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Wednesday, August 9, 2017

Outpatient ASC M&A Fueled by Health Systems

As outpatient surgeries grow, hospitals look to claim piece of ASC market

(from Modern Healthcare)

With the looming financial threat from the migration of lucrative hip and knee replacement procedures to outpatient settings, some hospitals and health systems have acquired ambulatory surgery centers or formed joint ventures with surgeons in these centers.

That allows hospitals to keep a piece of the revenue.

And it better aligns their interests with surgeons, who like ambulatory centers because the greater efficiency of these facilities lets them do more procedures in a day and make more money, said Naya Kehayes, practice leader for ambulatory surgery at ECG Management Consultants.

UnityPoint Health, which operates hospitals and clinics in Iowa, Illinois and Wisconsin, acquired an interest in 2015 in a surgery center in Davenport, Iowa, where orthopedists do hundreds of total joint replacements annually. It was a three-way partnership with the surgeons and Surgical Care Affiliates, a publicly traded operator of ambulatory surgery clinics.

And in Des Moines, Iowa, UnityPoint and the 30-doctor Des Moines Orthopaedic Surgeons group run an ambulatory surgery center in a joint venture.

Sabra Rosener, vice president of government affairs for UnityPoint Health, said that even though her system has some capacity to do outpatient joint replacements, it's not yet moving ahead to prepare for performing them on Medicare patients because of regulatory uncertainty under HHS Secretary Dr. Tom Price.

"It would be good to be proactive, but with the speed at which CMS is putting out rules and changing proposed rules from the previous administration, it's wait and see time for us," she said.

In the for-profit hospital sector, Tenet Healthcare Corp. and HCA both have developed or acquired outpatient surgery centers, with Tenet buying United Surgical Partners International in 2015. "Tenet and HCA have a way to capture that volume and participate in this outpatient surgery growth," said Brian Tanquilut, a senior healthcare analyst at Jefferies & Co.

Marian Lowe, USPI's chief strategy officer, said her company is preparing for the outpatient shift by honing clinical processes for joint replacements at three physician-owned hospitals it manages that participate in Medicare's mandatory bundled-payment program for total joints. "We have worked with patients, physicians and home-care agencies to have protocols in place to help patients recover effectively at home," she said.

In contrast, many hospitals are still going it alone, uncertain how to respond to the shift to outpatient joint replacements or the pending CMS payment proposal. "It's a mixed bag; every market is different," Kehayes said. "I have health systems that want nothing to do with ASCs."

Orthopedic surgeon Dr. Louis Levitt said that while his orthopedic group is increasing the volume of outpatient joint replacements at its Massachusetts Avenue Surgery Center in Bethesda, Sibley Memorial Hospital in nearby Washington still has not moved the procedures to outpatient settings. Sibley, part of Johns Hopkins Medicine, is one of the largest providers of total knee and hip replacements in that market.

"Their outpatient facility is not geared up for joint replacement," said Levitt, who also performs surgeries at Sibley. "I think they're way behind on this."

A Sibley spokesman, Gary Stephenson, disputed that. He said his hospital and its surgeons send joint replacement patients home the same day if that's medically appropriate. But most payers in the market do not cover total joint procedures in outpatient settings, he said. "Our actions are based entirely on the best interests of each individual patient," Stephenson said.

In contrast, Dr. Matthew Weresh, a partner in Des Moines Orthopaedic Surgeons group, is optimistic about collaborating with his local hospital system, UnityPoint, in rolling out outpatient joint replacements for both Medicare and private insurance patients. "They're smart enough to know the writing is on the wall, it's going to outpatient regardless, so let's do this together," he said.

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