Ambulatory surgery centers: To build or not to build?

August 1, 2007

The shift of surgical procedures from the hospital to physician-owned outpatient facilities has been the prevailing trend over the past 2 decades and will continue into the foreseeable future.

The driving force for this shift has been the change in payments. The payment for the "facility" fee (office practice expense or ASC facility fee) generally adds more profit to the bottom line than does the physician's professional fee.

Trend to build

The next logical question is, does this work for urology? The answer depends on several factors. Many urologists have run numbers looking at the potential for ASCs as single-specialty facilities, and others have looked at the potential for multispecialty groups. While the results using current numbers have been mixed in various markets across the country, trends in health care are pushing more groups to build some type of facility.

The push in health care to bring overall costs down is the true market force making facility development attractive to practicing physicians. Private payers and Medicare are looking across the board at ways to hold premiums down. As you are well aware, physician revenue within the Medicare system and among private payers has held steady or decreased. Coupled with cost increases within the practice and increases in cost of living, the physician has been losing ground on a fee-for-service basis.

It seems that the time has come for all physicians to pursue new market niches to expand revenue potential, and facility development looks promising. For the past several years, Medicare and other payers have changed reimbursement patterns to allow physicians to increase the services provided in the office setting. With the increase in hospital inpatient costs as well as the increase in hospital infection rates, outpatient surgery has been on the rise. The number of ASCs is increasing and will continue to do so because they are more cost effective for many services.

ASCs offer other advantages as well, including time savings related to scheduling overlap and surgical delays from other physicians, and increased productivity directly related to scheduling control for office and surgical services. All of these issues should be taken into account when considering building an ASC.

Other options

In some markets, building an ASC is not possible due to local market forces. Fortunately, the ASC is not the only avenue available for the physician to pursue this growing market. Medicare will not pay facility rates to office surgical suites in most areas, but many payers will because of the cost savings. Because of this, certified surgical suites are also increasing in the marketplace.

Of course, anything that sounds this logical must have a potential downside. Payers may elect to change the way services are paid to the facility in the future and the powerful hospital lobby will not go quietly into the night. Hospitals already have upped the ante, attempting to woo physicians with attractive revenue guarantees, facility partnerships, and amenities such as electronic medical records. They have also tried to block facility development in many areas, arguing that quality will suffer overall. The trend has created an obvious conflict between physicians and hospitals that will most likely grow over time.

In the end, the true advantage to the development of a facility is greater control of patient care for the physician. The trends are apparent. It is time for physicians to take the lead, and development of facilities is one more piece of the puzzle that can help return patient care to the true managers of health care.

Urologist Ray Painter, MD, is president of Physician Reimbursement Systems, Inc., in Denver and is also publisher of Urology Coding and Reimbursement Sourcebook.

Mark Painter is CEO of PRS Urology SC in Denver.

Disclaimer: The information in this column is designed to be authoritative, and every effort has been made to ensure its accuracy at the time it was written. However, readers are encouraged to check with their individual carrier or private payers for updates and to confirm that this information conforms to their specific rules.