Migration Patterns

Posted Jun 23, 2022 under:

Trends in Accelerating Outpatient Migration

The improvement in patient outcomes has also been made possible by the development of more advanced clinical technology and improvements in anesthetics.

The Trend of Moving Cases to Outpatient Continues

For many years, there has been a steady migration of cases and procedures out of the hospital environment and into outpatient facilities such as ambulatory surgery centers (ASCs).

This article was last updated on 3/29/24 to reflect current information.

Trends in accelerating outpatient migration to ASCs hospital leaders should know 

For many years, there has been a steady migration of cases and procedures out of the hospital environment and into outpatient facilities such as ambulatory surgery centers (ASCs). Contributing factors have included the development of more advanced clinical technology and improved anesthetics. They have also included physicians becoming more comfortable with minimally invasive approaches to care. 

However, over the past few years there have been several developments that have accelerated this shift. According to Ralph Lambiasi, Vice President of Development at PE GI Solutions, a strategic partner of SCA Health, these developments are likely to further hasten migration to ASCs.

“Hospital and health system leaders—particularly those tasked with overseeing their organization’s outpatient strategy—need to understand these trends so they can better assess the impact on their strategy and formulate a plan to remain competitive in the outpatient space,” Lambiasi explains. 

He then goes on to identify the following as some of the most significant and more recent outpatient surgical trends and developments:

Price Transparency Laws and Penalties

Many hospitals have yet to comply with hospital price transparency requirements. PatientRightsAdvocate.org assessed 1,000 accredited hospitals and found that just slightly more than 14% were complying with the transparency rule, according to a February 2022 report. This figure is likely to increase in the coming years, in part because Centers for Medicare & Medicaid Services (CMS) penalties for noncompliance with requirements have increased. The penalty for a full year of noncompliance currently ranges from $109,500 to about $2 million. 

“As more prices are published, those consumers interested in shopping for their care and understanding where their copay or deductible may be lower will have more information upon which to base their site-of-service decision,” Lambiasi says. “This plays to one of the core strengths of ASCs: lower costs.” 

The “No Surprises Act,” which took effect in 2022, may further spur consumerism, he adds. 

Commercial Payor Preference

The COVID-19 pandemic has motivated commercial payors to consider and adopt site-of-service policies. These are more aggressively pushing patients out of the inpatient settings and have become a driver of outpatient migration to ASCs.

“Payors are requesting more documentation from hospitals to authorize procedures and prove that the hospital is an appropriate site of care,” Lambiasi says.

“It’s becoming much more difficult for hospitals to receive approval for something like a screening endoscopy for a younger, healthier patient,” he continues. “These cases are going to ASCs.” 

Other Factors Driving Outpatient Migration

Changes in Screening Recommendations

In 2021, the U.S. Preventive Services Task Force (USPSTF) issued new recommendations for colorectal cancer. These stated that people at average risk should start screening at age 45 instead of the traditional 50. The Affordable Care Act requires most insurers to cover the costs of these screening tests as per USPSTF recommendations.

“This new case volume will largely go to surgery centers,” Lambiasi says. “If hospitals want to see these patients within their service lines, they need to be thinking about an ASC strategy.” 

Federal Initiatives

When looking at some of the major federal developments of the past decade, Lambiasi is reminded of Steven Brill’s Time magazine article, “Bitter Pill: Why Medical Bills Are Killing Us.” 

“Consider recent efforts to push consumerism, such as accountable care organizations, various Affordable Care Act initiatives, the exchanges and transparency laws,” he states. “I think CMS and the federal government are trying to avoid more sticker shock to patients.” 

Lambiasi believes there will be more similar initiatives down the road.

“We already have site neutrality for some surgical procedures where the hospital and ASC are paid the same rate,” Lambiasi says. “Are screening endoscopies or other elective GI cases ripe for site neutrality? If a development like this occurs and you’re a hospital lacking an ASC strategy, expect to experience difficult financial and operational ramifications.” 

COVID-19

The pandemic played a part in encouraging more outpatient migration of care to ASCs—and not just because of commercial payor efforts. During periods of high COVID hospitalizations, hospitals were focused on caring for these patients. Additionally, they were providing more emergency and urgent care. This naturally led to non-urgent patient volume going to outpatient settings. It will be difficult for hospitals to slow this momentum. 

Since the pandemic hospitals have become less appealing sites for care for patients, Lambiasi says. “Whether right or wrong, that’s going to be the perspective and bias of many patients who now associate hospitals with people sick with COVID—especially with the uncertainty around future waves.” 

Then, there are the financial and personnel effects of COVID, which are still being felt in every industry, including healthcare.

“Perhaps before the pandemic, hospitals may have had the capital and staffing levels to consider ways to expand their outpatient portfolio and try to capture some of the surgical volume making its way to ASCs,” Lambiasi says. “That may no longer be the case, with hospital efforts more focused on returning to pre-pandemic levels of operation and accepting that some surgical cases, especially lower-acuity procedures, are not a priority.” 

“That doesn’t mean hospitals should abandon their pre-pandemic outpatient strategy,” he says. “Rather, they may need to consider different approaches that will help them achieve their goals.”

Management Services Organizations (MSOs)

Physician alignment with management services organization (MSO) rollup groups is a rapidly growing trend. It could siphon more surgical cases out of hospital operating rooms. According to Lambiasi, such groups have become the top alternative to hospital employment in the eyes of many private groups.

He continues, “The MSO could be a ‘double whammy’ for the hospitals. They would lose the opportunity to employ the physician looking to leave private practice and would most likely lose case volume to the competing ASC that the MSO-sponsored entity owns or would build.” 

Despite Challenges, ASC Opportunities for Hospitals Exist

The rapidly-evolving surgical landscape makes one thing clear. Hospitals and health systems need a strong outpatient portfolio, and that includes ASCs and physician partnerships.

“Inpatient-to-outpatient surgical migration shows no signs of slowing down, and with an aging population, the demand for surgery is rising,” Lambiasi says. “Without such a portfolio, a hospital will likely struggle to retain surgical volume and miss out on what’s becoming an even more significant piece of healthcare.” 

Hospitals uncertain about establishing or growing an ASC portfolio are looking to experts to help them make intelligent development decisions. They also look to them to facilitate the partnerships with physicians needed for outpatient surgery success.

Lambiasi states, “At PE GI Solutions and SCA Health, we’re engaging in more discussions and entering into more partnerships with hospitals and health systems.” He elaborates, “We’re helping these organizations overcome their pain points and solve the multitude of challenges they’re facing today and likely to face in the coming years.” 

Lambiasi expects such collaboration to become a more substantial part of the SCA Health business model. One major way SCA Health is collaborating with hospitals and health systems is strengthening engagement and relationship with GI physicians. They accomplish this via PE GI Solutions and identifying opportunities to add ASCs to their portfolio. This can be through HOPD-to-ASC conversions, joint ventures with physicians or building de novo facilities.

These initiatives also support the creation of endocenters. These are the cornerstones for gastroenterology service line integration and growth. Endocenters also contribute to the development of long-term plans that account for continued outpatient migration.

“We are bringing hospitals our years of experience and expertise in the ASC and GI space,” Lambiasi concludes. 

Resources

SCA Health: https://sca.health/

Tuscaloosa Surgical Center: https://tuscaloosasurgicalcenter.net/about-us/what-is-an-asc/

American Hospital Association: https://www.aha.org/guidesreports/2021-09-21-financial-effects-covid-19-hospital-outlook-remainder-2021

Time: https://time.com/198/bitter-pill-why-medical-bills-are-killing-us/

U.S. Preventative Services Task Force (USPSTF): https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/colorectal-cancer-screening

Centers for Medicare and Medicaid Services: https://www.cms.gov/nosurprises; https://www.cms.gov/newsroom/fact-sheets/cy-2024-hospital-outpatient-prospective-payment-system-opps-policy-changes-hospital-price

Patient Rights Advocate: https://www.patientrightsadvocate.org/

“Hospital and health system leaders—particularly those tasked with overseeing their organization’s outpatient strategy—need to understand these trends so they can better assess the impact on their strategy and formulate a plan to remain competitive in the outpatient space ...”

Ralph Lambiasi, Vice President of Partnership Development for PE GI Solutions

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