Kenny Hancock, President and Chief Development Officer of Meridian Surgical Partners, discusses the future of spine surgery at ambulatory surgery centers.
Question: Will there be more, fewer or about the same number of spine surgeons looking to develop ASCs in the near future?
Kenny Hancock: We believe there will be more spine surgeons looking to develop ASCs in the future. We believe this is driven largely because of patient demand. It’s where the consumer market is headed. Patients are seeking high quality surgical care in a safe and lower cost environment. With the abundance of online resources related to spine surgical options such as videos, presentations, white papers and other educational materials, patients can easily obtain information and are being directed toward minimally invasive surgical techniques and surgeons who provide that alternative.
Technology provides surgeons the opportunity to shift spine from the hospital setting to the ASC setting safely. Minimally invasive surgical techniques and advances in anesthesia and pain management allow patients to experience excellent results in a lower cost setting with extremely low risk of infection.
Q: Where do you see the biggest potential for outpatient spine surgery center growth over the next few years?
KH: Growth is driven as surgeons become more comfortable moving spine cases safely into the outpatient setting. Discussions about clinical success in the ASC setting are now evident within the profession and serve as a catalyst for more spine surgeons to explore the option. The desire to control their surgical environment, increase productivity, perform surgery in a less institutional setting and participate as an equity partner in the business will be prime drivers of growth over the next few years.
Q: For established spine surgery centers, what opportunities are there to bring in new surgeons or procedures?
KH: There is an opportunity for pain-based ASCs to add spine surgery and for spine surgery-based ASCs to add pain management. Each specialty is unique and complementary of the other. Increasing the number of specialists in an established setting is market dependent and variable based on available specialists, competitive practice issues, merger considerations, etc.
Q: How do you expect reimbursement changes over the next year or two to impact outpatient spine surgery centers?
KH: Currently, there isn’t a Medicare fee schedule for spine surgery in an ASC setting; therefore, each market is dependent on the ASC's ability to negotiate a suitable case rate or fee schedule with commercial payers. Some payers, certainly not all, are beginning to recognize that spine surgery can be performed safely in an ASC setting at a lower cost than hospitals. We anticipate downward pressure on spine reimbursement rates, just as we’ve seen historically with other specialties. ASCs will continue to provide high quality in the lowest cost surgical setting.
Q: What key trends in healthcare present the best opportunities for success with outpatient spine centers?
KH: The ASC setting produces the lowest cost surgical option. According to a recent study by ASCA, ASCs currently save the Medicare system $2.6 billion a year and if just half of the eligible procedures were moved to the ASC setting from HOPDs it would save the system another $2.5 billion. The savings for the Medicare program generated by ASCs could exceed $57 billion over the next decade. Over the last 10 years, ASC reimbursement rates have declined in comparison to HOPD reimbursement rates and are now on average 58% of what an HOPD receives for a similar procedure. Providing high quality spine surgery for the lowest cost will matter as consumers take on a more active responsibility for their healthcare expenses.
Transparency is needed to fully expose the cost differential between the ASC setting and hospitals. As that evolves and patients are aware of their options, many will select the ASC versus the hospital due to savings, high quality care, excellent patient satisfaction and decreased risk of infection. Growth opportunities will include participation with self-insured employers, acutely aware of their cost of employee healthcare, seeking high quality, lower cost surgical alternatives. Groups managing populations will also be viable growth opportunities as they seek lower surgical cost alternatives. As more and more groups emerge that manage populations such as, ACOs, IPAs, large physician networks, etc., it will continue to be extremely important for ASCs to be recognized as a high quality lower cost provider of spine surgery.
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