Business Advisor: ASCs as an Economic Stimulus

Exorbitant healthcare costs in America are a driving force in our troubled economy. Attempts to save money in this arena by public officials usually involve cutting services to Medicare recipients. I think there's a better solution right under their noses — a mass migration of most surgeries from hospital settings to ASCs — that could save trillions of dollars over time.

The time to act is now. We're in the throes of one of the worst pandemics in modern history. The U.S budget deficit is about to hit $3.3 trillion in part because of this scourge. Financial bailouts are the main reason the economy is still afloat. Even before the pandemic hit, the National Health Expenditure (NHE) had grown to $3.8 trillion in 2019 and accounted for 17.7% of our gross domestic product. Medicare and Medicaid accounted for 37% of that expense. That was not sustainable. The United States was spending more on health care as a share of its economy than any other advanced economy in the world.

The warning sirens that were wailing before the virus hit are now blaring at unbearably high decibels. If we do nothing to rein in healthcare costs, we will face drastic decisions and be forced to take extreme measures in the coming years that would be inconceivable today. Officials are scrambling to find a panacea to cure this accelerating fiscal crisis before it reaches a critical mass. But what if a big part of the answer was already here?

Surgeries done in ASCs cost significantly less than procedures done in hospitals or HOPDs. For example, the online peer-reviewed journal Orthopedic Reviews estimates that orthopedic procedures would cost 60% less if most were done in ASCs. A 2020 study by the Ambulatory Surgery Center Association (ASCA) said that surgeries performed in ASCs instead of hospital settings saved Medicare $28.7 billion from 2011 to 2018. Furthermore, with more surgeries projected to move to outpatient settings, ASCA projects that the savings from 2019 to 2028 could total as much as $73.4 billion. Let's digest that for a second and imagine if even more procedures than projected took place in ASCs in the future and the savings were diverted into other critical areas of health care.

These projections, which I think are very reasonable, would translate into trillions in savings over our lifetime and the lifetime of our children. It's almost criminal for so many surgeries to continue to take place in more expensive locations when they can be safely performed elsewhere.

CMS has made some changes in the last few years. In 2019, it approved Medicare reimbursements for a series of cardiac diagnostic procedures to be performed at ASCs and several cardiac interventions got moved to the ASC-approved list in 2020. Total knee replacements also made it to the ASC-approved list last year and total hip replacements made it there this year.

Despite this, the disparity between Medicare rates for identical procedures performed at HOPDs and ASCs continues to widen, according to ASCA data. At one time, ASCs received about 85% of the HOPD rate, but that amount was cut to 50% by 2019, which disincentivizes performing them in less expensive settings. The exact opposite should be taking place. The 2020 ASCA study notes that HOPDs still perform 96% of parathyroidectomies, perhaps because ASCs receive only 46% of the rate CMS pays HOPDs for the same procedure. The Medicare payment gap is even larger for percutaneous cardiac interventions, for which the HOPD rate is 75% higher than what ASCs are paid. These trends need to go in the other direction to avert an economic disaster.

Imagine the costs savings if more surgical procedures took place in same-day settings and the savings were diverted into other critical areas of health care.

While CMS also declared it would eliminate its inpatient-only procedure list in phases over the next three years, the 1,700 procedures are only scheduled to be moved, when clinically appropriate, to the HOPD-only list, not to the ASC-approved list as well. Not allowing ASCs to do them is inexplicable, as the facilities are essentially identical, and just as safe. Many of these procedures should move to the ASC-approved list as well. Some surgeries on patients with serious health issues and some complex procedures are best done in inpatient hospital settings, of course. But in most cases, as evidenced by the continuing migration of more cases to the outpatient arena, highly specialized ASCs outfitted with the latest equipment and staffed with top-notch surgical talent can perform the jobs safely. At ASCs, hospital transfers are rare; infection rates are low; recovery times and subsequent discharges are appropriately quick; outcomes are good; waiting times are short; convenience and patient satisfaction levels are high — and cost of care is comparatively low.

It's imperative that these promising developments continue, as we've reached a tipping point and have no choice but to continue to change. Simply put, the county's running out of cash. Government entities and insurance companies need to continue the concerted effort to move more elective surgeries to lower-cost ASC settings, both for the country's financial future and our people's health and welfare. Our voices need to continue to be heard as we advocate for this path forward. We must insist our leaders take additional action to avoid the inevitable breakdown of our healthcare system. We owe our future generations at least that much. OSM