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Surgery center boom cuts into hospitals
The Crozer Medical Plaza at Brinton Lake in Glen Mills, Penn., houses a surgery center.
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Kai Ryssdal: There's a whole infrastructure that comes along with health care in this country. Not just the billing and the bureaucracy, but the actual places you go to get care. For decades, conventional wisdom has been that if you needed an operation, you had to go to the hospital. Even for one-day procedures.
Outpatient surgery centers have changed that. They can be easier for patients, less expensive for insurers, and big money makers for the doctors who often own them. But the boom in those surgery centers has hospitals feeling a whole lot of pain. Kerry Grens reports from WHYY in Philadelphia.
ADAM HAUSER: This is our pre-op combined and recovery area. Or PACU, as we call it. It has 17 beds.
Adam Hauser is an anesthesiologist. He wears blue scrubs and one of those little blue scrub caps as he shows off his surgery center.
Hauser: My anesthesia machine. Love my machine here. My anesthesia cart. Here's an operating room bed.
Hauser works a few days a week at a large suburban hospital. Most days he's here running the Surgery Center at Brinton Lake, which does pretty much everything.
Hauser: Orthopedics. Ear, nose, and throat. Opthalmology. Pain management services. Urology...
And a lot of procedures, like knee surgeries, that are popular among baby boomers -- a huge, well-insured market.
Hauser started the center four years ago, after realizing that many patients could be treated less expensively outside the hospital. Attracting surgeons was easy, he says, because outpatient centers offer simpler scheduling and faster turn-around times.
Hauser says Brinton Lake doubled its business in the last two years.
Hauser: We haven't actually done the whole budget for next year yet, but we're probably going to anticipate 15-20 percent margin next year.
Profits like that are typical, and have been behind a small explosion of these ambulatory surgery centers, or ASCs as they're called. With hundreds of new centers opening each year, some states have begun regulating their growth.
ROBERT Field: These ambulatory centers tend to be very profitable because they can do high volume with low overhead on well-insured patients.
Robert Field is a health care regulation expert at Drexel University Law School. He says those surgeries are also very important to hospitals. The profits subsidize their most expensive departments, such as burn units, ICUs, and emergency rooms. And that's creating stiff competition for surgical outpatients.
Field: This is the ultimate cherry picking. And the cherries are the patients who are most profitable.
With every new surgery center that pops up, hospitals lose out.
Richard Keenan is the chief financial officer of Valley Hospital in Ridgewood, N.J. He says surgery cases earn the majority of the hospital's revenue.
RICHARD Keenan: For the first time in the history of Valley Hospital, we did fewer surgical cases in 2009 than we did in 2008, than we did in 2007. So we have seen the erosion.
And he means that literally.
Keenan: That's an ambulatory surgery center right there.
Grens: So, right within view of your office?
Keenan: Right.
And there are five more centers in adjacent towns.
Surgery centers might be the thorn in hospitals' sides, but they save money for the health care system -- a primary goal of health reform.
Kathy Bryant is the president of the Ambulatory Surgery Center Association.
KATHY Bryant: Right now Medicare pays ASCs about 59 percent of what they pay hospitals for performing the same procedure. So there's a great deal of savings that Medicare can achieve.
Even Richard Keenan at Valley Hospital agrees.
Keenan: It's hard to argue that it's a bad thing.
Hospitals are taking notice. More and more of them are teaming up with doctors to open their own outpatient centers.
In fact, the Brinton Lake Surgery Center run by Dr. Hauser, is partially owned by the hospital he works for.
In Philadelphia, I'm Kerry Grens for Marketplace.
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High healthcare costs are synonymous with Hospital Charges. Hospital price gouging is the reason for the failure of the American Healthcare System. They are untouchable since they own the government with their huge lobby and have done a fabulous job making physicians indentured servants to them and scamming the public. The only reason they want to have part ownership in ASCs is to try to control them from harming or reducing their Outpatient Facility price gouging. They will schedule the profitable procedures/patients to the Hospital and negotiate the managed care contracts under the Hospital umbrella. Bottom line hospitals especially HCA and Tenet and even some large non profits systems are killing America both literally and financially. Non Hospital owned ASCs are restoring the integrity and viability of our healthcare system. Keep people out of the hospital and keep the hospitals from price gouging and you fix the entire system. PERIOD.
Very nice piece on ASC and the benefits they provide patients in a safe environment. ASCs provide a more specialized and safer facility than hospitals. Currently, the AHRQ is developing strategies to reduce complications during and after surgeries by 25% by year's end. Most of these complications occur in hospital settings. The company I work for, Surgical Risk Solutions, offers patients protection (COMPLICATION INSURANCE) from surgical complications should they occur. To me, its unfortunate that we need this insurance product.
Patients are highly satisfied with the services in ASC's. They provide efficient surgical services without the hours of waiting. The patients are well, so the risks of hospital acquired infections are next to nothing. We will always need hospitals to care for the medical patients, but out-patient surgery provides great outcomes for far less of our limited healthcare dollars.
Insurance Companies are here to make money and their sales force leverage the hospital names in order to sell more policies; therefore, the insurance industry is contributing to the skyrocketing cost of healthcare by giving ASC very poor reimbursement rates and over pay hospitals because their name helps sell policies.
CMS has not truly taken a good look at ASC's simply because of the history of the people on their boards. No one truly cares about saving the American public money and quality care. ASC's have lower infection rates than hospitals, higher satisfaction rates, and more economical. It is the American Model in practice.
It was very interesting to read the transcript of the interview, and more to the point, the comments posted. Mr. Keenan failed to disclose that Valley Hospital has it's own large, fairly new (within the last five years) free standing ASC about 3 miles from it's hospital. As to Mr.Macfarlane's comment about Stark. In New Jersey,ASCs are in a bitter, on-going battle with all insurance carriers and even the state Department of Banking and Insurance over out of network. Unlike most states, the majority of ASCs (and there are over 400) in New Jersey are out of network. In 2009,the state legislature passed the Cody Law which gave physicians the right to own and self-refer to ASCs. Indeed, they have always had a Safe Harbor exclusion, but must abide by the 'one third' rule, which mandates that any physican owner must perform 1/3 of his (what CMS deems applicable)cases in said center, and 1/3 of his medically derived income must come from those cases. The state of New Jersey also imposes special taxes on ASC's, including one of 6% on cosmetic procedures, the proceeds of which are then given to the hospitals to help fund their ERs. Cherry picking? At one of my centers, appx. 50-60% of the insurance is Medicare (hardly a good paying insurance). Contrary to popular myth, we do not turn down Medicare cases, or have the doctors take them to the hospitals.
Thank you for your coverage of the Ambulatory Surgery Center industry.
However, it was disappointing to me that the focus seemed to be primarily on profits rather than on patients.
As a physician who has worked as an Anesthesiologist in ASCs (without any ownership interest), I am very proud of ASCs’ tradition of providing excellent care to our patients.
This history of superlative patient care is the fundamental basis of our work , not an abrogation of the hospital industry’s purported right to overcharge selected
“cherries†to underwrite other activities.
Dear Sirs I thought your article comparing ambulatory surgical centers (ASC) and hospital surgical care was fair to poor. Did you know most hospitals own a major portion of surgury centers. Did you know hospitals get paid 10 to 20 percent more for the same procedure by the federal government. Did you know hospitals convert the ASC to a hospital out patient department so it can raise the cost by 10 to 20 percent. Did you know physician owed ASC cut health care cost and Hospital systems increase the cost. Did you know half the money made by the physicans in ASCs is given back to the government in taxes because physicians don't hide behind a non for profit status. As we can see, the article on ASCs is lacking. I am glad the medical community has a higher standard than you reporting.
Thank you Marketplace and Public Radio for your informative broadcasts.Also thank you Kathy Bryant for all you give to the ASC industry.I am a surgical RN by degree and am very fortunate to be employed as the Director of a very high quality ,patient focused,efficient and safe ASC.I take offense to the comment that our industry"is the ultimate cherry picking.And the cherries are the patients who are most profitable". Mr Field needs to research his facts.We are not reimbused for implants and medical devices or in some cases 2nd procedures.Our margins are thin and contractual write offs are high but we make it up in efficiency and standardization of supplies. I have worked in Hospital systems and understand why they have concern but please dont be critical of a health care model that is working.
To call ASCs "cherry pickers" negates the high percentage of both Medicare and Medicaid cases done in ASCs. Most ASCs also do significant numbers of charity cases, for which they, unlike hospitals, receive no compensation. Having had surgery in both places, I would choose an ASC over a hospital just about every time. It is faster; there is less "hassle"; and my separation from my family or friends is minimal. The staff in an ASC also seems to enjoy their jobs more than the staff in the hospitals I have experienced. I believe there is room for both types of facilities in this economy. Hospitals would do well to start trying to run their ORs more like an ASC--leaner, faster, more cost-effectively.
Robert Field is a health care regulation expert at Drexel University Law School. He says those surgeries are also very important to hospitals. The profits subsidize their most expensive departments, such as burn units, ICUs, and emergency rooms.
David Weber has worked for hospitals, for physicians, for insuarnce companies, and now for a surgery center. He says that Robert Field's argument is based on the false premise that hospitals should charge more for surgeries and less for emergency room care, ICUs, and burn units. This is at the core of America’s health care problem. We must pay for the true cost of the care we receive. Hospitals need to be paid for the true cost of surgeries, emergency room care, ICUs, and burn units. If hospitals could provide surgery care for less than 59% of the payments they receive now, then the prudent health care surgery consumer might chose the hospital. If insurer’s paid the true cost of emergency room care, than I would not be surprised if free standing private, efficient, high quality, lower cost, non hospital providers would also compete with hospitals for emergency room patients.
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