Insights from an ASC Expert, by Scott Bacon
What are the benefits and what unforeseen hurdles should it be aware of before proceeding?
This month’s ‘Insights from an ASC Expert’ column is focused on health systems considering the conversion of a hospital outpatient department (HOPD) to an ambulatory surgery center (ASC). Reimbursements for cases performed in an HOPD are greater than those same cases being performed in an ASC setting. For this reason, the conversion of these outpatient facilities to licensed, free-standing ambulatory surgery centers has been slow to occur over time. However, the pace of conversion is increasing.
Why Would Health Systems Convert HOPDs to ASCs?
Among many reasons, a few stand out:
Health systems are quickening the pace of conversions and often seeking support from outside parties to do it. Operating a profitable ASC venture in a lower reimbursement environment is unique compared to operating an HOPD setting. Compass has continued to expand its hospital joint-venture ASC partnerships, with many deals centered around HPOD to ASC conversion.
Unforeseen obstacles for an HOPD to an ASC conversion
For a health system that has not yet converted an HOPD to an ASC, there are a few hurdles to consider.
As hospitals consider converting their existing HOPDs to ASCs, many factors should be considered before determining if this is the appropriate strategy. Obviously, the financial impact on the hospital is always a concern. An experienced ASC developer (insert shameless plug for Compass here) can assist with the strategy evaluation, financial analysis, licensure, and ongoing operational oversight in the lower-cost setting. Additionally, many surgeon partners who invest in the ASC prefer to have a third-party manager involved in the operations and partnership oversight.
For those systems that intend to proceed with the development of a new ASC (via an HOPD conversion or new facility), having an experienced ASC operator has been a benefit to many other hospitals that have pursued this same strategy.
Compass has helped many health systems evaluate whether an ASC is appropriate for its respective market. Many times, the answer to the strategic analysis is not to proceed with the ASC development. The goal is to find the pathway that suits the system in the long run, even if there is some short-term pain due to the loss of better-paying HOPD surgeries.
Lastly, those who think most creatively about how to market the ASC asset to payers and employers will benefit. While not a magic bullet, marketing to large employers to grow market share becomes much easier with a high-performance ASC in the health system network