Outpatient Surgery Needs Immediate Reform
by Leonard Grunstein
Nov 25, 2014 | 5713 views | 0 0 comments | 41 41 recommendations | email to a friend | print
A dangerous new healthcare trend was recently exposed with the passing of Joan Rivers: doctors performing procedures in a private facility that have traditionally been done in a hospital.

Many of these facilities are ill-equipped to handle complicated medical procedures, particularly when situations arise that require emergency treatment. To adapt to the growing use of outpatient surgery centers, hospitals must begin incorporating these facilities on their campuses.

Ambulatory surgery centers are often owned by a doctor and can take on basic procedures that have typically been done in hospitals, such as endoscopies and colonoscopies, as well as more complicated procedures such as eye surgery.

Their use has quietly boomed in recent years. According to the Centers for Disease Control, the rate of surgery visits at these facilities increased 300 percent from 1996 to 2006, while visits to hospitals stayed flat. Today, there are more than 5,000 such centers dotting the country.

The benefits of a freestanding facility are obvious: they are convenient to reach and appointments can often be scheduled with little notice. Because they are not required to maintain many of the auxiliary services of a hospital, such as charity care, they can also offer cheaper rates to patients, often half the rate of a hospital or more.

But these conveniences come with grave risks. Most critically, freestanding centers are not required to have an emergency room. As a result, patients who develop complications mid-surgery must be transferred to a hospital by ambulance, delaying treatment at a time when minutes and even seconds can mean the difference between life and death. A 911 call and ambulance ride cannot compete with a short trip down a hospital hallway.

Moreover, some procedures such as endoscopies and colonoscopies often involve some form of anesthesia, yet an outpatient office may be neither well equipped nor even licensed to perform life-saving care in the event a problem occurs.

While the lack of an emergency room and specialized services lets hospitals cut costs, the experience of Joan Rivers and others demonstrates a fatal flaw in this model. The American Society of Anesthesiologists has estimated that out of 250,000 outpatient surgeries, 232 patients had major complications within 72 hours, including 21 who died.

This situation must be remedied. There is no reason why outpatient surgery must be done far from a hospital. A number of hospitals, in fact, have vacant land that could easily house a freestanding facility. What are needed are the right incentives to lure such centers to hospital sites.

Hospitals can bring doctors to their campus by leasing out space adjacent to the building on favorable market terms and conditions. While doctors would continue to earn the facility fees they typically earn at independent facilities, they would share a portion with the hospital as part of the rental arrangement.

In exchange for this sacrifice, however, a center with access to an emergency room could expand the kinds of services it offers, as well as branch out to more complicated and risky procedures. The rents earned by the hospital, in turn, could be used to defray the cost of case for the indigent and for emergency services.

By promoting more efficient service, such a model would permit each of these compound facilities to be financed as a stand-alone unit, allowing it to attract favorable financing through the capital markets.

The real winner would be the public, which would gain access to a wider range of services at a cheaper price than they would at a typical hospital, but with the safety provided by the full range of specialists on call for this purpose.

As the price of medical care continues to spiral, it makes sense to embrace freestanding facilities as a cost-effective alternative. It should not be done, however, at the expense of safety. Giving doctors the incentive to move closer to hospitals is the right way to strike a happy medium.

Leonard Grunstein, an expert on hospital financing, is managing member at Hanlen Real Estate Development & Funding.

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