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Joan Dentler – The Latest ASC Market Trends from Hospital Leaders image

Joan Dentler – The Latest ASC Market Trends from Hospital Leaders

S1 E53 · This Week in Surgery Centers
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Joan Dentler is the Founder of Avanza Healthcare Strategies, and she joins our host, Nick Latz, this week to dive into their 5th Annual Hospital Leadership ASC Survey. Nick and Joan discuss the survey results, including key conclusions and trends around ASC ownership, hospitals and health systems’ growing interest in ASCs, what equity breakouts look like, where third-party management companies come into play, and much more.

Read & Download the Full Avanza Intelligence 2023 Hospital Leadership ASC Survey

In our news recap, we’ll cover a terrible act of violence against a surgeon in Tennessee and tips for preventing violence at your facility, a lawsuit between UCLA Health and Mattel, surgeons in New York who have performed the first-ever whole-eye transplant in a human, and, of course, end the news segment with a positive story about a woman who created a hummingbird hospital.


Articles Mentioned:

The Tragic Murder of Dr. Ben Mauck

Implement Security Safeguards

UCLA Health sues Barbie-maker over $49M donation pledge

Surgeons in New York Announce World's First Eye Transplant

The woman who turned her apartment into a hummingbird hospital


Brought to you by HST Pathways.

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Transcript

Introduction to the Podcast

00:00:01
Speaker
Welcome to This Week in Surgery Centers. If you're in the ASC industry, then you're in the right place. Every week, we'll start the episode off by sharing an interesting conversation we had with our featured guest, and then we'll close the episode by recapping the latest news impacting surgery centers. We're excited to share with you what we have, so let's get started and see what the industry's been up to.
00:00:27
Speaker
Hi,

Insights from the ASC Survey

00:00:28
Speaker
everyone. Here's what you can expect on today's episode. Joan Dentler is the founder of Avonza Healthcare Strategies, and she joins our host, Nick Latz, this week to dive into their fifth annual hospital leadership ASC survey. Nick and Joan talk through the results of the survey and key conclusions and trends around ASC ownership, reasons why hospitals and health systems are interested in ASCs, what the equity breakout could look like,
00:00:56
Speaker
where third party management companies come into play and much more. In our news recap, we'll cover a terrible act of violence against a surgeon in Tennessee and tips for preventing violence at your facility, a lawsuit between UCLA Health and Mattel, surgeons in New York who have performed the first ever whole eye transplant in a human, and of course, end the news segment with a positive story about a woman who created a hummingbird hospital.
00:01:27
Speaker
Hope everyone enjoys the episode and here's what's going on this week in surgery centers.
00:01:39
Speaker
We're excited to have you back on. I'm excited for this conversation and the topic at hand and looking forward to talking through the advanced intelligence hospital leadership ASC survey. Joan, understand this is the fifth time that you've done this survey. Can you tell us a little bit about what's the methodology, who you talk to as part of the survey and how that's evolved over the years?
00:02:02
Speaker
Sure, sure. Let me just say that the reason we do the survey is having worked in the hospital ASC space for several years, pretty much since the founding of the company. We were always looking for data on hospitals and their relationship with ASCs and couldn't find it. And so about five years ago, we decided, well, you know, if you can't, if you can't find it, I guess you have to build it. So we have engaged health leaders media. We feel like they're a great resource.
00:02:31
Speaker
for hospital leaders. And so they conduct the survey, so we aren't doing it ourselves. And we ask them to look for and to survey hospital and health system leaders. We go through a list. We just really want C-suite or very high level
00:02:51
Speaker
operational or clinical leadership. We've asked them to try to get as diverse as a segment of the population. So from all areas of the country, and we include that in the survey so everybody can see sort of where everybody comes from and primarily larger hospitals, just because we do know that smaller hospitals don't tend to need surgery centers. So it's largely not-for-profit hospitals with over 200 beds.

Hospital Trends in ASC Ownership

00:03:19
Speaker
Fantastic. And one of the key areas the survey hits on is hospital and health system interest in ASCs. And so in terms of the trend, what were kind of the key conclusions from this year related to hospital interest in ASCs and how has that changed over historical years? Well, it's not surprising to us having worked in this area, but it just keeps growing. The number of hospital systems owning ASCs
00:03:43
Speaker
keeps rising. It's now up to close to 50%. When we started the survey, it was closer to 40, so it's kind of a slow and steady growth. And I think the other thing that we find interesting is that it's a lot of the health systems that we talk to own more than one ASC.
00:04:02
Speaker
And so that's a continually growing phenomena, is that it's not just having one off ASC, they'll have multiple. And then I guess the biggest takeaway for this year had to do with the fact that we're seeing more and more that want to own 100% of the ASCs that they have.
00:04:19
Speaker
And I want to dig into that here in a second in terms of the ownership options. Before jumping into that though, the reasons. What reasons are health systems citing for developing or building ASCs?
00:04:35
Speaker
Well, again, this kind of fluctuates and we give them lots of choices in the survey to sort of rank order. And it looks like the increased surgical capacity overall comes out as one of the top reasons. Also responding to consumers and we're assuming that a lot of that is the consumer desire for lower cost when they're having elective surgery. One thing we found really interesting is that there are some groups that we work with that
00:05:08
Speaker
We're not going to pay for these procedures in hospitals anymore. But that did not come out as in the top two or three reasons. So we're also seeing that's very regional. Some areas, payers are really pushing. In some areas of the country, payers haven't really jumped on that bandwagon quite as much. But we're also seeing an increase in the whole idea of because of a value-based strategy, if the health systems leave that, they have to have an ASC.
00:05:30
Speaker
It's absolutely payer pressures. The payers are telling them we
00:05:36
Speaker
Right. And the payer piece is interesting is just kind of a general healthcare consumer like we all are. I'm starting to get advertising in the mail for the first time for my health insurance company, educating me on the benefits of doing elective procedures in an ASE setting. So it does seem like the payors are kind of stepping up the awareness and marketing to consumers.
00:05:58
Speaker
Definitely. And we also, you know, we see it sometimes where the pressure is not even on the hospital. It is more pushing the consumer, the patient, and it's also putting some pressure on the surgeons. So we're seeing a lower professional fee given to surgeons if they do a procedure in a hospital when it could have been done in an ASC. So there's a lot of subtle pressures that the payers are putting to obviously to lower the cost of the overall experience of elective surgery.
00:06:27
Speaker
So roughly 50% of hospitals and health systems have an ASC footprint or presence.

Internal Management of ASCs

00:06:34
Speaker
I'm curious about the management side of this. What trends are you seeing in terms of hospitals and health systems using external ASC management companies versus doing self-management?
00:06:47
Speaker
Well, we look at this every year and the use of outside managers is a question that we've asked from the very beginning. And the first year we did the survey, it was 23% of the hospitals that we surveyed used an outside management company. As we have been doing the survey, it continues to drop to where this year it came in at 12%. And so that's a pretty big drop in five years.
00:07:11
Speaker
And so that does surprise me a little bit. And I know you work with hospital groups all the time that are exploring these strategies. What do you think are the key considerations for hospital groups as they go through the decision process of external management versus internal?
00:07:28
Speaker
Right. Well, well, first of all, let me just define internal, sometimes internal management can mean all kinds of different things. It can mean either the hospital wants to manage it themselves or what we're seeing now, and I think this is a real testament to the maturity of the ASC space. Is there a lot of strong ASC experts out there now, people that either worked for management companies or set up
00:07:53
Speaker
the ASCs and have been running them for years and years and so the trend that we are seeing that we are attributing the sort of drop in the dependence on outside third-party management companies is that the larger health systems are developing the competency in-house. They're creating an ASC division, a surgery center division within the health system. They're going around and they're hiring the best and the brightest out of the ASC world and leaving those people alone
00:08:23
Speaker
They understand the need not to run their ASC platform like a hospital, so they build an ASC division. So where that was really unheard of probably, well, for sure when I entered into this space 15 years ago, but probably even at the beginning of this survey, it was very rare that you would see health systems do that.
00:08:42
Speaker
We are seeing more and more health systems if they have multiple ASCs, seeing that it makes sense. Same way they have a radiology department or other departments within the hospital. They're creating that, but they are smart enough, most of them, to create it with people that come directly out of the ASC space and understand how ASCs are different than just outpatient hospital surgery.
00:09:10
Speaker
Yeah. And I think it's a really interesting trend and glad to hear that, you know, kind of in general, health systems are looking to hire folks with ASC operating expertise. Cause we've talked about in the past, it is different, right? There's typically different processes, different systems, different technology. How do you think in general, the hospital systems are doing and creating these kind of ASC divisions?
00:09:35
Speaker
For the most part, the ones that we interact with, they've brought in some really strong, good people. And so, you know, it seems to be working really well. It keeps it kind of all in-house. They may go out and outsource some of the other services like RCM or HR or some of those things as part of this, but the groups that they have running their departments are really, you know, they know who the good providers of those services are.
00:10:04
Speaker
And I think what I've seen working with the health system right now, who's doing this. And what I've seen is the physicians really, if they're physician partners in the ASC, they really like it because it's not a third.
00:10:17
Speaker
institutional partner or second institutional partner. So you've got the hospital and the doctors as partners. And if you have a management company, you have to make room for most of those that require, they require equity. So you have to have some equity come out of either the hospital or the doctors of parcels for the management company. And I think they like the fact that it leaves more equity on the table.
00:10:41
Speaker
I will say just to make sure everybody's real clear on this is, you know, hospitals can't provide any type of management services for free to an ASE that's owned by physicians. So there has to be a fee for some of these things, but it just really depends on the extent that the hospital department is actually hands-on managing versus just sort of keeping an eye on the hospital's investment. Yeah, it's an interesting trend and I think
00:11:11
Speaker
From the standpoint of the hospital, there's an economic incentive, a reason, right? Which probably you get to capture that fee revenues you just mentioned versus paying that to someone else. Is there also an advantage just around controlling case volume and having more access to where case volume goes within the overall health network?
00:11:31
Speaker
Yeah, I don't see that being much different. Again, like I said, a lot of these hospitals are doing this. If they know if they're going to do it, they need to be hands off and let it run. So the actual running of the ASC is not really that different. It's really more, like I said, not having a third party come in.
00:11:50
Speaker
I will say that there's still room for some management companies, but what you'll see, I think, in the hospital space, at least with ASCs, is the management companies really have to be able to explain the value proposition that they offer. So that's, I think, a little different.
00:12:09
Speaker
I first started management companies could just say, we'll take care of this for you. But now that there's so much talent out there and there's so much tech available to ASEs and other vendors, you really have to show what are you going to bring? And how is that different from if we just hire a really strong administrator and hire a really good RCM company and get a really good tech platform? What else are you bringing? And so I think it's putting a little pressure
00:12:37
Speaker
that the management companies, you're going to see the cream rise to the top, I guess is what I'm saying. You're going to see the people, the management companies that really have strong either payer relationships or supplier relationships where they can really bring a strong value to the ASC. Those management companies will still have a place in the space, but I think just the blanket, well, we need a management company is now being questioned.
00:13:04
Speaker
a little tighter. Obviously, the data shows that going from 23% to 12%. So like I said, I think you'll see the cream rise to the top when it comes to management companies in the ASC space. Got it. Okay. And I want to go back to the reasons hospitals are interested in having an ASC presence.

ASC Equity for Physician Recruitment

00:13:23
Speaker
You mentioned capacity, consumers, payers,
00:13:27
Speaker
What about the physician side of this? Because I read in your report that I think one of the benefits, at least from a health system is, hey, we're able to offer our physicians the equity piece of ASC ownership and give them that overall benefit within the health system environment. Right.
00:13:45
Speaker
Right. And I'll tell you that is becoming more and more a, not a nice to have, but a must have for physician recruitment. We had a client who recently told us they were trying to recruit a spine surgeon and the health system was in the process of developing an ASC, but it was about two years down the road and the spine surgeon basically decided to go with another opportunity because they didn't want to wait two years.
00:14:11
Speaker
for an ASE. So it's almost something that if you want to recruit busy, you know, high quality outpatient surgeons, you're going to have an ASE and you're going to have to be able to provide them equity in that because they want that other revenue stream, even if they're employed, or if they're independent, it really doesn't matter. They really want that revenue stream.
00:14:38
Speaker
Got it. So talking about that overall ownership structure for these ASCs within a health system, I think I read in your survey that was it the average is something like that the hospital group owns 50%? Did I get that right or is it a little bit different? I think what we're seeing is that the hospitals are starting to really negotiate that
00:15:01
Speaker
you know, up or down, depending on the needs of the physicians. What we are seeing is more and more hospitals who are owning a hundred percent that. So basically saying that they aren't doing this kind of kicking and screaming. They are building ASCs because they know that's the right thing to do. But yeah, as far as ownership goes, we're seeing it. And I apologize. I don't have the exact number in front of me.
00:15:26
Speaker
But we're seeing it stay right around that 50% mark, but not necessarily more than 50%, which is how we began in the hospital space where hospitals wanted to own all of it, or at least a large portion of it. But there are issues around being able to have the hospital negotiate contracts and things like that where the hospital owning closer to 50 to 51% could be advantageous for the surgeons as well.
00:15:55
Speaker
Got it. Got it. So, so it sounds like we're seeing health systems typically own at least 50%. Sometimes it's 50, sometimes it's a hundred and probably some different options in between. When the health system doesn't own a hundred percent, who typically owns the other percentage? You mentioned the physicians. Does that make up the difference or are there other groups in there

Ownership Structures in ASCs

00:16:17
Speaker
as well?
00:16:17
Speaker
The other groups that we're starting to see moving into the hospital ASE space are, besides management companies that have been there for a while, is private equity and getting involved. You know, they are obviously very into the ASE space in all kinds of ways. And then we're also seeing payers who want to get into the ASE space as well. So we need to make room for all of these different players as we are moving forward in the, like I said, this continuing maturing of the ASE.
00:16:47
Speaker
market. I think all of these things I'm talking about, the management, the ownership, whatever, are really because people weren't really sure how long ASEs were going to stick around. I think it's very clear now that ASEs are a part of the US healthcare landscape, international as well, but they're definitely part of the US healthcare landscape and CMS in their recent release of the ASE.
00:17:13
Speaker
payer schedule or the schedule for ASC cases, we saw more and more things going in towards the ASC. So I think it's a clear sign that ASCs aren't going away. Right. Got it. Okay. Joan, any other trends that popped out for you in the report that we haven't talked about yet?
00:17:33
Speaker
No, I mean, I know I've mentioned it kind of tangentially a couple times, but this idea of the hospitals owning 100%. Like I said, I think what that speaks to is hospitals got involved in ASCs a lot because the doctors threatened to pull their cases, then they continued to be involved with them because they were buying physician practices. And as part of that transaction, they threw in the ASC.
00:17:56
Speaker
Now we're starting to see hospitals voluntarily saying we must have an ASC, which is, like I said, further confirmation that they are going to be a part of the fundamental healthcare landscape. So we saw that more, the hundred percent ownership by hospitals, we saw more this year than any year in the past. It's interesting. It seems like it's more part of the health system strategic plan at this point versus kind of a reaction reactive.
00:18:25
Speaker
something that's happened, like you articulated before. Definitely. Definitely. And we're seeing hospitals calling us about, you know, help us with a system-wide strategy.

Strategic Integration of ASCs

00:18:33
Speaker
So not having just these one-off ASCs that they happen to buy or a group of physicians pressured them to set up, they now want to set up a true strategy. And we're seeing the CON laws around the ASCs starting to be challenged in so many more states. So I think it's really just going to start, it's going to be a landslide of more and more hospitals getting into this space.
00:18:56
Speaker
Got it. Final question for you, Joan. We do this every week with our guests. What is one thing our listeners can do this week to improve their surgery centers?
00:19:06
Speaker
I would say thank their staff. And by that I mean, you know, everybody talks to us about their biggest issue being staffing and recruiting new staff is much harder than retaining your current staff. So I would say going out of your way to thank your staff, even just a verbal thank you is great, but even all the way to somehow sharing in some sort of profit sharing plan. But if you've got good staff,
00:19:33
Speaker
having this surgeons thank them, having whoever the owners are know their names, all of that just goes so far. So I would just say realizing how valuable your staff is. And we just deal with too many people who are trying to find staff. So you got them, keep them and thank them. It's all about the people. That's good advice. So Joe, thanks. Thanks so much for joining us again this week. Okay. Thank you so much.

Violence Against Healthcare Workers

00:20:03
Speaker
As always, it has been a busy week in healthcare, so let's jump right in. This first story is a really tough one, but I think it's an important story and message to share. Dr. Mach was an orthopedic surgeon at the Campbell Clinic in Tennessee. And over the summer, he was fatally gunned down by a 29-year-old patient of his who had actually been a patient for two years. And this patient had allegedly also been
00:20:31
Speaker
threatening a Campbell Clinic staffer for a week leading up to the incident. The shooter was immediately arrested and taken into custody after the event. Now, I share the story because multiple studies show that violence against doctors, nurses, and other healthcare workers is on the rise. According to the US Bureau of Labor Statistics, healthcare workers' risk of injury due to workplace violence is five times greater
00:21:00
Speaker
that employees in other industries. Nurses are especially vulnerable and according to a 2022 study from National Nurses United 40% of nurses have seen an increase in violence.
00:21:14
Speaker
What's being done about this? In an attempt to ensure worker safety, some agencies are calling for measures that range from metal detection at entrances to teaching healthcare workers how to identify signs of imminent trouble, what to do if an incident begins, and even to creating new laws specific to assaults against medical workers.
00:21:36
Speaker
i know all that kind of would cost more money and you know everyone's already strapped for budget but back in august we had shared an article from aska with a lot of great tips for implementing different security safeguards so i will link that article in the episode notes again
00:21:53
Speaker
but I also wanted to re-share some of the tips that Aska had suggested. The first is double-check and possibly upgrade the locking mechanisms on all doors and windows. Hire part-time, off-duty police officers to help keep patients and visitors under control. Install keypad so that visitors are unable to move past the waiting room unattended.
00:22:15
Speaker
Add security cameras outside your facility. Install a silent alarm system so that you can alert local police. And lastly, make sure your employees are properly trained for any situation or emergency. So our thoughts are with Dr. Mach's family and all the other healthcare workers who have been affected by workplace violence. And I hope everyone can do their best to stay safe out there.

Legal Dispute: UCLA Health vs. Mattel

00:22:41
Speaker
In our second story, UCLA Health is suing Mattel, the toy and entertainment company behind Barbie, Hot Wheels, and many others, claiming that they never followed through with a pledged $49 million donation. According to the lawsuit, in 2017, the toy company pledged to donate $49 million to the health system over the course of 12 years.
00:23:06
Speaker
And in return for their generosity, UCLA agreed to work Mattel's logo and corporate branding into their marketing and other elements as well. However, the lawsuit alleges that Mattel last made a payment of a million dollars in 2018. Now Mattel's poor financial state caused them to put a pause in donations in 2017, which is odd considering that's the same year they allegedly made this pledge.
00:23:31
Speaker
And when the pause was over in 2021, the toy company allegedly attempted to negotiate its pledge down to 10 million from 49 million. And that new pledge would only include two and a half million dollars in cash and the rest would be made up in toys and in-kind marketing. But UCLA said, oh nay, they are looking to receive the full amount originally promised to them and damages they incurred stemming from the toy company allegedly backing out.
00:24:01
Speaker
Now, considering the Barbie movie raked in $1.4 billion in ticket sales, which was not produced by Mattel, but they were of course affiliated, and Mattel itself is projecting $125 million in Barbie doll sales alone. It's going to be a tough sell for Mattel to get out of this if what UCLA is claiming turns out to be true. So we will keep a close eye on the story to see how the lawsuit plays out.

Groundbreaking Eye Transplant in New York

00:24:30
Speaker
In an article from Medscape, surgeons in New York have performed the first ever whole eye transplant in a human, an accomplishment being hailed as a breakthrough, even though the patient has not regained sight in the eye. So the recipient of the eye is Aaron James, who is a 46-year-old veteran from Arkansas who survived a work-related high-voltage electrical accident that destroyed the left side of his face, his nose, mouth, and his left eye.
00:25:00
Speaker
So initially doctors were planning to include the eyeball as part of the face transplant just for cosmetic reasons. But in the six months since the surgery, the grafted eye has shown important signs of health, including well-functioning blood vessels and a promising looking retina.
00:25:18
Speaker
To encourage healing of the connection between the donor and the recipient optic nerves, surgeons harvested adult stem cells from the donor's bone marrow and injected them into the optic nerve during the transplant, hoping they would replace damaged cells and protect the nerve. The transplant surgery took 21 hours.
00:25:39
Speaker
And the patient shared that the doctors told him from the get go that they didn't expect the eye to work. And Aaron James told them, even if I can't see, maybe at least you can learn something to help the next person. Hopefully this opens up a new path, which is just unbelievably selfless and kind. And I wish him all the best in his recovery and congrats to the surgeons in New York for making progress in this area.

A Hummingbird Hospital in Mexico City

00:26:06
Speaker
And to end our new segment on a positive note, because we absolutely needed, after some of these stories, a woman in Mexico City turned her apartment into a hummingbird hospital. Now hummingbirds have a special history in mythology and Mexican culture, so it's no surprise that someone like Katya Glatu
00:26:26
Speaker
is going to great lengths to save and protect them. 12 years ago, Katia took in her first injured hummingbird, and since then, her home has become a makeshift clinic for sick, injured, or infant hummingbirds. She often cares for dozens of birds at the same time, and a foundation to train up the next generation of hummingbird whisperers is in the works.
00:26:51
Speaker
Now you should definitely check out the article because there is a very sweet photo of Katya and her birds. And I think that this makes Katya an honorary veterinary nurse in my opinion. And that news story officially wraps up this week's podcast. Thank you as always for spending a few minutes of your week with us. Make sure to subscribe or leave a review on whichever platform you're listening from. I hope you have a great day and we will see you again next week.