As hospitals and physician groups prepare to launch accountable care organizations and similar payment models, surgery centers are left to ponder their role in the post-health reform world. Marc Malloy, CEO of Ascentia Health Care Solutions and former COO for Coventry Health Care's Atlanta operations, and Michael Goran, MD, managing director for OptumInsight and lead consultant for ACO development at Tuscon (Ariz.) Medical Center, discuss the value of surgery centers in an accountable care model.
Q: How can ASCs contribute to an accountable care organization model?
Dr. Michael Goran: ACOs have responsibility for the triple aim of improving the care of patients, improving the health of populations and making care more affordable. ASCs can help improve patient care and affordability. For example, with knee replacement, ASCs can improve the patient experience, increase patient safety and improve outcomes by standardizing care processes, reducing unwarranted variation and increasing compliance with EBM guidelines. And ASCs can reduce the cost of care.
Marc Malloy: Any providers of services that can demonstrate value — and in healthcare, that means low cost and good clinical outcomes — will be welcome in ACO arrangements. The usual argument is that ASCs should be used for outpatient surgical procedures because of the lower costs of care afforded by having much less overhead than the traditional hospital. While a reasonable argument, the counterbalance is that if a hospital loses these procedures, there will be less revenue to cover the fixed cost of running the hospital.
As I look at what is happening here, I think ACOs are the precursor to what I keep dubbing the "high performance network." When you think about 2014 and the coming insurance networks with health insurance exchanges, people are going to make decisions based on the price of the product and the quality of the network. Consumers will be asking, "Is my physician in that network, and is it any good? Is there demonstrated quality coming out of that particular network?" I see ACOs as the first stage of moving toward a high-performance network, and in that phase, I think surgery centers are in a good position to [improve performance and reduce cost].
Q: ACOs (or ACO-like structures) will be driven by multiple groups — payors, physician groups and hospitals, to name a few. Which do you see as the most appropriate for ASCs to partner with?
MM: A lot of it comes down to the way we use the term ACOs. In its purest form with Medicare beneficiaries, you're trying to make sure you have a product for CMS. If the hospitals are creating it, having an ASC involved is lost revenue to the hospital. If the physician or payor is putting together the ACO, they want to include the ASC because they want to yield savings. From the cost perspective, payors already understand the unit cost differential. What they may or may not understand is that ASCs can deliver higher quality care as well. If you're a patient and you're trying to access care, certainly the cost share is important to you, but the quality is even more important.
If you form an ACO as a physician group, you'll be thinking about how to control cost downstream, and an ASC would be a great solution for that because they tend to have lower cost for comparable procedures. There's a big difference if the hospital drives the development of the ACO. I think if ASCs have a choice, it's probably better to partner with a physician organization. So far I haven't seen payors take an active role in developing an ACO, but to the extent that they do contracting, they will prefer to contract with ASCs.
MG: ACOs are likely to be sponsored by a variety of provider organizations, ranging from multi-specialty group practices to primary care groups to physician-hospital entities to integrated systems. ASCs can potentially partner with any of them, in part depending on pre-existing relationships.
Q: How can ASCs start preparing for the advent of ACOs now? What should they bring to payors, hospitals or physicians to show they can contribute to the model?
MG: ASCs can prepare by developing and documenting a value proposition that measures tangible quality improvements while reducing costs. ASCs can also lead the transformation to new forms of reimbursement that reward outcomes instead of volume, such as bundled payment. ASCs that choose to wait and see will miss out on a valuable learning experience — but should have ample opportunity to revisit their decision. ACOs represent a long-term commitment to transforming the way we deliver and pay for healthcare that will eventually lead to sustainable health communities.
MM: Over the past few years, there has been a trend of increasing consumerism in healthcare. As this continues to accelerate, all providers of services must begin to think of patients as customers, and as in any consumer market, customers make decisions based on price, quality and convenience.
Related Articles on ACOs:
30 Predictions on the Future of Ambulatory Surgery Centers
3 Choices for Surgery Centers Seeking New Strategic Direction
Amerinet Publishes Executive Briefing on Healthcare Reform and Accountable Care
Q: How can ASCs contribute to an accountable care organization model?
Dr. Michael Goran: ACOs have responsibility for the triple aim of improving the care of patients, improving the health of populations and making care more affordable. ASCs can help improve patient care and affordability. For example, with knee replacement, ASCs can improve the patient experience, increase patient safety and improve outcomes by standardizing care processes, reducing unwarranted variation and increasing compliance with EBM guidelines. And ASCs can reduce the cost of care.
Marc Malloy: Any providers of services that can demonstrate value — and in healthcare, that means low cost and good clinical outcomes — will be welcome in ACO arrangements. The usual argument is that ASCs should be used for outpatient surgical procedures because of the lower costs of care afforded by having much less overhead than the traditional hospital. While a reasonable argument, the counterbalance is that if a hospital loses these procedures, there will be less revenue to cover the fixed cost of running the hospital.
As I look at what is happening here, I think ACOs are the precursor to what I keep dubbing the "high performance network." When you think about 2014 and the coming insurance networks with health insurance exchanges, people are going to make decisions based on the price of the product and the quality of the network. Consumers will be asking, "Is my physician in that network, and is it any good? Is there demonstrated quality coming out of that particular network?" I see ACOs as the first stage of moving toward a high-performance network, and in that phase, I think surgery centers are in a good position to [improve performance and reduce cost].
Q: ACOs (or ACO-like structures) will be driven by multiple groups — payors, physician groups and hospitals, to name a few. Which do you see as the most appropriate for ASCs to partner with?
MM: A lot of it comes down to the way we use the term ACOs. In its purest form with Medicare beneficiaries, you're trying to make sure you have a product for CMS. If the hospitals are creating it, having an ASC involved is lost revenue to the hospital. If the physician or payor is putting together the ACO, they want to include the ASC because they want to yield savings. From the cost perspective, payors already understand the unit cost differential. What they may or may not understand is that ASCs can deliver higher quality care as well. If you're a patient and you're trying to access care, certainly the cost share is important to you, but the quality is even more important.
If you form an ACO as a physician group, you'll be thinking about how to control cost downstream, and an ASC would be a great solution for that because they tend to have lower cost for comparable procedures. There's a big difference if the hospital drives the development of the ACO. I think if ASCs have a choice, it's probably better to partner with a physician organization. So far I haven't seen payors take an active role in developing an ACO, but to the extent that they do contracting, they will prefer to contract with ASCs.
MG: ACOs are likely to be sponsored by a variety of provider organizations, ranging from multi-specialty group practices to primary care groups to physician-hospital entities to integrated systems. ASCs can potentially partner with any of them, in part depending on pre-existing relationships.
Q: How can ASCs start preparing for the advent of ACOs now? What should they bring to payors, hospitals or physicians to show they can contribute to the model?
MG: ASCs can prepare by developing and documenting a value proposition that measures tangible quality improvements while reducing costs. ASCs can also lead the transformation to new forms of reimbursement that reward outcomes instead of volume, such as bundled payment. ASCs that choose to wait and see will miss out on a valuable learning experience — but should have ample opportunity to revisit their decision. ACOs represent a long-term commitment to transforming the way we deliver and pay for healthcare that will eventually lead to sustainable health communities.
MM: Over the past few years, there has been a trend of increasing consumerism in healthcare. As this continues to accelerate, all providers of services must begin to think of patients as customers, and as in any consumer market, customers make decisions based on price, quality and convenience.
Related Articles on ACOs:
30 Predictions on the Future of Ambulatory Surgery Centers
3 Choices for Surgery Centers Seeking New Strategic Direction
Amerinet Publishes Executive Briefing on Healthcare Reform and Accountable Care