With over 250 children’s hospitals in the United States, pediatric care delivery has evolved over time and hospital leaders are challenged with providing increasingly complex care to children with a wide range of healthcare needs. At the same time, children’s hospitals are facing skyrocketing costs, reimbursement obstacles, and increasing pressure to deliver high-quality care while reducing the financial burden for patients and their families.
To address these growing concerns, hospital leaders are evaluating opportunities to develop and implement ASC strategies as a solution for delivering affordable, safe pediatric surgical care. This blog post outlines six key drivers that children’s hospital leaders should consider when developing an ASC strategy and operating a pediatric ASC.
- Physician Recruitment and Retention
With a growing shortage of physicians nationwide, hospital leaders need to improve physician recruitment and retention. ASCs provide an environment that enhances physician efficiency, reduces wait times for patients, and increases overall satisfaction. ASCs that can support pediatric surgery—and have available block time—will be in competition with pediatric hospitals and will be appealing to key surgeons in the community.
- Physician Alignment via Joint Ventures in ASCs
An ASC strategy gives children’s hospitals an opportunity to enhance alignment with surgeons via joint ventures. Employed surgeons are being offered opportunities to invest in competing ASCs, increasing the demand for hospital leaders to entertain joint ventures that allow both community and employed physicians to participate. This alignment reduces the risk of losing surgeons and their case volume to other locations.
- Implications of the Pediatric Patient Population on ASC Planning
Health system leaders are often eager to begin developing financial forecasts for new ASC ventures. However, it is critical that the teams performing the planning and development analyses carefully study both the operational costs and the up-front capital costs unique to the pediatric patient population. For example, a pediatric ASC will require increased levels of instrumentation, equipment, medical supplies, and space to support patients of varying ages and sizes. These expanded costs can, at times, nearly triple start-up costs, capital requirements, and ongoing operating expenses.
- Pediatric Payer Mix and Impact on Case Migration
Each year, CMS expands the ASC covered procedure list (CPL), allowing for more cases to move from the inpatient and HOPD setting to the ASC setting. In 2024, for example, providers can shift Medicare total shoulder and ankle surgeries to the ASC setting. The ongoing changes in the approved ASC CPL drives case migration and overall ASC industry growth. In an ASC dedicated to children, the payer mix will not be dominated by Medicare patients and instead will see a high volume of Medicaid patients.
Medicaid reimbursement varies widely across the United States and must be carefully considered when assessing the feasibility of a children’s ASC. If Medicaid reimbursement results in substantial losses, which is often common, commercial payer volume and rates need to be high enough to offset the losses.
Finally, it is important to consider whether disproportionate share (DSH) payments will be impacted by migrating cases from a children’s hospital to a new ASC.
- Optimizing Pediatric Care Delivery in an ASC
While ASCs are often smaller than hospital facilities and HOPDs, a children’s hospital ASC will likely require additional space and higher staffing levels than an adult-focused ASC. Below are four key operational differences between a pediatric and adult-focused ASC:
- An unconscious child in the PACU may require a second nurse who is ready and available to assist (adding to pediatric-specific staffing costs).
- Pediatric ASC clinical support staff will be required to have a pediatric-focused skill set, which requires additional training.
- Anesthesiologists who are trained in pediatrics are also critical to success.
- Pediatric patients and their families may require more privacy than the adult patient population, necessitating private consultation rooms or enclosed pre-op/recovery areas (versus a curtain divider).
6. Payer Due Diligence and Managed Care Implications
It is important to explore alignment with commercial payers ahead of planning your pediatric ASC. Conduct payer due diligence to determine whether commercial payers are willing to work with the children’s hospital to foster the development and success of the ASC. This will require contract rates with a nonstandard rate structure due to the increased operating costs attributed to the pediatric population, enhanced staffing levels, and increased capital requirements for the pediatric center. Performing commercial payer due diligence will be critical to ensuring adequate reimbursement for services in the ASC.
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Edited by: Matt Maslin
