Unless you’ve needed outpatient surgery in the past few years, you may not realize the value of surgery centers, a quiet revolution in health care that’s providing convenient, less costly and safer outpatient procedures to millions of Americans each year.
The number of ambulatory surgery centers has grown to more than 5400, with more facilities on the horizon. More than half of these surgery centers are doctor-owned, although many hospital systems have also jumped on the bandwagon.
Factors driving their popularity include:
- Outpatient surgeries. Today more than 60 percent of all U.S. surgeries are outpatient procedures. In fact, each year surgery centers perform more than 7 million procedures for Medicare beneficiaries needing same-day surgical, diagnostic and preventive procedures.
- On average, procedures take about 30 minutes less in a surgery center, a 25 percent improvement over the mean procedure time in a hospital, according to a study published in Health Affairs.
- Individual patients pay up to $1,000 less for procedures in surgery centers than in hospitals. Nationally, the surgery centers save billions each year for Medicare and commercial insurers.
- Surgery centers are profitable. A Pennsylvania newspaper reported that surgery center profit margins are about 30 percent higher than hospitals. Why? They don’t need to provide costly emergency room services and technology. Plus they focus on patients with reliable payment methods: those who are commercially insured, self-paying or covered by Medicare.
- Consumer Reports says complications, including infections, actually appear to be less likely in outpatient surgery centers than in hospital-owned surgery centers and outpatient departments. (For elderly patients or those with underlying health issues, hospitals remain a better choice.)
Common procedures, real savings
Cataract surgery. Shoulder surgery. Knee arthroscopy. Endoscopy. Tonsillectomy. Colonoscopy. Hernia repair. These are just a few of the many procedures that are routinely performed in surgery centers across the nation.
The savings are significant. For example, in Charlotte, NC, the average price for a knee arthroscopy in a hospital outpatient department is $12,493 while the average ambulatory surgery center price is $6,118. In Charleston, West Virginia, cataract surgery ranges from $5,762 to $7,987 in hospital outpatient departments, but averages only $2,932 at a surgery center.
This cost differential saves employers and consumers billions each year. If all of the procedures currently performed in surgery centers was done in hospital owned outpatient departments instead, private health care costs would increase $37.8 billion in just one year, according to an analysis by Healthcare Bluebook and HealthSmart.
These differences haven’t gone unnoticed, and payment reform is underway with leadership from the Centers for Medicare and Medicaid Services (CMS). Beginning in January 2017, a new federal budget rule will go into effect requiring new hospital-owned surgery centers be reimbursed at the same CMS rates as independent surgery centers and doctors’ offices.
Implications for employers: Engagement and education
Plan design can prompt employees to become more engaged in the actual cost of care or enable them to disregard it. With fixed co-pays, beneficiaries have little “skin in the game.” But as high deductible health plans and larger coinsurance costs become more prevalent, patients become consumers and price information becomes more important.
Educating employees about how to find information also critical. The price of health care procedures has been a well-hidden secret, but the trend is changing. More than 30 states have passed or proposed legislation to increase price transparency. And savvy commercial health plans are providing online transparency tools for their members and even rewarding members for choosing a lower-cost provider.