Ambulatory surgery centers compete with hospitals for outpatient dollars
For 2023, CMS has removed 10 procedures from the Inpatient Only list in its proposed rule, with comments due by September 13.
From left: American Surgery Center cofounders Dr. Isaias Irgau, medical director, and CEO Kemal Erkan
Photo courtesy American Surgery Center
Ambulatory surgical centers are gaining traction in the outpatient market. ASCs continue to perform more than half of all U.S. outpatient surgical procedures, and they can expect to see greater volumes as the number of outpatient procedures increase by an estimated 15% by 2028, according to Fortune Business Insights.
Over the next 10 years, surgeries are projected to grow 25% at ambulatory surgery centers and 18% at both hospital outpatient departments and physician offices, according to a report published this year by Sg2. The reason for the increase in ASC growth is cost, according to Kemal Erkan, chairman of the board at the American Surgery Center and CEO of United Medical, an ACO platform which he owns.
An average gallbladder surgery costs $12,000 when done at a hospital while the same procedure costs $2,200 at the surgery center, according to Erkan.
"Surgery centers are the future for reducing costs," Erkan said. Hospitals, he believes, should focus on the more severe cases. This means insurers pay less for care, he said. More than 80% of the American Surgery Center volume is in value-based contracts.
Last year analysis by UnitedHealth Group found that payers could reduce surgical costs by upwards of 59% by directing members away from hospital settings to ASCs.
Financially, surgeons benefit from working for ASCs, because, when they perform outpatient surgery in a hospital, they get no facility fees, Erkan said.
WHY THIS MATTERS
Over the past decade, minimally invasive surgical procedures performed on an inpatient basis have shifted to outpatient facilities.
A rapid expansion and innovation in technology, telehealth, EHRs and mobile health applications has simplified patient monitoring, particularly postoperatively and for chronic conditions, and has contributed to the rise in outpatient care, according to Erkan.
Demand for outpatient care has grown in such areas as diagnostic and ultrasound services, cardiac catheterization, spinal, bariatric and cataract surgeries. The shift prompted hospitals to expand their market share by acquiring outpatient facilities and physician practices. Hospitals also have been setting up ambulatory doctor offices on their own campuses.
Inpatient services had previously been the main source of hospital revenue. By 2019, outpatient services were on track to generate similar revenues, according to the University of North Carolina Wilmington.
The Centers for Medicare and Medicaid Services attempted to shift more inpatient care to outpatient settings by eliminating the Inpatient Only list in its Outpatient Prospective Payment System rule for 2021.
The rule eliminated the IPO list over three years. The list consists of 1,700 procedures for which Medicare will only pay when performed in the hospital inpatient setting. Under the new rule, 298 services were to be taken off the list in the first year. These were musculoskeletal-related services that previously could only be done in an inpatient setting, according to the National Law Review.
In addition, CMS added 11 services to the ASC Covered Procedures List, including total hip replacements, which would lead to increasing ASC volumes.
However, after receiving much stakeholder feedback, CMS stopped the elimination of the Inpatient Only list.
In its 2022 Hospital Outpatient Prospective Payment System Proposed Rule, CMS added the services removed in 2021 back onto the IPO list in 2022.
For 2023, CMS recommends removing 10 procedures from the Inpatient Only list in its proposed rule released in July. Comments on the 2023 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System proposed rule are due by September 13.
Ekran contends that, since these surgeries are once again only covered in inpatient environments, it effectively gives hospitals a monopoly on these procedures for 50% of potential patients.
"There is no reasonable rationale for these policy rollbacks and no data to support this decision," he said.
THE LARGER TREND
The United States ambulatory surgical centers market size is estimated to reach $58.85 billion by 2028, according to the Fortune Business Insights report. The market value reached $34.73 billion in 2020 and rose to $36.96 billion in 2021.
Surgery centers often specialize in a particular type of surgery, such as orthopedics. The privately held American Surgery Center focuses on bariatric surgeries.
It is Cerner's authorized ambulatory surgical center. Cerner gave the ASC a cloud platform to share patient information. This means it's clinically integrated within the EHR. The software manages patient flow of a patient in real time.
Surgeons who operate in the ASC also use Cerner software as part of their contract with United Medical, so the patient records are integrated. This has made a huge difference in making the American Surgery Center function more like a hospital, according to Erkan.
"Until a few years ago, there simply were no good options," Erkan said. "An EHR system designed for a physician's office would not have the functionality ASCs need to support the work they do."
Twitter: @SusanJMorse
Email the writer: SMorse@himss.org
