July 14, 2021

The potential for enormous savings for CMS is driving a steady migration of procedures to surgery centers.

CREDIT: Ridgelight Studio
WINDFALL PROCEDURES As elective surgeries continue to stream away from hospitals and HOPDs into ASCs, the government is saving billions of dollars every year.

Ambulatory surgery centers (ASCs) could save Medicare billions of dollars over time. A 2020 study by the Ambulatory Surgery Center Association (ASCA) found surgeries performed in ASCs instead of hospital settings saved Medicare $28.7 billion from 2011 to 2018, says Shakeel Ahmed, MD, founder and CEO of Atlas Surgical Group, the largest privately owned ASC group in the Midwest. With more surgeries projected to move to ASC settings, ASCA projects savings from 2019 to 2028 could total as much as $73.4 billion.

As these enormous numbers continue to add up, Dr. Ahmed says the shift of elective surgeries to ASCs is nothing short of an economic stimulus package for the entire federal government, and certainly a far better option than cuts in services to Medicare recipients.

Dr. Ahmed points to the 2019 National Health Expenditure (NHE), which at $3.8 trillion accounted for 17.7% of the U.S. gross domestic product. Medicare and Medicaid accounted for 37% of that $3.8 trillion. "That is not sustainable," he says. "The United States spends more on health care as a share of its economy than any other advanced economy in the world."

The numbers behind the argument for continued migration of procedures to ASCs are eye-popping. Dr. Ahmed cites an estimate in the online peer-reviewed journal Orthopedic Reviews that orthopedic procedures would cost 60% less if most were done in ASCs. An Ambulatory Surgery Center Association (ASCA)-commissioned study projects that ASCs will save Medicare as much as $73.4 billion by 2028.

The Centers for Medicare & Medicaid Services (CMS) certainly is accelerating the migration trend with its recent moves. In 2019, it approved Medicare reimbursements for a series of cardiac diagnostic procedures to be performed at ASCs, and added several cardiac interventions to the ASC-approved last year. Total knee replacements made it to the ASC-approved list in 2020. Total hip replacements were added in 2021.

The news could be better, though. Dr. Ahmed says the disparity between Medicare rates for identical procedures performed at HOPDs and ASCs continues to widen. ASCs once received about 85% of the HOPD rate, but that amount was cut to 50% by 2019, providing a disincentive for ASCs. "The exact opposite should be taking place," says Dr. Ahmed. "These trends need to go in the other direction to avert an economic disaster."

Pleasing design touches create spaces that both patients and clinicians enjoy.

CREDIT: Lighthouse Surgery Center
COMFORT ZONES Patients and their caregivers might occasionally wonder if they’re really at a surgery center when they spend the day in calm, bright spaces like this.

As elective surgeries continue to move outside of hospitals, newly constructed ambulatory surgery centers (ASCs) are stepping up their design games to gain an edge over their competitors for new patients. Nowhere is that more evident than in Hartford, Conn., where The Lighthouse Surgery Center opened last year.

The $26.5 million orthopedic facility resembles a New England seaside hotel fit for a vacation destination. Its lighthouse theme includes lots of aquamarines and blues to go with postmodern furniture, sleek lines and artwork specially created for the facility that ties the look together. A partnership between Saint Francis Hospital and Medical Center and surgeons from the Connecticut Joint Replacement Institute, the facility is located directly across the street from the hospital, providing cutting-edge joint, spine and pain management care.

The waiting area is large, so family members can wait for their loved ones comfortably during lengthy joint replacement cases, the center's specialty. Floor-to-ceiling windows, a fireplace and a variety of seating options, including chairs in semi-private nooks where friends and family members can talk while waiting, contribute to the welcoming vibe. The inspiration for the waiting area's design came when Lighthouse's President and CEO Michael Joyce, MD, saw a well-appointed first-class lounge at London's Heathrow Airport.

Six 630-square-foot ORs feature procedure-specific mobile storage cabinets, six feet in height, that are wheeled in and out as needed, shaving precious minutes off room turnover times and keeping each OR versatile and adaptable. Ceiling-mounted booms that house video, anesthesia and surgical equipment can rotate 240 degrees with no intrusions by wires and cords. Observation areas next to the ORs allow other providers to watch surgeries through glass windows, while live feeds of arthroscopic images can be routed to large-screen flat monitors in the observation rooms.

The sterile processing department received hospital-grade sterilizers, large cart washers and a barcode system that monitors and tracks all of the many instrument trays needed for orthopedic and spine cases. The department is even integrated with the hospital so the two facilities can share instruments should the need arise.

For patients and their families, the space provides a calming, bright, comfortable environment. Clinicians, meanwhile, enjoy state-of-the-art, versatile working spaces. When ASCs skillfully combine those two factors, they are set up for success.

Patients get a close-up look at their surgery experience in an interactive educational showroom.

Credit: Stryker TSAOG Orthopaedics – San Antonio, TX.

Credit: Stryker Educational Showroom at TSAOG Orthopaedics.

An exciting new ambulatory surgery center is making a real statement in San Antonio, Texas, where TSAOG Orthopaedics, the largest orthopedic practice in South Texas, opened in January 2021. The new 100,000-square-foot, three-story medical building and state-of-the-art ASC was the result of a partnership with Stryker that TSAOG's COO Chris Kean sums up in one word – "powerful."

She explains that this orthopedic practice, founded in 1947, was looking for a partner, not a vendor. The relationship with Stryker helped to envision this new state-of-the-art center.

Jackie Bull, Director of Marketing and Communications at TSAOG Orthopaedics, says, "The relationship with Stryker brought TSAOG to an incredibly special place, and set us apart on a national level."

TSAOG Orthopaedics also has a unique educational showroom that was planned in collaboration with Stryker. By clicking on the interactive screens, they can see inside the OR and view the equipment used in their surgeries behind the glass panels and gain a better understanding of what their surgery will look like. "It demystifies the surgery for the patient," says Ms. Kean, "And it helps put patients at ease."

The process of creating this state-of-the-art ASC involved the whole team. Stryker's exclusive 3D room design software, ByDesign, helped TSAOG Orthopaedics envision and plan their ORs. Questions were asked up front and everyone on the team was involved. Kevin Kirk, MD, says "It allowed us to really innovate."

Stryker's approach to helping TSAOG Orthopaedics was comprehensive and focused on their specific needs. First, the Stryker team evaluated the comprehensive project scope, including capital, implants, disposables, service, and financial and clinical goals. Next, the team calculated the expected implant and disposable spend based on procedural case volume and determined a percentage of each implant/disposable to offset capital costs. Finally, the Stryker team worked cross-divisionally to put it all together in one agreement for TSAOG Orthopaedics.

Everything was customized to meet TSAOG's goals. The practice's specific needs were evaluated, and these included 16 ORs that required surgical tables and accessories, lights, monitors, video, OR integration systems, robotics, power tools, waste management, tourniquet systems, patient warming, sterilization and PPE. In addition, seven pre-op bays and 34 post-op bays with stretchers, beds, overbed tables and patient warming were all part of the project plan.

Note: Watch the TSAOG video here! To learn more about Stryker's ASC business, go to stryker.com/asc.

Vacated reprocessing areas create more room for surgeries and patient care.

Whether you're constructing a new ambulatory surgery center (ASC) or expanding an existing one, every square foot available for surgical care is precious. The trouble is that cleaning and sterilizing surgical instruments takes up a lot of space. A tantalizing option is emerging, however: What if your facility didn't even have a sterile processing department?

Offsite sterile processing facilities are becoming an option for ASCs with eyes on growth and the concept is being proven by large health systems. The Ohio State University, Penn Medicine and Northwell Health have unveiled standalone sterile processing facilities to service their same-day surgery centers.

The new 110,000-square-foot reprocessing behemoth at the Hospital of the University of Pennsylvania in Philadelphia opened last winter. "We were landlocked and realized that performing sterile processing correctly would require space that would be better used to treat patients," says Chris Pastore, manager of Penn Medicine's Interventional Support Center. "That forced us to look at the potential of an offsite model."

The facility features a one-way forward-flow approach, so instruments never need to be placed in containers and transported through a "dirty" section of the facility to get to the next clean area in the reprocessing pathway, says Mr. Pastore. It also includes a series of inventory storage carousels, much larger versions of garment conveyors at dry cleaners.

The Ohio State University Wexner Medical Center in Columbus says its freestanding facility will serve at least seven surgery centers in five years. "Surgery is the moneymaker for most health systems, and central sterile is the lifeblood of surgery," says Kim Jones, the center's director of central sterile supply. OSU's facility includes an onsite service center that repairs, refurbishes and maintains instruments. Northwell Health's facility, located at the site of a former popcorn factory in Bethpage, N.Y., has trucks specifically designed to keep rigid containers and their contents sterile and secure.

If building a freestanding sterile processing center is outside of your facility's budget, companies are emerging that pick up dirty instruments from facilities, take them offsite for reprocessing and then return them. OrthoIllinois Surgery Center recently partnered with such a company in the Chicagoland region that picks up and reprocesses its dirty total joints trays.

Offsite sterile processing is an emerging trend. As some of the biggest health systems in the country begin to embrace the concept, the time is now for ASCs to begin considering the possibilities.

A national law firm, however, says facilities don't have too much to worry about provided their organizational houses are in order.

A recent advisory opinion issued by the U.S. Office of the Inspector General (OIG) regarding one ASC's investment structure has caused some confusion in the industry, according to a national law firm that sought to clear the air about its implications regarding physician ownership.

The OIG opinion, coded as AO 21-02 and readable here, responds to proposed investments in a multispecialty ASC joint venture by a health system, certain orthopods and neurosurgeons who work for that system, and a management company. OIG said the arrangement would not be eligible for "safe harbor" protection for several reasons, including the fact that the health system would be positioned to influence referrals to the ASC through its employed physicians. Another issue: not all of the neurosurgeons and spine surgeons, who frequently require inpatient ORs, would derive one-third of their medical practice income from performing ASC-qualified procedures. "Nevertheless, the OIG found that the transaction posed a sufficiently low risk of fraud and abuse," write authors Adria Warren and Emily Webber of national law firm Foley & Lardner LLP in the National Law Review.

The authors explain that while ownership of, and referrals to, an ASC by a physician is not subject to the federal Stark Law that prohibits physician self-referral, it does implicate the federal Anti-Kickback Statute (AKS), a criminal, intent-based statue that prohibits persons from "knowingly and willfully" providing remuneration to induce referrals, or in exchange for referrals, of patients or business regarding Medicare and other federal health programs. "Given that the primary investors in an ASC are physicians, it is important to consider the impact of physician ownership and referral arrangements in structuring any ASC transaction," the authors say.

"Safe harbors" for ASCs exist under the AKS that, if satisfied, can protect providers and facilities from prosecution. The authors point out that failure to meet all safe harbor criteria is not necessarily a violation of the law, and many ASCs do not meet all applicable criteria. "In these cases, the facts and circumstances of the arrangement should be reviewed in their entirety, to determine whether the necessary intent to induce referrals is present," the authors say. They advise that, when structuring an ASC transaction, facilities should approximate safe harbor criteria and read OIG advisory opinions to get a clearer idea of what regulators are monitoring. Overall, here were their takeaways from the OIG opinion:

• Failure to meet volume or income safe harbor criteria may not pose a significant regulatory risk. The ASC is intended to serve as an extension of the physician's practice, with at least one-third of each physician investor's yearly medical practice income derived from their performance of ASC-qualified procedures at that specific ASC. Even though neurosurgeons, who depend on inpatient facilities for more complex procedures, might not meet those thresholds, OIG acknowledges these specialists would typically perform procedures at the ASC themselves and rarely cross-refer to other surgeon investors.
• Investment in ASCs by hospital-employed or contracted physicians is permissible. However, because hospitals are in a position to make or influence referrals directly or indirectly to their physician employees and contractors, "investment by those physicians in a hospital-affiliated ASC would fall outside of the applicable safe harbor," the authors write. By taking certain precautions, however, you can minimize risk of fraud and abuse. They say hospitals should not require or encourage employed or contracted physicians to refer patients to their ASCs or their physician owners, nor track referrals made to the ASC.
• Physician investors should be able to invest on equal terms. To stay in "safe harbor," an ASC should not offer ownership to any physician based on their previous or expected volume or value of referrals. "If the ASC has multiple levels of ownership or criteria for investment, it could imply that physicians are being selected based on their presumptive referral patterns," the authors write.
• Physician groups investing in ASCs continue to be "red flags" for OIG. This is especially true with multispecialty ASCs that engage in internal cross-specialty referrals.
• Proper structuring is crucial to comply with applicable fraud and abuse requirements. The authors provide an example of making sure jointly held real estate complies with AKS safe harbors for space rental and equipment rental, while any services performed by the hospital for the ASC comply with safe harbor for personal services and management contracts and outcomes-based payments.

The authors say the OIG opinion indicated some regulatory flexibility for physician- investor neurosurgeons and spine surgeons, whose specialties could otherwise preclude them from performing the required volume of surgery in the ASC setting. Additionally, the opinion supports investments by hospital-physician employees in hospital-affiliated ASCs as long as certain existing "guardrails" are observed.

"AO 21-02 did not significantly change the framework under which an ASC transaction should be structured," the authors conclude. "Similarly, AO 21-02 encourages following well-established practices in structuring an ASC investment opportunity." Overall, the authors say, the buzz over the opinion is overstated and doesn't impact ASCs in any major way.