Outsized focus on outpatients
Changing reimbusements have ambulatory centers seeking partners
As insurance reimbursement practices continue to change, and self sufficiency becomes harder to achieve, ambulatory care center operators are increasingly looking to hospitals, either to form partnerships or present themselves as takeover targets.
In the past, ambulatory centers — particularly those focused on surgery — were able to remain viable as out-of-network providers, said Larry Trenk, market president of United Surgical Partners International, a national ambulatory surgical center company.
But now, "it makes more sense to be in network," said Trenk, also president of the New Jersey Association of Ambulatory Surgery Centers. "The surgery centers here see a perfect opportunity … that by having a hospital partner, they can leverage that relationship to a more favorable reimbursement."
The era of higher reimbursement for ambulatory care centers is ending, with the gap between hospital and ambulatory rates narrowing. Also, more employers are also pushing their employees to seek care at in-network facilities through higher co-pays and deductibles in order to keep health benefit costs down.
Acquiring ambulatory care centers also make sense for hospitals looking to extend their geographic footprints to be competitive in the midst of health care reform.
Joseph A. Trunfio, president and CEO of the Atlantic Health System, said hospitals are acquiring ambulatory care centers, including surgical centers, for many of the same reasons they are acquiring physician offices — to increase coordination of care between providers and establish a dedicated base of patients.
"Hospitals who want to expand their geographic footprint are looking at high-quality physicians who would like to sell their surgery centers or have the hospitals be joint owners in the surgery centers," Trunfio said. "Some of the advantages in the future of independent surgery centers are now going to go away."
Atlantic and Hunterdon Medical Center announced a joint venture earlier this fall, citing future ambulatory care opportunities as one of the reasons for combining resources. Trunfio said the two systems were exploring opportunities for expanding ambulatory care, and would need to decide what kind of ambulatory centers would be the best fit, and where to locate them.
Other decisions the two systems will confront while choosing how to expand their joint venture will include whether to supplement services already available at the two hospitals or to add a new service line through acquisition.
"For hospitals, they need to get close to having 50 percent of revenue from outpatient, and 50 percent from inpatient," Trunfio said. "The risk is not being in the outpatient arena, you are basically in a shrinking business."
Robert Garrett said that's the reason Hackensack University Health Network purchased two ambulatory surgical centers in 2012.
"It goes back to the overall theme, that more and more health care is delivered outside hospitals," said Garrett, president and CEO of Hackensack. "It seems natural for a network like Hackensack University Health Network to partner with physicians and partner with a company that runs ambulatory surgery centers."
The first two centers Hackensack has expanded into — the Hackensack Endoscopy Center and the Endoscopy Center of Bergen County — are through its joint venture with USPI. Garrett said future ambulatory acquisitions likely will revolve around orthopedic surgery; ophthalmology; and ear, nose and throat physicians.
"I believe there will be many more partnership opportunities there, as well," Garrett said. "I think physicians that own these ambulatory surgery centers recognize that it's the right time for these types of partnerships."
Garrett said the "health care consumer is the winner" in these partnerships, because hospitals bring their capital and brand recognition to the joint ventures, while the flexibility and ownership experience of the physicians provide efficient, lower-cost care.
USPI also has worked with Meridian Health in Monmouth and Ocean counties, building or acquiring six ambulatory surgical centers over a 13-year relationship.
"Meridian, to its credit, was in the forefront recognizing that partnering with physicians was the way to go," Trenk said. "The old theory is if you can't beat them, join them. I think Meridian deserves enormous credit for having enough foresight, being prescient enough to know that being competitive with physicians was not viable."
Sal Inciardi, senior vice president of business development for Meridian, said the ambulatory trend was just too big to ignore a dozen years ago, and that he's not surprised that it has continued.
Inciardi said Meridian recognized early on that patients preferred the convenience of ambulatory care, physicians preferred the efficiency of outpatient centers, and partnering with both physicians and third-party management spread the economic risk evenly, instead of all risk being placed on a hospital.
Now, Inciardi said, patient population management is playing a role in these partnerships.
"I continue to see all forms of outpatient care — same-day surgery, imaging and other forms — playing a role in having the geography covered, so you're able to manage a patient population across a broad geography," he said. "You're basically providing the most comprehensive complete health care that you can."
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