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Why IPAs & unions approach this New York-based ASC administrator in droves

A new trend is taking hold in the state of New York as commercial payers increasingly understand the value of ambulatory surgery centers. As administrator and vice president of business development of New York City-based Gramercy Healthcare Management that oversees Gramercy Surgery Center, Jeffrey Flynn, CASC, has had more independent physician associations approach him in the past two months about transitioning cases to the surgery center.

IPAs haven’t historically worked with ASCs as many surgery centers were out-of-network and could face backlash from payers. Recently, however, many payers are driving IPAs to surgery centers because ASCs present a significant cost-savings opportunity while also providing high quality services.

“It seems they have received pressure from the commercial insurance companies to force their outpatient cases from the hospitals to outpatient centers,” Mr. Flynn notes. “One plan they are using to do this is appealing to any shared savings they have on capitated patients.”

In shared saving agreements, payers and providers can share in savings if providers keep a patient’s episode of care within a certain price range. Providers can receive this bonus by practicing preventative care to ensure a patient has a minimal chance of hospitalization and performing procedures that are in-network.

However, another tactic entails payers taking control and requiring IPA members to transition cases out of the hospitals and into the surgery centers.

“One IPA member told me a payer said, ‘If there is not a dramatic shift of your cases from the hospital to freestanding surgery centers, there could be a significant cut in fees when we get to the end of your contract date’,” Mr. Flynn says. “Dramatic and significant are relevant terms that payers don’t always define. Providers often wonder what this means for reimbursement.”

The cost savings payers can accrue from shifting procedures to the outpatient setting may be substantial.  For instance, a three-part podiatry procedure costs nearly $3,875 more when performed at local hospital compared to Gramercy Surgery Center.

In addition to IPAs, union leaders are also looking to truncate costs and thus are seeking out ASCs. This month alone, Mr. Flynn is presenting in front of two large New York unions to meet with their medical directors about how Gramercy Surgery Center can yield cost savings. Reducing costs is of particular importance to unions as Mr. Flynn notes, “they pay dollar for dollar even if they are managed by insurance companies.” In the last two months, eight IPAs and six unions have approached Mr. Flynn as to how they can start moving cases to the surgery center.

The healthcare industry’s drive to continually find ways to save money will push cases into the ASC setting. ASCs are not only cost-effective, but their quality often meets or exceeds that of the hospital’s quality scores. For example, Gramercy Surgery Center is one of the few ASCs performing penal implants in the United States; they have done more than 100 procedures with a 0 percent infection rate.

“I can show these organizations my numbers — no one is coming in and staying two days and then getting an infection. That would be another cost,” he says. “That is a point that payers are starting to realize. This is a unique time for ASCs as we are one of the main solutions to bringing down costs.”