Returns to specialization: Evidence from the outpatient surgery market

Hospital behavior over the private equity life cycle

Private equity is an increasing presence in US healthcare, with unclear consequences. Leveraging unique data sources and difference-in-differences designs, we examine the largest private equity hospital takeover in history. The affected hospital chain sharply shifts its advertising strategy and pursues joint ventures with ambulatory surgery centers. Inpatient throughput is increased by allowing more patient transfers, and crucially, capturing more patients through the emergency department. The hospitals also manage shorter, less treatment-intensive stays for admitted patients. Outpatient surgical care volume declines, but remaining cases focus on higher complexity procedures. Importantly, behavior changes persist even after private equity divests.

How Have Patient Out-of-pocket Costs for Common Outpatient Orthopaedic Foot and Ankle Surgical Procedures Changed Over Time? A Retrospective Study From 2010 to 2020

BACKGROUND

Out-of-pocket (OOP) costs can be substantial financial burdens for patients and may even cause patients to delay or forgo necessary medical procedures. Although overall healthcare costs are rising in the United States, recent trends in patient OOP costs for foot and ankle orthopaedic surgical procedures have not been reported. Fully understanding patient OOP costs for common orthopaedic surgical procedures, such as those performed on the foot and ankle, might help patients and professionals make informed decisions regarding treatment options and demonstrate to policymakers the growing unaffordability of these procedures.

QUESTIONS/PURPOSES

(1) How do OOP costs for common outpatient foot and ankle surgical procedures for commercially insured patients compare between elective and trauma surgical procedures? (2) How do these OOP costs compare between patients enrolled in various insurance plan types? (3) How do these OOP costs compare between surgical procedures performed in hospital-based outpatient departments and ambulatory surgical centers (ASCs)? (4) How have these OOP costs changed over time?

METHODS

This was a retrospective, comparative study drawn from a large, longitudinally maintained database. Data on adult patients who underwent elective or trauma outpatient foot or ankle surgical procedures between 2010 and 2020 were extracted using the MarketScan Database, which contains well-delineated cost variables for all patient claims, which are particularly advantageous for assessing OOP costs. Of the 1,031,279 patient encounters initially identified, 41% (427,879) met the inclusion criteria. Demographic, procedural, and financial data were recorded. The median patient age was 50 years (IQR 39 to 57); 65% were women, and more than half of patients were enrolled in preferred provider organization insurance plans. Approximately 75% of surgical procedures were classified as elective (rather than trauma), and 69% of procedures were performed in hospital-based outpatient departments (rather than ASCs). The primary outcome was OOP costs incurred by the patient, which were defined as the sum of the deductible, coinsurance, and copayment paid for each episode of care. Monetary data were adjusted to 2020 USD. A general linear regression, the Kruskal-Wallis test, and the Wilcoxon-Mann-Whitney test were used for analysis, as appropriate. Alpha was set at 0.05.

RESULTS

For foot and ankle indications, trauma surgical procedures generated higher median OOP costs than elective procedures (USD 942 [IQR USD 150 to 2052] versus USD 568 [IQR USD 51 to 1426], difference of medians USD 374; p < 0.001). Of the insurance plans studied, high-deductible health plans had the highest median OOP costs. OOP costs were lower for procedures performed in ASCs than in hospital-based outpatient departments (USD 645 [IQR USD 114 to 1447] versus USD 681 [IQR USD 64 to 1683], difference of medians USD 36; p < 0.001). This trend was driven by higher coinsurance for hospital-based outpatient departments than for ASCs (USD 391 [IQR USD 0 to 1136] versus USD 337 [IQR USD 0 to 797], difference of medians USD 54; p < 0.001). The median OOP costs for common outpatient foot and ankle surgical procedures increased by 102%, from USD 450 in 2010 to USD 907 in 2020.

CONCLUSION

Rapidly increasing OOP costs of common foot and ankle orthopaedic surgical procedures warrant a thorough investigation of potential cost-saving strategies and initiatives to enhance healthcare affordability for patients. In particular, measures should be taken to reduce underuse of necessary care for patients enrolled in high-deductible health plans, such as shorter-term deductible timespans and placing additional regulations on the implementation of these plans. Moreover, policymakers and physicians could consider finding ways to increase the proportion of procedures performed at ASCs for procedure types that have been shown to be equally safe and effective as in hospital-based outpatient departments. Future studies should extend this analysis to publicly insured patients and further investigate the health and financial effects of high-deductible health plans and ASCs, respectively.

LEVEL OF EVIDENCE

Level III, economic and decision analysis.

Private equity and healthcare firm behavior: Evidence from ambulatory surgery centers

Healthcare firms regularly seek outside capital; yet, we have an incomplete understanding of external investor influence on provider behavior. We investigate the effects of private equity investment, divestment, and an initial public offering (IPO) on ambulatory surgery centers (ASCs). Throughput is unchanged while charges grow by up to 50% for the same service mix. Affected ASCs witness declines in privately insured cases and rely more on Medicare business. Private equity increases physician ASC ownership stakes, and both simultaneously divest when the ASC is sold. Our findings appear more consistent with private equity influencing the financing of ASCs, rather than treatment approaches.

The Safety of Performing Surgery at Ambulatory Surgery Centers Versus Hospital Outpatient Departments in Older Patients With or Without Multimorbidity

BACKGROUND

Surgery for older Americans is increasingly being performed at ambulatory surgery centers (ASCs) rather than hospital outpatient departments (HOPDs), while rates of multimorbidity have increased.

OBJECTIVE

To determine whether there are differential outcomes in older patients undergoing surgical procedures at ASCs versus HOPDs.

RESEARCH DESIGN

Matched cohort study.

SUBJECTS

Of Medicare patients, 30,958 were treated in 2018 and 2019 at an ASC undergoing herniorrhaphy, cholecystectomy, or open breast procedures, matched to similar HOPD patients, and another 32,702 matched pairs undergoing higher-risk procedures.

MEASURES

Seven and 30-day revisit and complication rates.

RESULTS

For the same procedures, HOPD patients displayed a higher baseline predicted risk of 30-day revisits than ASC patients (13.09% vs 8.47%, P < 0.0001), suggesting the presence of considerable selection on the part of surgeons. In matched Medicare patients with or without multimorbidity, we observed worse outcomes in HOPD patients: 30-day revisit rates were 8.1% in HOPD patients versus 6.2% in ASC patients ( P < 0.0001), and complication rates were 41.3% versus 28.8%, P < 0.0001. Similar patterns were also found for 7-day outcomes and in higher-risk procedures examined in a secondary analysis. Similar patterns were also observed when analyzing patients with and without multimorbidity separately.

CONCLUSIONS

The rates of revisits and complications for ASC patients were far lower than for closely matched HOPD patients. The observed initial baseline risk in HOPD patients was much higher than the baseline risk for the same procedures performed at the ASC, suggesting that surgeons are appropriately selecting their riskier patients to be treated at the HOPD rather than the ASC.

Trading spaces: Medicare's regulatory spillovers on treatment setting for non-Medicare patients

Medicare pricing is known to indirectly influence provider prices and care provision for non-Medicare patients; however, Medicare's regulatory externalities beyond fee-setting are less well understood. We study how physicians' outpatient surgery choices for non-Medicare patients responded to Medicare removing a ban on ambulatory surgery center (ASC) use for a specific procedure. Following the rule change, surgeons began reallocating both Medicare and commercially insured patients to ASCs. Specifically, physicians became 70% more likely to use ASCs for the policy-targeted procedure among their non-Medicare patients. These novel findings demonstrate that Medicare rulemaking affects physician behavior beyond the program's statutory scope.

Is physician location sensitive to changes in patients' financial responsibility?

This study examines how changes to patients' financial responsibility affect physicians' behavior. This is achieved by examining a health insurance reform that changes patients' relative financial responsibilities for a medical service that can be received at one of two locations. In particular, this study examines how physicians' treatment location decisions change after the reform. This study finds that physicians who previously work across the two locations are increasingly observed working at the location that becomes cheaper for patients. Thus, physicians' responsiveness to new policies may be an important lever by which certain demand-side health insurance reforms successfully operate.

Ambulatory Surgery Centers Versus Hospital Outpatient Departments for Orthopaedic Surgeries

BACKGROUND

The goals of this study were to compare the utilization and costs of ambulatory surgery centers (ASCs) versus hospital outpatient department (HOPD) for commonly performed outpatient orthopaedic surgical procedures.

METHODS

Commercially insured patients undergoing elective, outpatient orthopaedic surgery were queried using an administrative claims database. We queried the following surgeries: carpal tunnel release, lumbar microdiskectomy, anterior cruciate ligament reconstruction, knee arthroscopy, arthroscopic rotator cuff repair, and bunion repair. Total costs were defined as the sum of all payments for a surgical episode. Professional fees were defined as payments to the primary orthopaedic surgeon and technical fees as all other payments. Comparisons between ASC and HOPD reimbursements were conducted using bivariate statistics and generalized linear models controlling for patient age, sex, and Elixhauser comorbidity index.

RESULTS

Among 990,980 cases of outpatient orthopaedic surgery done from 2013 to 2018, the utilization rate of ASCs increased from 31% to 34% across all procedures assessed: compound annual growth rate of 3.3% for lumbar microdiscectomy, 1.8% for knee arthroscopy, 1.4% for anterior cruciate ligament, 1.4% for carpal tunnel release, 1.2% for arthroscopic rotator cuff repair, and 0.5% for bunion repair (P < 0.001 for all). The average total costs were 26% lower at ASCs than HOPDs (P < 0.001 for each procedure). The average technical fees were 33% lower at ASCs than HOPDs (P < 0.001 for each procedure). Both total costs and technical fees were less for ASCs than HOPDs after controlling for patient age, sex, and Elixhauser comorbidity index (P < 0.001 for each procedure). Over the study period, the mean total costs at HOPDs increased by 2.5% yearly, whereas the mean total costs at ASCs decreased by 0.1% yearly. The average surgeon professional fees declined in both care settings over time.

CONCLUSION

From 2013 to 2018, there was an increase in ASC utilization for common outpatient orthopaedic surgeries. ASCs were overall less costly than HOPDs for outpatient orthopaedic surgeries.

LEVEL OF EVIDENCE

IV.

Long-run growth of ambulatory surgery centers 1990-2015 and Medicare payment policy

OBJECTIVE

To examine long-run growth in the ambulatory surgery center (ASC) industry and potential factors influencing its trajectory.

DATA SOURCES

National data for all Medicare-certified ASCs (1990-2015) and outpatient discharge records from the state of Florida in 2007.

STUDY DESIGN

We documented the number of ASCs in the United States over time and decomposed the trend into underlying ASC market entry and exit behavior. We then examined the plausibility of 2008 Medicare payment reforms to influence the trend changes.

DATA EXTRACTION METHODS

Data on ASC openings and closures are obtained from the Centers for Medicare and Medicaid Services Provider of Service files. Secondary data on ASC volume in Florida are obtained from the Florida Agency for Health Care Administration.

PRINCIPAL FINDINGS

The number of ASCs in the United States grew 5%-10% annually between 1990 and 2007 but by 1% or less beginning in 2008. This change coincided with substantive reductions in Medicare payments for key ASC services. The annual number of new ASCs was as much as 50% lower following the payment change.

CONCLUSIONS

ASCs are an important competitor for outpatient services, but growth has slowed dramatically. Sharp changes in new ASC entry align with less generous Medicare fees.

Treatment consolidation after vertical integration: Evidence from outpatient procedure markets

Hospital ownership of physician practices has grown across the US, and these strategic decisions seem to drive higher prices and spending. Using detailed physician ownership information and a universe of Florida discharge records, we show novel evidence of hospital-physician integration foreclosure effects within outpatient procedure markets. Following hospital acquisition, physicians shift nearly 10% of their Medicare and commercially insured cases away from ambulatory surgery centers (ASCs) to hospitals and are up to 18% less likely to use an ASC at all. Altering physician choices over treatment setting can be in conflict with patient and payer cost, convenience, and quality preferences.

Ambulatory surgery for cancer patients: current controversies and concerns

PURPOSE OF REVIEW

This review aims to describe the main concerns and controversies of ambulatory surgery in cancer patients while providing an overview of ambulatory cancer anaesthesia.

RECENT FINDINGS

Cancer patients can undergo a variety of ambulatory surgeries. The introduction of robotic approach and the implementation of enhanced recovery programmes have allowed patients to avoid hospital admissions after more complex or invasive surgeries. In this context, the anaesthesiologist plays a key role in ensuring that the ambulatory surgical centre or the hospital-based ambulatory department is equipped for the perioperative challenges of the cancer population. Cancer patients tend to be older and with more comorbidities than the general population. In addition, these individuals may suffer from chronic conditions solely because of the cancer itself, or the treatment. Consequently, frailty is not uncommon and should be screened on a routine basis. Regional analgesia plays a key role in the provision of opioid-sparing multimodal analgesia.

SUMMARY

Neither regional anaesthesia or general anaesthesia have proven to affect the long-term oncological outcomes of cancer patients undergoing ambulatory surgery. In addition, there is insufficient evidence to suggest the use of total intravenous anaesthesia or inhalational anaesthesia over the other to decrease cancer recurrence.

Divided by choice? For-profit providers, patient choice and mechanisms of patient sorting in the English National Health Service

This paper studies patient choice of provider following government reforms in the 2000s, which allowed for-profit surgical centers to compete with existing public National Health Service (NHS) hospitals in England. For-profit providers offer significant benefits, notably shorter waiting times. We estimate the extent to which different types of patients benefit from the reforms, and we investigate mechanisms that cause differential benefits. Our counterfactual simulations show that, in terms of the value of access, entry of for-profit providers benefitted the richest patients twice as much as the poorest, and white patients six times as much as ethnic minority patients. Half of these differences is explained by healthcare geography and patient health, while primary care referral practice plays a lesser, though non-negligible role. We also show that, with capitated reimbursement, different compositions of patient risks between for-profit surgical centers and existing public hospitals put public hospitals at a competitive disadvantage.

Implementation of a Multimodal Analgesia Protocol Among Outpatient Neurosurgical Patients Undergoing Spine Surgery to Improve Patient Outcomes

PURPOSE

This quality improvement project implemented an evidence-based multimodal analgesia protocol among patients undergoing outpatient spine surgery in an attempt to decrease postoperative opioid requirements, postoperative pain scores, and facility and postanesthesia care unit length of stay (LOS).

DESIGN

Two independent samples were compared with a preimplementation and postimplementation design. There were 37 patients in the preimplementation group and 36 patients in the postimplementation group.

METHODS

Data were collected by a retrospective chart review of neurosurgical patients undergoing spine surgery and included postoperative opioid requirements, postoperative pain scores, facility and postanesthesia care unit LOS, and the number of protocol components implemented on each patient.

FINDINGS

Intraoperative and postoperative by mouth opioid requirements were significantly decreased postimplementation. Postoperative opioid requirements decreased, and postimplementation pain scores were reduced across all time points. LOS did not significantly change.

CONCLUSIONS

This multimodal analgesia protocol significantly decreased opioid consumption among neurosurgical patients at this surgery center.

The impacts of private hospital entry on the public market for elective care in England

This paper examines reforms that enabled private hospitals to compete with public hospitals for elective patients in England. Studying hip replacements, we compare changes in outcomes across areas differentially exposed to private hospital entry, instrumenting hospital entry with the pre-reform location of private hospitals. We find private hospital entry increased the number of publicly funded hip replacements by 12% but did not reduce volumes at incumbent public hospitals, and had no impact on readmission rates. This suggests new entrants exerted little competitive pressure on incumbents. Instead, the market expanded with more marginal patients receiving treatment at an earlier point in time, resulting in a fall in average patient severity. Additional publicly funded volumes were not associated with reduced privately funded volumes, while impacts of provider entry did not vary by local deprivation. These findings indicate the reform increased publicly funded capacity but did not improve quality at existing public hospitals.

Mastectomy and Prepectoral Reconstruction in an Ambulatory Surgery Center Reduces Major Infectious Complication Rates

Mastectomy and implant-based reconstruction is typically performed in a hospital setting (HS) with overnight admission. The aim of this study was to evaluate postoperative complications and outcomes with same-day discharge from an ambulatory surgery center (ASC) compared with the same surgery performed in the HS.

Payments for outpatient joint replacement surgery: A comparison of hospital outpatient departments and ambulatory surgery centers

OBJECTIVE

To compare commercial insurance payments for outpatient total knee and hip replacement surgeries performed in hospital outpatient departments (HOPDs) and in ambulatory surgery centers (ASCs).

DATA SOURCES

A large national claims database that contains information on actual prices paid to providers over the period 2014-2017.

DATA COLLECTION

We identified all patients receiving total knee replacement surgery and total hip replacement surgery in HOPDs and in ASCs for each of the 4 years.

STUDY DESIGN

For each year, we conducted descriptive and statistical patient-level analyses of the facility component of payments to HOPDs and to ASCs.

PRINCIPAL FINDINGS

For each procedure and for each year, ASC payments exceeded HOPD payments by a wide margin; however, the gap across settings declined over time. In 2014, knee replacement payments to HOPDs (n = 67) were $6016 compared to $23 244 in ASCs (n = 68). By 2017, payments to HOPDs (n = 223) had grown to $10 060 compared to $18 234 in ASCs (n = 602). Similarly, for hip replacements, HOPD payments (n = 43) rose from $6980 in 2014 to $11 139 in 2017 (n = 206) and in ASCs fell from $28 485 in 2014 (n = 82) to $18 595 in 2017 (n = 465).

CONCLUSIONS

Results suggest that for total joint replacement, common perceptions of cost savings from transition of services from hospitals to ASCs may be misguided.

Ambulatory versus inpatient shoulder arthroplasty: a population-based analysis of trends, outcomes, and charges

Background

The purpose of this study was to evaluate the clinical outcomes and cost of shoulder arthroplasty (SA) performed in ambulatory surgery centers (ASCs) compared with SA performed in hospital-based surgery settings.

Methods

The State Inpatient Databases and the State Ambulatory Surgery Databases were queried for patients undergoing primary or reverse SA between 2010 and 2014 in 5 states in either the inpatient (IP), hospital outpatient department (HOPD), or ASC setting. Outcomes included all-cause readmissions, emergency department visits within the 90-day postoperative period, and charges. Covariates included patient demographic data and procedure details. Risk factors for readmission were calculated using logistic regression analysis.

Results

We identified 795 ASC (2%), 183 HOPD (0.5%), 38,114 (97.5%) SA procedures. The outpatient cohort was overall younger and healthier with a lower percentage of diabetes (14.1% vs. 20.2%), cardiopulmonary disease (11.4% vs. 20.4%), and obesity (10.7% vs. 15.6%). The US state and obesity were factors significantly (P < .0001) associated with readmission. The median IP charge was $62,905 (range, $41,327-$87,881) vs. $37,395 (range, $21,976-$61,775) for combined outpatient cases. When outpatient SA was stratified into ASC and HOPD cases, the median charges were $31,790 for ASC cases vs. $55,990 for HOPD cases (P < .0001). After adjustment for multiple covariates, the charges for combined outpatient SA surgery were 40% lower than those for IP SA surgery (P < .0001).

Conclusion

As the current health care climate shifts toward lower-cost and higher-quality care, this study demonstrates that SAs performed in ASCs have a comparable safety profile to and significant financial advantage over SAs performed in the hospital-based setting.

Reference pricing: The case of screening colonoscopies

We study the introduction of reference pricing to the California Public Employees' Retirement System. Reference pricing changes the relative price of using a hospital versus an ambulatory surgery center (ASC) for patients receiving a colonoscopy, leading to as good as random variation in patients' use of ASCs. We find a 10 percentage point increase in the share of patients using an ASC, leading to a $2300 to $1700 reduction in prices paid for patients who switch to ASCs. Our results suggest that the use of ASCs has a causal effect on prices paid and has no negative effect on patient health outcomes.