The shift of surgical procedures from the hospital to physician owned outpatient facilities has been the prevailing trend over the past two decades and will continue into the foreseeable future.First, cystoscopies, vasectomies, and other minor procedures were shifted to the office. Then, many procedures were shifted to ASC’s. Currently, some procedures, previously performed in the ASC’s, are being shifted to the office while others are shifting from the hospital to ACS. It is anticipated that this trend will continue.
Changes in technology and payment have influenced and continue to influence the place of service for many procedures. The payment for the “facility” fee (office practice expense, or ASC facility fee) in general adds more profit to the bottom line than the physicians’ professional fee.
Last year Medicare announced that Ambulatory Surgery Centers (ASC) payment system would be revised over a two year period. 2007 was the first year of the phase in which resulted in minor changes adding 21 CPT codes to the current list. Currently there are approximately 2400 CPT codes covered for the ASC under 9 ASC payment categories which are paid between $333 and $1339. The changes for this year added a few codes to the list. The change also allows for a cap on payment to the ASC which actually pays some services below the $333 of the lowest ASC payment group.
Beginning January 1, 2008 Medicare has indicated that the APC system will be fully extended to the ASC. This change will expand the payment from 9 categories in the current payment range to 221 Ambulatory Payment Classification codes (APC) to the ASC with proposed payment levels from $3.68 to $16,146.03.
The next logical question is does this work for Urology. The answer to this depends upon several factors. Many Urologists have run numbers looking at the potential for the ASC as single specialty facilities and others have looked at the potential for multi-specialty groups. While the results have been mixed in various markets across the country using current numbers, the trends in health care are pushing more groups to build some type of facility.
The overall push in health care to bring costs down is the true market force making facility development attractive to the 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 subsequently private payers has held steady or been 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.
Hospitals have faired slightly better on a line item basis, at least receiving cost of living increases during this same period. In addition, the macro-economic prospective toward healthcare indicates that we are spending enough on healthcare as a whole.
It seems that the time has come for the physician 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 fees and costs as well as the increase in inpatient infection rates, outpatient surgery has been on the rise. ASCs are increasing and will continue to do so, because they are more cost effective for many services.
There are other advantages to the ASC from the standpoint of time and increased productivity directly related to scheduling control. All of these issues should be taken into account when looking the possibilities of building an ASC.
There are some markets where 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, however, many payers will because of the cost benefit. Certified surgical suites are also increasing in the marketplace.
Add to this the number of procedure codes with office based practice-expense values that make the performance of the services in the office revenue positive or neutral and the office based surgical suite makes sense. As you look at the potential of an office based surgical suite, consider not only the revenue per procedure but the time, productivity and service aspects that will affect your practice.
Of course, anything that sounds this logical has to have some potential downside. The downside potential for an investment in a facility is real. Payers may elect to change the way services are paid to the facility in the future and of course the powerful Hospital lobby will not go quietly into the night.
Already hospitals have upped the ante, attempting to attract physicians with attractive revenue guarantees, facility partnerships and amenities such as EMR. They have also tried to block facility development in many areas arguing that quality will suffer overall. The trend has created an obvious control 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 to for physicians to take the lead and development of facilities is one more piece of the puzzle that help return patient care to the true managers of healthcare.
