Types of Surgical Facilities

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Types of Surgical Facilities

Business of Medicine
Author Credentials 

Lawrence M. Simon, MD
Clinical Assistant Professor of Otolaryngology
Department of Otolaryngology-Head and Neck Surgery
LSU Health Sciences Center
New Orleans, LA

Module Summary

Otolaryngologists may operate in the following settings:

  1. Hospital inpatient department
  2. Hospital outpatient department
  3. Surgical Hospital
  4. Ambulatory Surgery Center (ASC)
  5. In-office (Physician professional reimbursement at “Non-Facility” RVU value)

The following ownership structures may all be applied in various manners to the above listed operative settings:

  1. Hospital owned
  2. Physician owned
  3. Joint venture
  4. Other/outside investors
    1. Venture capital
    2. Management firms
  • Ownership in a Surgical Hospital or ASC may carry substantial financial and regulatory risk in addition to offering substantial income potential.  Ethical considerations are discussed in the module on ethics and self-referral.
  • Federal and state regulations must also be considered.  Consult a health care attorney and CPA if needed.
     
Module Learning Objectives 

After completing this module, the physician should be able to:

  1. Discuss the various settings in which an Otolaryngologist may operate.
  2. Describe how to apply this information to your individual situation and determine which types of facility are most compatible with your practice patterns.
  3. Describe the various regulations that must be considered when deciding on what type of facility in which to operate. 
     
Reimbursement Considerations
  1. DRG vs APC vs ASC payment scales
    1. Hospital IPPS vs OPPS
    2. CMS Final Rule Addendum B- “Inpatient Only”
    3. ASC payment rates
    4. Be aware of physician professional payment versus facility payment and any particular payer-specific reimbursement policies    
    5. For office procedures: does the procedure have a Non-Facility RVU value assignment
      1. Some payers may not cover procedures without a non-facility RVU assignment when performed in the office
  2. How does their policy handle in-office surgery
    1. Office visit co-payment vs full surgical deductible
  3. In-network vs out-of-network
    1. State regulations vary
  4. Patient out-of pocket cost based on facility and network status
Regulatory Considerations
  1. State medical practice act
    1. May determine what types of procedures can be done in the office or in an ASC
  2. Medicolegal
    1. Make sure that your malpractice policy will cover you in each setting (especially in-office)
  3. Anesthesia- some states may not permit in-office 
  4. Stark and self-referral
    1. Requirement to disclose ownership interest to patients
Practice Considerations
  1. Proximity to the office
  2. Patient mix- level of patient and surgical complexity
  3. Equipment and supplies 
    1. Availability/access
    2. Cost
  4. Anesthesia capabilities
    1. Turnover
    2. Ability to handle complex airway issues and/or comorbidities
  5. Monitoring capabilities
    1. Overnight observation
    2. ICU or step-down unit
    3. How large is PACU
ASC Ownership Considerations
  1. Ownership structure
    1. Physician alone
    2. Joint venture
      1. Hospital vs other investors
  2. Buy-in structure
    1. Cost per unit
    2. Percentage/pay-out per unit
    3. How to finance
      1. Self vs bank vs facility financed
    4. Other requirements of ownership
  3. Distribution arrangement
    1. Financial metrics/requirements for distribution
    2. Payout schedule and structure
    3. Rate of return (annual percentage return)
  4. Facility finances
    1. Understand facility payments vs physician professional payments
    2. Understand facility management and budgeting
      1. Impact of case mix and equipment needs
    3. Decide on in-network vs out-of-network
      1. Ethical considerations
      2. Access and patient cost-considerations
    4. Payer mix
Review Questions
  1. What are the primary ownership structures for surgical hospitals and ASCs?
  2. How can you decide if buying into a Surgery Center is a prudent investment for you?
  3. How can you decide if buying into and operating at a Surgery Center is ethically permissible for your practice?
  4. How do payments to hospital inpatient departments, hospital outpatient departments, and ASCs/surgical hospitals differ?  How are they similar?
  5. What factors should be considered when deciding on whether or not to perform surgery in the office?
Resources 

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  1. Annual Meeting Webcast (AMW):

American College of Surgeons:

American Medical Association:

CMS Resources: