Why Health Systems Should Invest in ASCs

 

Ambulatory surgery centers (ASCs) are growing exponentially in the healthcare market as we see hospital-based outpatient care shifting to freestanding surgical facilities. On top of the 23% growth of ASC outpatient procedure volumes over the last few years, experts predict another 16% growth through 2026 due to low cost to consumers, greater accessibility to life-saving procedures, and changing reimbursement rates from insurance providers. Some would argue that this is a threat to hospitals and that they need to now compete in an oversaturated market for surgical revenue. However, another approach could lead to revenue growth and an increase in quality across healthcare facilities.

 

Instead of focusing efforts on drawing in potential surgery patients to hospitals, health systems should follow the money and invest in new or existing surgery centers. Although these procedures are cheaper, it seems that the mass influx of patients and reduced operational costs for the facility would offset the loss of revenue from a hospital’s reduced inpatient and outpatient volumes. Both private payers and CMS have actually increased reimbursement rates to ASC procedures to combat the rising expenses in hospital outpatient settings that often leave hospitals indebted and at risk of closure. These factors also increase revenue to physicians, leading them to seek either employment or equity stake in ASCs as they see this trend continue.

 

Since consumers, payers, and employees all benefit by making this shift, it makes sense for larger systems to invest their resources in these facilities as it would improve their clinical quality and brand recognition. Health systems and hospitals can affiliate with ASCs through a variety of means, such as joint ventures, timesharing, and acquisitions, in order to profit from this market. Regardless of the method, they too can benefit from a changing healthcare environment instead of fighting it.

 

Read more about the ASC market:

https://www.advisory.com/daily-briefing/2019/03/05/asc-shift

https://www.reliasmedia.com/articles/143809-asc-market-growth-on-track-for-2019-and-beyond

MRG Newsletter March 2019

Managing Assets: How to Plan for a Facility Closure

Health systems consistently see hospitals coming in and out of network via acquisitions, consolidations, or closures. But since most of the focus is on planning for acquisitions, many fail to properly prepare for their closing facilities. Hospital closures are happening more frequently and for a variety of reasons. Financial challenges are a leading cause, such as with many EmpowerHMS facilities recently, where they are closing or reducing services in hospitals across several states. Health systems may also consolidate services from one hospital to another existing or newly built medical facility, where closures can range from a single department to an entire building.
     Regardless of reason or scope, health systems need to consider how to handle their assets in the event of either a sudden or planned closure. The main points to plan for are the inventory, transference, and liquidation of assets.
1.     Inventory of existing assets
  • Know what assets closing facilities have and what condition they are in. Items in better condition could be re-purposed whereas worn-out items may be thrown out or recycled immediately.
  • Inventory assets in surrounding locations to know where there is need for equipment without having to ask numerous department heads.
  • Compare inventories and asset conditions to determine which assets will be kept and which ones will be disposed of in a closure.
2.     Transference of assets to other facilities
  • Identify where usable assets will go based on need in other facilities or to the facility where services will be consolidated.
  • Determine how equipment will be transferred between facilities. Does your in-house materials team have the tools to move larger and multiple assets, or will you need to outsource the moving process?
  • Reconcile ledgers when equipment is removed or replaced so each facility’s books are up to date, ensuring that they are not paying for nonexistent assets.
3.     Liquidation of remaining assets
  • Include assets from the closing facility and any assets displaced by transferred equipment across sites
  • Get a fair market valuation for all disposable assets. Knowing what each item is worth will inform the best route for disposal – auction, resale, or donation.
  • Determine a consistent method of sale for the most profitable return on your capital equipment. Are you going to bid items out individually or contract a third party to handle resale?

Once these processes are addressed, health systems can establish a system-wide plan to ensure maximum efficiency with ongoing and future closures. Since these transitions will always happen in the healthcare sector, they can be made easier and more profitable by taking this proactive approach to changes in facilities. For more information on inventory, assessment, and liquidation services, please visit our website at www.go2mrg.com.

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MRG Projects:
  • Technology change-out of Siemens Analyzers for 3 hospitals in MI
  • OBGYN audit for practice acquisition in OH
  • Cardio & Vascular audit for practice acquisition in OH
  • Remote audit for practice acquisition in WV
  • Urology audit for practice acquisition in OH
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MRG Appraisal of the Month:
1 qty Olympus CYF-4 flexible cystoscope
FMV: $2000.00

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MRG Fun Facts:
St. Jude Children’s Research Hospital, which has treated thousands of children with cancer, is not religiously affiliated! It was founded by actor Danny Thomas because of a promise he had made to the patron saint of lost causes after he found success in Hollywood.

Why Are Hospitals Missing Payroll?

Companies like Americore and EmpowerHMS are missing payroll at several hospitals across the country. Americore’s Ellwood City Hospital in Pennsylvania missed payroll multiple times over the last year and, more recently, has been shortchanging workers’ paychecks by only giving them minimum wage. Missouri-based EmpowerHMS has also been late in meeting obligations including payrolls, rents, and utility bills at facilities across the country, most notably in Midwestern states such as Missouri, Kansas, Arkansas, and Oklahoma. Their facilities have had to reduce services and lay off employees, some closing their doors indefinitely.

https://www.kansascity.com/news/business/health-care/article223265995.html

https://www.beckershospitalreview.com/finance/pennsylvania-hospital-shortchanges-workers-paychecks-again.html

Healthcare used to be a stable and reputable career field. Now with rural hospitals at an all-time high of 1 in 5 facilities at risk of closure and an increase in instances of missed payrolls, the future of healthcare jobs is perilous and leaves a lot of workers at risk. With EmpowerHMS, it seems to boil down to a systemwide management disruption, as these financial troubles come amid a legal investigation into their lab services. Across other hospitals, however, lack of reimbursement from CMS is often cited as the predominant factor in these missed payments.

Is this a result of a declining healthcare market or a mismanagement problem at a corporate level? Is it limited to only one/a few health systems or is it becoming a trend we will see more of? And finally, what will healthcare workers do if this trend of missed payrolls continues? The search for answers is ongoing, and we hope to gain clarity soon.