Image by Fitsum Assefa from Pixabay

The ambulatory surgery center (ASC) landscape continues to evolve with different ownership and management models, one being the ASC and office-based lab (OBL) hybrid, in which operators combine the services of both facilities under the same roof. 

This model is particularly popular in cardiology, William Hoffman, a shareholder at the law firm Polsinelli, told ASC News. But the hybrid approach also works in other specialties, including ophthalmology, according to Joseph D’Agostino, ASC administrator with the Advanced Surgery Center Perimeter in Georgia. Indeed, many procedures that were once exclusively performed in hospitals are now permitted in ASCs, enabling cardiologists to move these services to outpatient settings.

Motivations for this shift include providing patients with a more convenient experience, reducing the risk of hospital-acquired infections, and financial incentives, as physicians who own ASCs may prefer to perform procedures there, Hoffman said. 

“So, that’s a trend that you’re seeing,” he said, noting that an OBL is further down the “acuity spectrum” from an ASC.

Differences between an ASC and an OBL

An OBL is essentially a physician’s practice that provides diagnostic and certain interventional procedures, often for vascular conditions. Unlike ASCs, OBLs are generally not state-licensed, which allows them to operate with lower overhead costs. 

“So what it allows a doctor to do is bring a patient to his or her practice and provide a service that gets reimbursed at the Physician Fee Schedule rate, but because the expense load is so much lower in an OBL, a doctor can actually make more money there,” Hoffman said. 

In an OBL, services are reimbursed under the Medicare Physician Fee Schedule. While OBLs cannot bill Medicare for facility fees like ASCs, their lower operational costs can make them more profitable for certain procedures.

By operating both an OBL and an ASC, providers can offer a broader range of services while taking advantage of more reimbursement opportunities.

“What’s been happening is that a lot of payers are noticing that, from a site-of-service perspective, an OBL is less expensive,” Hoffman said. “So, what they’ll do is sometimes tack on a facility fee-like payment to the OBL because they want to encourage doctors to use the OBL.”

Safety considerations

Though there is flexibility and financial advantages to the ASC-OBL hybrid model, Hoffman said operators should approach it thoughtfully. One key consideration is patient safety. 

Certain procedures must be performed in an ASC due to safety requirements, such as the presence of crash carts and adherence to life safety codes. 

Physicians must choose the appropriate site of care for each patient, Hoffman said, adding that medically fragile patients may require hospital-level resources.

“I think that patients rely on the doctor to give them a recommendation on where a service should be performed,” Hoffman said. “I think that what’s interesting is that doctors can use cost as a factor to convince a patient to receive a procedure in an ASC or an OBL because, from the patient’s perspective, receiving a service at a hospital is substantially more expensive than receiving it at an ASC or an OBL.” 

The generally healthy patient population and the low-acuity nature of procedures like cataract surgery are factors in favor of hybrid models in ophthalmology. These cases typically don’t require general anesthesia.

“Historically speaking, ambulatory surgery centers have an attached suite to the physician practice with the door around the side,” D’Agostino told ASC News. “But a lot of that’s really kind of evolved with the modern world, the marketplace, and the trend of outpatient procedures moving into ambulatory surgery centers. That does allow the hospitals to focus on the more complex, higher-acuity surgical procedures.”

There are some lower-acuity procedures, like cataracts, that can be suited toward a physician’s office-based practice, which may or may not be part of an ASC, D’Agostino said. 

“I think the quickest I’ve seen is that some surgeons can do a cataract in five minutes or less,” he said. “Obviously, that is accompanied with, ‘Hey, we want to make sure we’re delivering the highest quality outcomes as well.’” 

Another challenge lies in compliance and operational logistics. Medicare regulations prohibit an OBL and ASC from functioning simultaneously in the same space. Operators often use a block lease system, alternating between OBL and ASC operations on different days, or dedicate separate floors for each, Hoffman said. 

These arrangements require careful planning but can enable operators to maximize the utility of their facilities, he said. 

“It’s popular because it allows you to do both, and you just schedule patients accordingly,” he said. “These aren’t emergency services, so you can schedule them in a way that allows you to block leases.”

There is long-term potential for this model, especially in states with lengthy ASC licensure processes, Hoffman said.

“ASC licensure and enrollment, depending on the state, can take up to a year or even more,” he said. “So what will happen is a doctor will get a space, build out the space as an ASC, but operate it as an OBL while they try to get ASC approval. After that, when they get the ASC approval, what they need to do — because of ASC Medicare regulations — is block lease the space.”