Partnering with Hospitals Today: A Discussion with Tom Blasco, MD, and Anne Cole, RN, CASC, of Surgical Directions

During this sponsored episode of ASCA’s Advancing Surgical Care Podcast, Charlie Leonard of ASCA’s public affairs team sits down with Tom Blasco, MD, and Anne Cole, RN, CASC, of Surgical Directions, a leading ASC consultancy and ASCA affiliate, for a discussion about the challenges and advantages of ASC-hospital partnerships. This the first in a series of sponsored content podcast episodes ASCA will be offering to enable ASCA affiliates to speak directly to ASCA members about a range of essential products and services and issues of importance to the ASC community.

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Narrator:   0:06
Welcome to the Advancing Surgical Care Podcast brought to you by ASCA, the Ambulatory Surgery Center Association. ASCA represents the interests of outpatient surgery centers of every specialty and provides advocacy and resources to assist them in delivering safe, high-quality, cost-effective patient care. As with all of ASCA’s communications, please check to make sure you are listening to or viewing our most up-to-date podcasts and announcements.

Charlie Leonard:   0:37
Hi, I'm Charlie Leonard, a member of the ASCA public affairs team. On this episode of the Advancing Surgical Care Podcast, I'm pleased to welcome Anne Cole and Dr. Tom Blasco as my guests. Both Ms. Cole and Dr. Blasco are with Surgical Directions, a leading ASC consultancy. Surgical Directions sponsored this podcast so that Ms. Cole and Dr. Blasco could share their experiences and offer their professional insights for ASCs seeking to successfully partner with their local hospital. As ASCA members know, there are several different ASC ownership models, and hospital partnerships are but one strategy for viability and long-term success. We hope to feature other models in future podcasts. With that introduction of our topic today, I'd now like to introduce our guests. Anne Cole has more than 30 years of professional nursing experience in hospital ORs, post-anesthesia care units, GI, central sterilization, labor and delivery units, as well as ambulatory surgery centers. In her practice, Anne helps clients improve case volumes, onboard new physicians and adopt essential continuing programs. She also specializes in perioperative processes and more. Dr. Tom Blasco is an anesthesiologist intensivist with more than 40 years of clinical experience working in and managing tertiary care level hospital operating rooms, critical care units and freestanding ambulatory surgery centers. As a founding partner of Surgical Directions working with scores of clients, Dr. Blasco has become a recognized leader in successful organizational improvement of patient-centric surgical care. Anne Cole, welcome to the Advancing Surgical Care Podcast.

Anne Cole:   2:23
Thank you, Charlie. I'm glad to be here.

Charlie Leonard:   2:26
And Dr. Blasco, welcome to you as well.

Tom Blasco:   2:29
The same for me, Charlie.

Charlie Leonard:   2:30
Thank you both. With that, let's get started. Anne and Tom, can you give our listeners an overview of the factors that you believe are encouraging hospitals to pursue partnerships with ASCs today and vice versa why an ASC might want to pursue a partnership with a local hospital? Anne can you share your thoughts and experience and then I'll ask Tom for a follow-up?

Anne Cole:   2:52
Sure, Charlie, thank you. So most recently, we've seen how essential ASCs have been to the healthcare industry with COVID and the shutdown of all elective surgery over the last year. In the background, the ASCs have stepped up and were able to help facilitate those essential surgeries that needed to be done in an environment. And as a result, our physicians found that they were comfortable there, that it is a viable option for them to bring their patients, and they liked it. And that's great for the ASCs. Right now, the hospital-only CPT code list has released more cases that can be brought to the ASC, and so you're going to start to see the physicians migrate out to the ASC. As a result, the hospitals are going to see a decrease in their revenues, they're going to see a decrease in their cases, the utilization of their ORs, and hospital leaders are going to start to look at how can they recapture that revenue that they're losing? As we talked about cases going out, we realized that only 10 million of the 16 million procedures that we perform each year remain in the hospitals that have to conform to the to midnight rule. Tom, any comments you'd like to make?

Tom Blasco:   4:08
I have a few. First of all, COVID not only gave the procedurals a new experience in the ASC at times, but COVID, basically it was almost like a two-by-four across the forehead of hospitals that we really depend on our elective outpatient surgery. And when they lost that, with that three-month hiatus when most elective surgery was canceled in the United States, hospitals became acutely aware of their vulnerability. What's interesting is that more than half the cases procedures done in the hospitals United States this year, probably over half can be moved out to the ASC or the office. In addition, there are two government mandates that are really affecting patient movement from the hospital to the ambulatory environment. The first is charged transparency, which was mandated by Congress and CMS. It started out pretty slow. But now, it's been mandated to be consumer friendly. I'll give you an example of this. The first one is of a hospital of an ASC and it typically charges and I know these numbers between $5,000 and $7,000 for a tonsillectomy adenoidectomy, we were at a hospital last week, that actually charges over $50,000 for the same procedure that could be done in ASC. That charge transparency will affect where patients and physicians and payers will direct their surgical preference. Additionally, there is something that's not really well known right now, but it's circling through the courts, is called site neutrality payments, and it was first passed by Congress in 2015 and it's been in the courts ever since. Hospitals, the American Hospital Association, have been fighting against it because it would mean that all outpatient procedures, whether it's done in the hospital, the HOPD, the ASC or the office, would get the same amount of revenue. The same charge fee that will dramatically affect and accelerate the movement of patients to the outpatient environment.

Charlie Leonard:   6:06
So we're obviously seeing a lot of change. Historically, I think we would all agree that ASCs and hospitals have been competitors more often than collaborators. So today, in addition to independent ASCs, we have management companies with multifacility ownership, hospital-owned ASCs, ASCs with hospital partnerships. This is really changing the healthcare landscape, at least for outpatient surgery procedures. What do you see happening in terms of these relationships today and where they're going tomorrow?

Tom Blasco:   6:34
Well, I'll give you a quick 50,000-mile view of what currently the market is and in the ASC industry of the almost 6,000 ASCs, approximately 60 percent are still privately held, usually by procedurals. And these facilities typically are single specialty, like a gastroenterology center or a cataract center. Now, there are some multi-specialty centers but most of the 60 percent is single specialty. Approximately 20 percent are owned by the big management companies, like SCA and Amsurg. And the last 20 percent are owned by hospitals and this is either a full ownership or a joint venture ownership. But this number will likely change dramatically. For the first time in many years, patients and payers are now driving care out of the hospital into the ASC. We had about a 10-year hiatus and growth that ended about 2018. And now there's an accelerated movement of patients to the ASC. So the ASC is going to be faced not only with new volume, but new specialties, new technology and new requirements for staff training. It's going to be a very different environment once all is settled, and we can get into some details on that a little bit later.

Charlie Leonard:   7:47
Anne, anything you'd like to add or things that people looking over the hill to the next year and years beyond?

Anne Cole:   7:55
Sure. You know, the one thing I'd like to say is that the ASC industry has managed the outpatient platform very well over the years. They've focused on excellence, patient and physician satisfaction, and efficiency. And the platform has proven outcomes and has very and has structure in place. The physicians new to the ASC, I think, are going to be very comfortable in this environment. And I think they're going to thrive in the environment. So it's going to be a very positive option for the physicians as well as the patients.

Charlie Leonard:   8:27
Anne, let me follow up. We've talked a lot about the hospital-ASC relationship. But I think we all know that central to this is the physician and the physicians’ relationship to the patient. And so there are incentives for the physician to move to the ASC model as well and to continue expanding with partnerships. Can you talk for a moment about how physicians are incentivized to adopt this model?

Anne Cole:   8:51
Well, I think there can be a couple models. First off, physicians long-standing have been interested in partnership with the ASCs, and so they have that opportunity to share in the success of the ASC and it appeals to some physicians. However, the overall atmosphere is very much patient-centered care. It is dedicated to excellence by the ASC industry. And they want to attract those physicians that have those same goals and bring those patients that want that level of service. So being able to be a partner within an ASC is attractive, but also understanding the excellence in the service and care that the ASCs give to the patient is also very attractive to the physicians. You know, the patient setting is one of comfort and low stress compared to what they may see and hear in the hospital areas. There's different noises, the acuity that patients, it's just how it looks is very different than the overall atmosphere is really contributes to that individual patient experience.

Charlie Leonard:   9:57
So Tom, could you also give us a physician's personal with your colleagues, former colleagues—obviously there's some financial incentives in the ASC model and in partnering with the hospital—but other considerations that a physician might have.

Tom Blasco:   10:10
Well, I can sum it up in a single phrase, “I don't feel like a valued customer.” I've heard that hundreds of times out of surgeons in procedurals mouths when they talk about their experience within the hospital. Hospitals have, by necessity, catered to the complex cases, the add-ons, the emergencies, and instead it's not a very friendly environment at times, especially for elective outpatients. We should also comment on the difference in terms of the out make, it's going to be specially specific the rate of out migration, for example, orthopedic surgeons, typically only about 20 percent of them are employed by hospitals. That means 80 percent are in private practice, only about 20 percent currently, as of today, orthopedic procedures are done and as sees that number is expected to increase to over 60 percent by 2025. On the other hand, cardiologists, another big group, they're mostly owned by hospitals, they're employed by hospitals and they really don't have a lot of urgency to leave the hospital because of their employment to move into the ASC. So you're going to see different rates in different times various specialties are going to begin to embrace this new ASC environment. I think that pretty much sums up the proceduralist view of the ASC market.

Anne Cole:   11:31
You know, Charlie, if I could add to that, in the ASC the patient satisfaction rates have been traditionally mid to high, 90 percent, and in the hospital setting their patients set really ranges in the 50 percent. Patients, in coming back to their physicians’ offices for their postop call, shares their experiences, their satisfaction, how great they were treated and then encourages a physician to continue the relationship with the ASC. And it encourages the patient to tell their friends about the great experience they had at the ASC as well. Patients are fearful of the hospital right now, so this is a perfect time for those ASCs to embrace these new physicians coming out and wanting to partner with them, and get them hooked on an ASC environment. It's really very positive for the patients right now.

Charlie Leonard:   12:22
Well, that's a good segue into my next question, which is, so we've talked a lot about the differences of the two settings and what appeals to physicians in terms of practicing in the ASC. But part of our focus today is to talk about the pros and cons of partnering with the hospital because there are pros and cons and benefits to that type of arrangement. So maybe we could get into a little bit more of the details there in terms of the factors that you would encourage an ASC to look at when evaluating whether or not to have a partnership. Tom, do you mind taking that first?

Tom Blasco:   12:54
Yes. And I spent a number of years working in a surgeon own ASC environment, helping to open them. And so I have heard their comments over and over again about how, if and when they want to have a relationship with a hospital. First of all, what can hospitals offer an ASC? Well, the first thing is obviously deep pockets. Because many of these new technologies, whether it's vascular or neuro or the robot or cardiology, these all require extensive investment in high-tech equipment. Additionally, although it's been within the hospital for a couple of decades now, the electronic healthcare records, it's still a fledgling industry within the typical ASC. Hospitals could and can help ASCs adopt the paperless healthcare record that they have been resistant to because of the cost in the past, I think. Additionally, hospitals own a lot of managed care populations and these populations can be directed towards the ASC in speed growth. Obviously, hospitals can help with insurance negotiations. However, the biggest con that I see is that when hospitals begin to really dabble in managing ASCs, that's when the ASC uniqueness and culture can be affected negatively, that's the biggest con. So help us with money, help us with technology, but stay away and let us run our own business.

Charlie Leonard:   14:13
So, I guess some folks like yourself help try and smooth out some of those rough edges and relationships like that.

Tom Blasco:   14:19
That's correct.

Charlie Leonard:   14:20
Anne?

Anne Cole:   14:21
Yeah, I'd like to add a couple of comments here because it will be a new day in the relationship between the ASC and the hospital. And coming from both sides of the world, I understand how difficult it may be but we have to embrace their hospital and say, how can you help me because I really don't have the greatest experience with cardiology, just never been part of what I've done in my past, the advanced orthopedic cases I've may not have ever had experience with. So I'm going to depend on the hospitals to help me out as we partner with those physicians. So the cost of supplies, how to obtain the supplies, working with those values during purchasing, from the larger systems to get best prices, they can help me do that. One thing that I fear is that as the hospitals lose those cases, they are keenly aware of their utilization of their ORs and their staff and sending the staff home consistently at the hospital site is not going to work. I mean, people are dependent on their paycheck. So if a surgeon is at the ASC two days out of the five for the week, and now I have downtime for those staff, what am I going to do with that staff. And oppositely, the ASC doesn't necessarily have that expertise in those procedures with their staff and their ASC. So can we consider leasing from the hospital those critical staff to do those higher acuity cases. So I think that's a new world. I know some ASCs do lease from a hospital staff, and I think that's something we need to consider and talk about with our hospital partners. Again, I think we have to do a really great business plan, looking at the return on investment, taking a look at what equipment I need, the expertise of the staff, the disposables, the reusables, specialty sterilization, so all those things, what's going to be my breakeven point for the huge capital investment. So we have to really think about that. And as well, we have to think about that patient, how are we going to choreograph their stay at the ASC and going home? How do we optimize them to make sure they're in the best shape to go home? And so really partnering with our anesthesia teams to make sure that we have the right pathway and making sure that we're in coordination with our physician plans.

Charlie Leonard:   16:52
So the world has changed. We're moving away from competition and more towards collaboration, and it sounds like we're just likely to see more of this. Thank you both for lots of good advice and guidance for the kinds of questions that ASCs need to ask themselves, not only financially, but I think Tom touched on culturally as well, how ASCs operating are going to continue to operate in the future. So thank you both. That's about all we have time for today. I hope this podcast discussion will be helpful and informative to ASCA members who are either partnering with a hospital today or considering a partnership in the future. Once again, I'd like to thank Anne Cole and Dr. Tom Blasco and their consulting group, Surgical Directions, for their sponsorship and support for the production and distribution of this podcast. Until next time, please wear a mask, practice social distancing, wash your hands, and please make sure you get vaccinated as soon as you are eligible so we can all stay healthy and safe.