Image by sanooj ck from PixabayAs hospitals continue to seek ways to reduce costs and increase efficiency, many are turning to the ambulatory surgery center (ASC) model.
One emerging strategy is converting hospital outpatient departments (HOPDs) into ASCs.
This trend is gaining traction as payers push for more care to be delivered in lower-cost settings and patients increasingly prefer the convenience of outpatient procedures. However, the transition from an HOPD to an ASC is not as simple as flipping a switch.
While the potential benefits are significant, so are the regulatory, operational and logistical challenges. Without proper planning and a deep understanding of ASC requirements, health systems can encounter costly setbacks, industry leaders told Ambulatory Surgery Center News.
Assessing the physical space
Crystal Aigner, administrator of Surgical Suites of Coastal Virginia and Port Warwick Surgery Center, both orthopedic and ENT centers, managed two HOPD to ASC conversions. She told ASC News that multiple renovations were necessary to create distinct ASC spaces compliant with specific regulations.
“Both centers had renovations done to carve them out and give them their own space,” Aigner said. “ASCs are required to be contained within their own firewalls. Splitting them from the current space was mainly the project.”
Engaging facility management early to understand ASC-specific regulations, from firewall installations to fire drills and generator testing, is important to make these projects work, Aigner said.
Hospital systems, in general, struggle with understanding the specific facility requirements of ambulatory surgery centers, even though they are adept at managing their main hospitals, she added.
And there are specific challenges that come with converting to an ASC, such as the need for a complete firewall around the ASC, even if it’s within another building, and the unique facilities-management needs that come with an ASC, such as meeting requirements for fire drills, fire poles and regular generator testing, which are not typically required for medical office buildings.
“Facilities management has been a learning opportunity,” Aigner said. “Understanding ASC requirements in advance is vital because they significantly impact project timelines and finances.”
Joan Dentler, founder of health care advisory firm Avanza Healthcare Strategies, said operators sometimes have misconceptions about facility conversions.
“Most people think if the space was licensed as a hospital, converting to a lower-acuity ASC should be easy,” Dentler said. “But the rules for an ASC’s physical space are totally different.”
The first crucial step is bringing in an ASC life safety expert to evaluate the physical space. Without this, projects risk significant delays and unexpected expenses, Dentler said.
“On the surface, converting HOPDs to ASCs sounds super easy, but it’s often more expensive, slower and harder [than expected],” Dentler said. “The key is extensive preparation and consultation with ASC-specific experts to avoid critical missteps.”
Freestanding HOPDs tend to be simpler, while those physically connected to hospitals present more challenges, Dentler added.
“Conversions are easiest when the HOPD is a standalone building or in a medical office building next to the hospital,” she said. “The hardest conversions happen within hospital walls, where everything from HVAC to shared walls must be meticulously reassessed and divided.”
During a particularly complex conversion within a hospital, it was challenging to find and designate space within the existing hospital layout to convert into an ASC, Dentler said.
“We were drawing walls inside the hospital floor plan to say, ‘Okay, this part is now going to be the ASC, and this part is going to stay in the hospital,’” she said. “We had to figure out what waiting room they were going to use, what ORs, how they were going to be licensed, what the signage was going to look like.”
Cultural transitions
Michael McClain, managing partner at Left Coast Healthcare Advisors, told ASC News that conversions often require extensive updates to meet ASC codes, especially if the existing facility was not originally designed for outpatient efficiency.
“You must consider whether the operational efficiencies you expect can actually be achieved in your existing physical plant,” McClain said. “If the building was designed with separate pre-op and post-op areas, it might not support the lean staffing model essential for ASC success.”
Beyond physical changes, the cultural transition from hospital to ASC staffing and operations poses unique challenges, Aigner said.
“It seems easy: ‘We have this floor doing outpatient surgeries; we’ll just turn it into an ASC,'” she said. “But understanding billing reimbursements and staffing differences is crucial. ASCs don’t staff like hospitals. We can’t afford all the equipment and instrumentation hospitals maintain.”
When her Williamsburg facility transitioned from a hospital to a surgery center in just one month, some staff stayed on, but they faced a significant learning curve, Aigner said.
“[ASCs] don’t have shifts; we stay until cases are done,” she said. “If cases finish early, staff typically don’t remain on the clock unless there’s education to do. So cross-training became essential.”
The operational shift can be one of the most challenging aspects, with significant differences in mindset and pace between hospitals and ASCs, Dentler said.
“The focus in an ASC is quicker turnaround, surgeon satisfaction and efficiency,” Dentler explained. “Hospital staff might struggle to adapt because the operational mindset is so different.”
Regulatory and compliance nuances
Compliance and regulatory shifts, while seemingly straightforward, must also be carefully managed, Dentler said.
“Everything must be redesigned specifically for the ASC,” Dentler said. “Nothing from the hospital or HOPD can directly carry over. Policies, procedures, forms, … everything requires revision.”
There is also the potential for complexity in licensing conversions, Dentler said.
“For the most part, if you’re in a not-for-profit hospital, most ASCs are structured as for-profit entities if they’re going to have any physician investment,” she said. “And so that’s a whole different, you know, IRS classification. … You have to pay sales tax, where, when it was a hospital, it didn’t have to pay sales tax.”
And advanced preparation in contracting with payers is also critical, as new ASC reimbursement agreements could take up to 18 months to finalize, McClain said.
“Hospitals often lack existing ASC reimbursement agreements,” he said. “Securing new contracts is essential and requires significant lead time.”
To avoid costly mistakes, hospitals should conduct thorough evaluations before embarking on a conversion, McClain said.
“There’s nothing worse than getting to the end of a conversion, having spent far more time and money, only to find you’re less efficient than before,” he said.
