In the wake of Hurricane Helene, which severely disrupted the supply of intravenous (IV) solutions in the United States, ambulatory surgery center (ASC) operators are thinking more seriously about resilience.  

The recent fluid shortages were a major challenge that taught operators valuable lessons about supply chain vulnerabilities, Dr. Vishal Mehta, president and managing partner at Fox Valley Orthopedic Institute, said at a recent industry conference. Fox Valley operates multiple ASCs in Illinois.

To address the vulnerability going forward, Mehta said his facilities are diversifying their supply chain by establishing ongoing relationships with multiple vendors for fluids and other essential supplies, reducing dependency on any single source.

Beyond the IV fluid shortage, Mehta is focused on diversifying his provider base by recruiting additional physicians and physician assistants, to ensure that his centers remain viable even if key personnel are lost.

“We have one surgeon who’s doing 500 total joints a year at our surgery center, and that’s a huge amount of revenue for us,” he said. “The conversations in the boardroom have been about that surgeon wanting to get busier, bringing on another physician assistant, and doing more volume. But we have to understand where our risks are across the board. What happens if that surgeon gets sick and suddenly we lose 500 cases a year? That’s a big deal.”

On the payment front, ASCs must find ways to protect themselves from Medicare Advantage risks, said Andrew Lovewell, CEO of Missouri-based Columbia Orthopaedic Group. The company operates The Surgical Center at Columbia Orthopaedic Group in Columbia, Missouri. 

Lovewell was blunt in his own assessment of MA plans, saying, “I hate Medicare Advantage.” 

Specifically, he cited operational burdens that compromise providers as well as consumer confusion around their benefits.

Overall, ASCs need to proactively understand and manage their risks across all aspects of the organization, the speakers agreed. 

“All of that is top of mind for us in staying strong and healthy in challenging times,” Mehta said. 

Proactive operations in uncertain times

The term “anti-fragile” refers to a business model that goes beyond resilience, enabling an organization to leverage uncertainty and shocks as growth opportunities. 

Lovewell said his organization’s proactive approach in supply chain management has allowed the company to maintain steady operations, even during recent supply shortages. 

“When the fluid crisis hit not too long ago, our hospital panicked and shut down elective cases, while our surgery center was like, ‘All right, let’s go through the end of the year. We can do it,’” he said. “We plan ahead, as opposed to just waiting and adopting a wait-and-see mentality. I think a lot of that we’ve learned through turbulence and getting through difficult times.”

Both speakers said that staffing remains a top challenge, particularly as they are trying to build high-performing, multi-generational teams.

Fox Valley has fostered a culture in which staff feel valued, despite the challenges, Mehta said. Employees at Fox Valley ASCs enjoy certain lifestyle advantages over hospital roles, such as no on-call duties, which gives the centers a competitive edge when recruiting. The centers also plan to expand access by offering weekend hours, enhancing their capacity to serve the community without overburdening staff.

“We invest heavily in that culture,” he said. “The other concerns and risks we see coming are market consolidation. As the systems around us grow and more insurance plans develop narrowly defined networks that cut us out, that’s a considerable risk we have to keep fighting against. I would say those are the main ones, besides what we mentioned, that are top of mind for us.”

Anesthesia is another source of concern for operators, Lovewell and Mehta said. 

To counter the challenge of sourcing anesthesia, Columbia Orthopaedic Group recently incorporated anesthesia operations into their practice to better control costs and align team culture, Lovewell said. 

Finding high-quality anesthesiologists has been especially difficult, Lovewell said, as anesthesiologists want fixed hours, ample vacation time, and competitive compensation in a tight labor market. To address instability within its anesthesia team, Columbia Orthopaedic absorbed the entire anesthesia operation, taking on billing, collections and hiring.

“That was a huge challenge, a huge cash flow challenge too, because anesthesiologists are very expensive people to find,” he said. 

The compounding issue of payer consolidation

The rapid expansion of Medicare Advantage (MA) plans was another critical issue discussed. Both leaders expressed strong reservations about the impact of MA plans on ASC operations. 

“It is the biggest scam in our country. It’s terrible for not only providers, but patients too,” Lovewell said.

Some plans mislead patients, particularly through advertising, leading them to think they have adequate coverage when they do not, Lovewell said.

“We have exclusively started down this path of getting rid of MA plans in our practice and going completely out of network with them, because it’s such a hassle. All the prior authorizations, the denied care, the retroactive denials, just everything that comes along with an MA plan,” he said.”

Educating patients about the limitations of MA plans, particularly around enrollment time, is important to counter widespread misunderstandings about their coverage, he added.

Mehta agreed, noting that a growing portion of payer revenue is now driven by MA plans rather than traditional insurance, which is a trend he finds troubling. A primary issue is the high rate of denials, which requires providers to spend considerable time and effort explaining the situation to patients and conducting peer-to-peer reviews, often just before surgery, which disrupts efficiency at Fox Valley centers. 

Yet he said his practice does not want to get rid of MA plans entirely, because of the emotional toll that dropping MA coverage could have on the community, particularly for older patients. 

“We’re members of our community, and we are there for them. It’s really hard for us to drop the elderly part of our population in our community, and we’ve tried to make the commitment that we’ll never drop Medicare,” he said. “But maybe, at some point, we have to stop being so nice, be more realistic, and not feel the guilt and shame about it, and realize it’s not our fault. But currently, we’re still committed to it, even though it’s not a good situation for us.”

As payers consolidate, ASCs face pressure to maintain viable reimbursement rates, which are often lower with consolidated payers, Lovewell said. 

To mitigate these risks, he recommended diversifying the payer mix by pursuing direct-to-employer contracts and partnerships with other private practices to reduce dependency on any single payer.

“Trying to be nimble in your business model, to either go direct to employer, form some kind of cooperative with other private practices, just doing anything you can to diversify your payer mix so you’re not overly consolidated on one payer is also super helpful,” he said.