Ambulatory Surgery Centers May Affect Hospital Pricing.
Ambulatory surgery centers (ASCs) stir competitive pressure on hospital outpatient departments that may help to push hospital prices down, a new study conducted by a School of Public Health researcher says.
In a paper in the journal Medical Care Research and Review, Kathleen Carey, professor of health law, policy & management, studied the impact of ASC market presence on actual prices paid to hospital outpatient departments during 2007–2010 for four common surgical procedures that were performed in both provider settings. For those procedures, hospitals received payments from commercial insurers that were in the range of 3.25 to 5.15 percent lower for each additional ASC per 100,000 people in a market. That suggests, Carey said, that hospitals may have less price-negotiating leverage with insurers in markets with high ASC market penetration, which could result in lower prices.
“Underlying the rapid expansion of ASCs is the question of their impact on the market for outpatient surgery,” Carey said. “While research on this topic is limited, there is recent evidence suggesting that ASCs actively compete with hospital outpatient departments…. [But] very little is known about how ASCs affect prices for outpatient services.”
ASCs are key players in a growing wave of medical specialty providers. Recent studies have found cost efficiencies in ASCs, as well as some evidence of ASC “spillover effects” driving lower costs in competing hospitals, Carey said.
“To the extent that a market has high ASC penetration, a HOPD (hospital outpatient department) may have less negotiating leverage with commercial insurers on price, resulting in relatively lower HOPD prices,” according to the study. “These results provide moderate support for the presence of price competition between ASCs and HOPDs.”
In the US, most surgical services are reimbursed by commercial insurers based on prices negotiated privately between insurers and providers. Carey notes that higher prices, due largely to greater provider bargaining power, are a significant concern, especially as consolidation among providers is growing, and many consumers are demanding that certain high-quality hospitals be included in their networks.
To date, the majority of studies of specialty providers have focused on the Medicare population, for which payments are set administratively. Because less than 20 percent of ASC revenue comes from Medicare, Carey argues for further study of the role of the private sector role in the economics of health care reform.