Volume 7 Issue 13, July 7, 2020
by Joan Dentler, President and CEO, Avanza Healthcare Strategies
Much has been said about the social and business opportunities buried within the COVID-19 crisis. Who hasn't been on a video conference when someone tried to invoke Sir Winston Churchill's quote: "Never let a good crisis go to waste."
Without a doubt, ambulatory surgery centers (ASCs) took a big hit when elective procedures were all but banned, but the rewards for doing the right thing are starting to make themselves known. With the doors of ASCs reopened and surgical volume steadily approaching pre-pandemic levels, we urge providers to see the opportunities ahead.
We have no evidence that the demand for elective surgeries has diminished as a result of the COVID-19 crisis. ASCs are working to reschedule those delayed procedures quickly and safely. Centers should also be working with their medical staff and referral sources to schedule and perform procedures that were identified during the shutdown but could not be scheduled.
Hospitals, like ASCs, had scheduled elective procedures that needed to be postponed. ASCs have a window of time — in some areas of the country, likely a lengthy window (more on this next) — to capture and perform those appropriate procedures resulting from the backlog and/or overflow from local hospitals focusing on COVID-19 and more emergent cases.
In the past few weeks, we have witnessed surges of COVID-19 cases in Texas and Florida that forced state governments and hospitals/health systems to reverse course on their reopening plans. This included stopping elective surgeries again to help maintain hospital capacity for coronavirus patients. With rapid surges occurring throughout the country (e.g., Arizona, California, North Carolina, Tennessee), other states and hospitals may need to take similar action.
What is important to note is that, at least as of early July, the new ban on elective surgeries appears to apply primarily to hospitals and hospital-licensed facilities (e.g., hospital outpatient departments (HOPDs)). This means ASCs can continue to perform procedures and potentially take on those being canceled at hospitals.
When one considers the likelihood that it will take some time to get these surges under control, coupled with the potential for a "second wave," and it would seem ASCs should be in a position to quickly make up surgical volume lost during the "lockdown" and then some, all while further positioning themselves as the preferred site for elective surgery.
Out of a desire to avoid the hospital setting due to safety concerns (i.e., COVID-19 infections), patients will proactively seek out ASCs, and for good reason: According to one study, the post-operative surgical site infection rate is six times lower for ASCs than HOPDs.
Those consumers experiencing financial strain from the pandemic who require surgery will take a more active role in selecting the location for their surgery to help reduce their out-of-pocket expenses. This should lead them to opt for ASCs as a lower-cost alternative to hospitals.
Surgeons who saw their case volume significantly decrease or cease entirely during the pandemic are eager to make up for lost time. Since centers generally operate on a Monday-Friday, 7:00 am-5:00 pm schedule, they have significant opportunity to increase capacity by extending hours without any substantial capital outlay required. ASCs can work with their governing board and surgeons (and consultants, when applicable) to explore how to safely expand hours and/or days of operation to accommodate greater numbers of surgeries. Generally speaking, ASCs are nimble organizations, able to quickly pivot to accommodate new opportunities and operate more efficiently and cost-effectively than hospitals.
In addition, more complex procedures already migrating to ASCs (e.g., total joint, cardiovascular, spine) will surge as hospitals divert cases, patients seek to reduce infection risk and cost, and surgeons seek available operating room time. The surge will help establish and continue the growth of ASCs performing higher acuity cases.
In some markets, as hospital cases were diverted to ASCs, hospital-based surgeons received emergency credentialing to operate at ASCs. The exposure and experience have prompted many of these surgeons to explore opportunities to continue their affiliation with ASCs. This creates a potential recruitment opportunity for ASCs, but it is one that could strain ASC-hospital relationships and should be handled with care.
Commercial payers, which were already directing surgical cases away from hospitals toward ASCs in cost-saving efforts, will take an even more aggressive approach to such migration. Conversions of HOPDs to ASCs were on the rise before the pandemic. As a result of commercial payer trends, we can expect more of these conversions going forward.
The Centers for Medicare & Medicaid Services (CMS), through its 1135 waiver authority, implemented the "Hospital Without Walls" policy. The policy allowed ASCs to contract with healthcare systems to provide hospital services or enroll and bill as hospitals during the emergency declaration.
This move seems to represent further evidence that ASCs can safely perform higher-acuity Medicare cases. In addition, CMS's recent willingness to fast-track telehealth and other patient-centered solutions could be a sign that it will expand the list of ASC-payable codes/procedures in its next annual update.
ASCs are well positioned for a rapid recovery and to be a model for providing high-quality, low-cost care. Consumer- and payer-driven trends favor ASCs, and hospitals are recognizing they need an ASC in their portfolio to accommodate patients and payers looking for a lower acuity, less expensive option for outpatient surgery. This was true before COVID-19 proved our point.
Joan Dentler (firstname.lastname@example.org) is President and CEO of Avanza Healthcare Strategies, which provides healthcare organizations with strategic guidance, with a focus on outpatient services. For more than 25 years Ms. Dentler has been consulting on, developing or operating ambulatory surgery centers, hospital outpatient services and community health initiatives.
Hilsman's career has been focused on facilitating M+A transactions in the healthcare industry. He has successfully led business owners through a transition of their business and has a comprehensive understanding of the financial and strategic buyers in the healthcare marketplace. In his previous position with CKS Advisors, he worked with physician practices, ambulatory surgery centers, and retail healthcare businesses. As a Managing Director at VERTESS, Hilsman helps healthcare business owners achieve their objectives and maximize their value in transactions.