Hospitals are re-thinking how to deliver the best quality care while improving the bottom line by reversing course on a previously popular trend. We outline strategic advantages associated with HOPD to ASC conversion in part 1 of a 2-part blog series. Read the full white paper here.
Only a few years ago, hospitals were buying ambulatory surgery centers (ASCs) and converting them to hospital outpatient departments (HOPDs). They began doing this because they were receiving 81% higher reimbursement rates on services performed in HOPDs. However, that trend is quickly ending as reimbursement shifts.
Why is this happening?
HOPD conversion shifts care to a lower cost setting, supporting two key strategies that drive hospital system success:
- Improved operational efficiency
- Physician alignment
HOPD to ASC conversions can drive advantage in terms of payer cost sharing, marketplace reputation and relevance.
Financially successful ASCs operate more efficiently than HOPDs due to a more narrowly defined scope of work. Surgeries appropriate for ASC patients can be scheduled throughout the day to fill OR block time. Patients are in and out of the facility as fast as possible, without any sacrifice in quality or safety.
In addition, the two most expensive budget line items for surgery – supplies and staffing – can be managed more efficiently in an ASC. Due to predictable scope, supply closets are stocked with exactly the devices and supplies the ASC needs. Also, because the day’s schedule can be planned without risk of interruption for trauma/emergencies, ASC personnel can assume multiple responsibilities, work part-time schedules and/or be sent home to decrease overall staffing costs.
“Hospitals are striving to reduce operational costs, and in doing so, we recognize that ASCs allow for efficiencies we could never achieve,” says Mark Murphy, Chief Strategy Officer at St. Joseph’s Health, a member of Trinity Health. “From faster turnover times to flexible staffing, there are a number of key benefits including physician alignment and satisfaction.”
For hospitals, joint venture partnerships with ASCs provide a long-term physician alignment solution and many systems are now considering allowing employed physicians to invest as partners. A joint venture is a strategic hybrid that minimizes hospitals’ financial investment and risk. It also offers physicians management resources, entrepreneurial opportunities, and the control they seek over clinically-related operating policies and equipment purchases.
Hospitals that choose to share ownership in an ASC can send lower acuity and reimbursing cases (e.g., ophthalmology and GI procedures) to the ASC and still profit from them. They can do this while freeing up hospital operating rooms for higher acuity and higher reimbursing cases.
Case in point – Robert Wood Johnson University Hospital (RWJUH) partnered with Regent Surgical Health to convert the Ambulatory Surgical Pavilion at RWJ from an HOPD to an ASC joint venture. The surgery pavilion had a proud history of clinical quality and viewed the conversion as an opportunity to increase integration with physicians. RWJUH approached Regent to invite local surgeons to participate in the center as partners.
“My partners and I have found that the ASC joint venture has provided the clinical control we wanted,” says H. Matthew Wheatley, M.D., Board President of The Ambulatory Surgical Pavilion at Robert Wood Johnson. “We’re more involved in hospital and ASC decision-making; this partnership has been a win-win for us.”