Thursday, October 11, 2007

Healthcare needing revolution or transformation?

The Denver Business Journal - by Bob Mook Denver Business Journal

Convenience and lower costs are driving more patients away from hospitals to ambulatory surgery centers (ASCs) for basic outpatient surgical procedures.

In Colorado, there are 105 ASCs, and the number of new facilities grows about 7 percent a year, according to the Colorado Ambulatory Surgery Association.

Sue Hayes, administrator for Englewood’s Rocky Mountain Surgery Center, said physicians like the centers because it’s easier to book an operating room in a short amount of time than in hospitals. Rocky Mountain Surgery Center is most commonly used for knee replacement, knee arthroscopy and hip joint replacement surgeries.

Hayes also claimed in many cases, surgery centers give patients better service than do hospitals.

“I felt like a VIP,” said Thomas Wells, who visited Rocky Mountain Surgery Center in early September to have a large welt drained from his stump.

Wells, 54, who lives in Denver, lost a leg during a motorcycle accident last July. He’s endured about 18 surgeries because of the accident.

Health care observers say doctors are investing in the ASCs to fund their retirement strategies, since younger physicians are reluctant to buy their practices.

Even hospital networks, which once regarded the centers as revenue-sucking competitors, are buying bigger ownership stakes in ASCs.

According to the Federated Ambulatory Surgery Association, a Washington, D.C., trade organization representing surgery centers, hospitals have an ownership interest in 21 percent of ASCs, and 3 percent of ASCs are owned entirely by hospitals.

“Hospitals originally viewed these centers as competition and sought to stifle their growth,” said Jim Hertel, editor of the industry newsletter Colorado Managed Care. “But in the past few years, they recognize [ASCs] as extensions of hospitals that can help moderate patient demand at a time when there’s significant growth in volume.”

ASCs once were criticized for creating an economic strain for the industry, because they siphon patients who are covered by insurance and that pays for their care, while hospitals get saddled with uninsured patients whose costs often goes uncovered.

But Hertel said he wouldn’t be surprised if nearly all ASCs were 100 percent owned by hospitals in the future.

Centura Health, which manages 12 hospitals owned by Catholic Health Initiatives, owns nine surgery centers in Colorado, including the Golden Ridge Surgery Center in Golden and the Crown Point Surgery Center in Parker.

HCA-HealthONE LLC, a Denver-based health care network whose hospitals include the Medical Center of Aurora, North Suburban Medical Center, Presbyterian/St. Luke’s Medical Center and Rose Medical Center, owns a 51 percent stake in Rocky Mountain Surgery Center, which is located less than one mile away from HealthONE’s Swedish Medical Center.

HealthONE has a stake in 13 ASCs in Colorado, said David Roy, vice president of operations for the ambulatory surgery division of HealthONE.

The center also benefits from having HealthONE’s administrative muscle in negotiating contracts and recovering claims from insurers — a benefit that freestanding surgery centers don’t always enjoy, Hayes said.

Surgical costs at ASCs could be as low as 60 percent of comparable procedures performed at hospitals. One reason is there are no hospital room charges.

“We don’t have all the overall costs [of hospitals],” Hayes said. “We’re not running a 24-hour facility or an ER. We stay lean and mean in staffing.”

Hayes added that many nurses prefer working at an ASC over a hospital because of the operating hours — which seldom require overtime or late nights.

The popularity of surgery centers is likely to grow because of the convenience and price factors, Roy said.

He noted that the federal government has moved to allow Medicare reimbursements for 750 procedures to be accepted in outpatient centers beginning next January.

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