Why it is a better business model than office-based surgery
Cataract surgery is one of the greatest success stories in medicine with a high success rate, low complication rate, and significant positive impact on the daily lives of patients. Because of their patient-centric culture and their commitment to the delivery of lower-cost and high-quality care in an appropriately regulated environment, the majority of the 3.8 million cataract procedures performed annually in the United States are furnished in the approximately 1,200 ASCs specialized in the provision of cataract and other ophthalmic surgeries. The U.S. Census Bureau estimates that there will be 83.7 million people age 65 and older by 2050, while the National Eye Institute projects that 50 million people will have cataracts by 2050.
The aging population and growth in cataract incidents indicate a growing need for accessible and efficient patient care in a safe surgical environment—the ophthalmic ASC.
Today’s standard of care requires that cataract surgery be performed in ASCs and hospitals. ASCs—where more than 75% of cataract surgeries are performed—are Medicare-certified, state licensed, accredited, and highly regulated. Ophthalmic ASCs in the United States have the capacity to accommodate the growing demand cost-effectively in comprehensive, high-tech environments operated by professionals who are licensed in the intricacies of ophthalmic care and emergent care needs.
In recent months, the Outpatient Ophthalmic Surgery Society (OOSS) has been conducting a comprehensive evaluation of surgical facilities, specifically, the differences between ASCs and office-based surgery (OBS) suites. The articles in the last few issues focused on patient safety, accreditation, and oversight.
This article will highlight the business advantages of physician ownership of an ASC compared with OBS, and the key differences that should be considered when comparing them. In the next issue, we will discuss the financial benefits of ASC ownership.
Optimized Financial Performance
The ASC has proven economic benefits based on receiving a fair facility fee, combined with suitable volume and a predictable cost structure. Currently (and for the foreseeable future), OBS does not receive a facility fee for Medicare patients, who represent an estimated 45% of most physicians’ cataract cases. Additionally, securing private insurance contracts is both challenging and unlikely. Combining the number of ineligible patients (due to insurance) and patients with comorbidities whose cases should not be performed in the essentially unregulated OBS, results in a maximum of 30% of patients who are good candidates for cataract surgery in an OBS suite. When projecting financial performance, those factors must be considered, indicating that the qualified OBS patient pool will be constrained to cash-paying healthy, younger patients.
Shared Ownership = Shared Risks
Building a new ASC requires a substantial investment. Syndicating into an existing ASC will cost less and may yield a bigger return, faster. For both new and existing ASCs, the financial risk can be shared by a group of physician owners or by an individual surgeon with ample volume to support the facility.
In a partnership scenario, the ASC revenue and productivity will grow as each physician’s volume increases. All partners benefit from each physician’s use of the facility. The ASC can recruit new ophthalmologists to use the center, add sub-specialties, and/or add new specialties to be performed at the ASC to grow volume and revenue.
The financial risk of owning an ASC is shared with other owners performing procedures at the ASC. Any vacations, long-term absences, or closures due to external reasons, such as COVID-19, are absorbed and shared by the group. When a single-owner ASC scenario is appropriate or desired, the physician can operate a very efficient, profitable, and independent ASC, while building a separate asset from his or her practice.
The investment in building a new ASC, furnishing the technology and equipment, and operating it with professional, dedicated, trained staff is significant. Having multiple physicians invest in and provide surgical care in the ASC provides the opportunity for member physicians to share costs, to benefit from the growth of colleagues’ practices, and to optimize the use of the facility and resources. Each physician can focus on growing the practice and surgical volume.
When a surgeon buys into an existing ASC, the investment can provide an immediate result; possibly receiving distributions the next month based on proven operations, revenue stream, and consistent past distributions, ultimately resulting in an accelerated ROI.
In the OBS structure, in contrast, lower surgical volumes that generate minimal to no facility fees (at least in the current payer environment) performed exclusively by physicians of the practice significantly limit financial performance. OBS currently receives minimal or no facility fees; therefore, very few cases can be furnished profitably in an OBS suite. A meaningful ROI is not feasible in current conditions in an OBS structure.
The surgeons’ clinical risk is mitigated when performing surgeries in a Medicare-certified, state licensed, or accredited (AAAHC, JCAH, AAAASF) facility. An OBS suite may seek accreditation as an office, but these standards are substantially less rigorous than those applied to ASCs. Under state laws, OBS will likely only be utilized by surgeons affiliated with the practice, and these facilities will likely be limited to surgery on non-Medicare patients. OMIC and private medical liability insurers are currently evaluating the risk of OBS ophthalmic procedures for purposes of determining coverage and limitations.
The ASC benefits from economies of scale. It is utilized by multiple surgeons, can accommodate high volume with state-of-the-art technology and supplies, and has specially trained staff. The ASC will likely obtain better pricing of supplies, implants, instruments, and equipment given the purchasing power of the larger organization, and will have a larger and more diverse lens/implant consignment, providing the surgeons with flexibility and predictability in providing treatment options.
Access to Desired Technology
The ASC physicians will have better availability and access to desired technology and innovation because they will be sharing costs with other owners. The physicians will be able to invest in the latest innovative technologies, such as a femtosecond cataract laser, ORA, and endocyclophotocoabulation laser (ECP) to be used within the ASC.
The OBS suite owner will have the freedom to select desired technology, but will also bear the full-cost burden. The technology’s lower usage due to volume may affect also affordability. The independent ASC owner will be able choose the desired and appropriate technology for patients’ surgical care.
An additional consideration is that ophthalmic devices and implants, such as MIGS, that benefit patients clinically provide an additional physician fee of $300 to $500 and $800 incremental margin for the ASC. But they are not approved by Medicare or private insurance in a clinic or OBS suite.
With a dedicated professional staff at the ASC and centers designed for ophthalmology, the physicians can perform the highest volume of procedures in minimal time, optimizing efficiency in the OR. The ASC staff is specifically trained for emergencies and complications.
In an ASC, the physician is focused on surgeries, assisted by staff dedicated to surgical care. In an OBS suite, the surgeon is responsible for the care of the patient, any medical emergencies that may arise, anesthesia complications, and management of staff and operations, in addition to practice accountabilities.
Building Physician Assets
The ASC has the potential to generate a significant ROI for the physician owner, becoming a high-value asset that is separate from the ophthalmic practice. With the ever-changing health care environment and reimbursement rates, it is in the physician’s best interest to own two separate entities—the practice and ASC—and to align with a leading, progressive ASC.
The physician who builds a practice that includes an OBS suite has one business yielding less flexibility and more risk.
The ophthalmic ASC remains, after decades of proven results, the best solution for patients and physicians, and the best investment for physician owners.
Visit the OOSS.org for information, resources, and tools to evaluate your ophthalmic surgical facility options. ■