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ASCs putting the squeeze on acute-care hospitals


ASCs are gaining in popularity due to their convenience, but acute-care hospitals are losing patients and profits.

THE EXODUS OF PATIENT CARE from traditional settings has been going on for years as patients gravitate toward walk-in health clinics at malls and drug stores across the country. On a higher level, acute-care hospitals are also losing business, with more and more patients choosing to have their outpatient surgeries performed at ambulatory surgical centers (ASCs). Often, those ASCs are more efficient and convenient for consumers, and they usually charge less than hospitals for the same procedures.

The Pittsburgh Post-Gazette also reported last month that in Pennsylvania, ASCs significantly outnumber acute-care hospitals by a count of 245 to 170. If payers benefit from lower costs and consumers benefit from greater convenience, this trend would seem to be positive-but things are rarely that easy. The financial impact to acute-care hospitals has become the downside to the ASC trend. On average, the centers see $806 in revenue per outpatient visit, compared with $296 for hospitals, according to the Post-Gazette.

"Hospitals are continuing to see physicians take the more profitable ambulatory procedures out of the hospitals and into the ASCs," says Erica Drazen, a managing partner in the Global Healthcare Sector of Computer Sciences Corp. "Doctors make more money if the procedures are performed in their ASC because they get to keep both the surgery fee and the facility fee."


To further complicate matters, the majority of patients who utilize ASCs tend to have health insurance, leaving hospitals with a disproportionate number of uninsured and those on Medicaid. According to the PHC4's report, the percentage of uncompensated care performed at hospitals is considerably higher (2.27%) than at ASCs (0.42%). Although many ASCs do accept Medicaid, those patients usually end up in hospitals, often after treatment in an emergency room.

From the health plan/payer perspective, it's great that ASC outpatient procedures cost less. In fact, Medicare pays ASCs 59% of what it pays hospitals because hospitals have such high overhead. The bigger problem is the overall increase in utilization and determining the medical necessity of many of the procedures.

"There is no question that the increased utilization of healthcare services is one of the biggest drivers in overall healthcare costs," says Robert Zirkelbach, AHIP director of strategic communications. "The United States has an aging population that is using more healthcare services overall than it had in the past, and unhealthy lifestyle choices also are contributing to the number of health conditions that drive increased utilization."

Are ASCs exacerbating that trend? Another issue that needs to be addressed is physician self-referral to facilities they own. The 1989 Stark regulations do not ban self-referral to a specialty hospital or ASC.

"For example, utilization of high-tech imaging services tends to be higher among physicians who own imaging equipment," Zirkelbach says. "There is a direct correlation there, so as we look at payment reform in general, we need to ensure patients are getting the right care, in the right setting-as opposed to simply reimbursing for whatever amount of services a physician provides."

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