at the Rubin Institute for Advanced Orthopedics in Baltimore to discuss their views on outpatient total joint replacements and the future for these procedures in the ASC setting.

Becker’s asked the two surgeons if they felt that Medicare should or should not allow total knee replacement surgeries in the outpatient ASC setting, and why. Here are their responses:

Dr. Derek Johnson: I feel it is in the best interest for Medicare to allow joint replacement to occur in the outpatient setting due to the substantial cost savings for the system. An ambulatory surgery center can likely provide joint replacement in the healthy Medicare population at a cost 25 percent to 40 percent lower than traditional hospital costs. Ambulatory surgery centers are often found to have lower infection rates and complication rates compared to inpatient hospitals as they are not commonly caring for patients with infections and complex medical problems.”

Dr. Barry Waldman: Outpatient knee replacement is an exciting development as it is more pleasant and convenient for a select group of patients. It also can be dramatically less expensive, as much as 40 percent cheaper, with no decrease in safety. I think that Medicare has the duty to both its enrollees and to the nation’s taxpayers to approve this for some total knee cases.”

Application for New Surgery Center gets Shot Down

Since the costs are often lower, you would think everyone would be in favor of opening more outpatient surgery centers, right? For a South Carolina Medical University, this is not the case. The Medical University of South Carolina proposed to open a new outpatient surgery center in conjunction with another health care provider, but the application for the project was shot down by several opponents, many with vested interests.

The Post and Courier covered this story, and according to publication: “The state health department recently denied an application to build The Surgery Center at Mount Pleasant, a freestanding facility that would have been staffed by doctors from MUSC’s Medical University Hospital and East Cooper Medical Center.” The article continues to explain that, “the proposed venture illustrates how health care industry in the Lowcountry can be both competitive and collaborative, sometimes with entangling and overlapping interests.”

Will We See an Increase in Surgery Center Acquisition?

Surgical Care Affiliate’s (SCAI) recent acquisition by the pharmacy benefit manager unit of insurer UnitedHealth Group Inc.(UNH) has sparked curiosity as to whether other surgery center operations will generate takeover interest in this environmental shift towards lower-cost settings.

This story was recently picked up in The Street, and the author points out that the rival of the target, Surgery Partners Inc.  (SGRY), is under speculation, but any type of transaction would still be several months in the making. Chad Vanacore of Stifel Nicolaus & Co. sums up the interest of ambulatory surgery center acquisition stating:

“The question is, ‘In a post-ACA world, are these more attractive or less attractive assets?’. The market seems to be telling us they’re actually still attractive … If we as a society are trying to bend the cost of healthcare, we need to push more volume out of the inpatient and toward the outpatient, and surgical centers do that.”

It seems there’s a lot going on in the ASC industry this year with expansions in some quarters, some proposed openings denied, and acquisitions in the mix.  We’ll be keeping an eye on this for our ASC clients and reporting throughout the year.