The Cutting Edge of Surgical Care Now Found at Outpatient Centers : Medicine: Lower-cost ambulatory facilities, a whole new industry, will soon radically alter the role of hospitals, experts say.
The beads of perspiration that formed on Dr. Mark Anton’s furrowed forehead glistened under the bright light bathing the operating room. Flanked by two masked nurses, he quickly completed the surgery.
The patient, still unconscious, was soon wheeled into the post-operation suite. Within hours she was sent home to recuperate.
Home? After a two-hour surgery? That, indeed, is what the doctor ordered.
“Patients would rather have that non-hospital feel,” said Anton, a plastic surgeon at the newly opened Newport Beach Surgery Center, one of a growing number of ambulatory surgery centers that have been providing a lower-cost alternative to hospital stays that average more than $800 a night.
Health care experts said that cost concerns and an array of high-tech medical devices have spurred a whole new industry: free-standing operating rooms that can accommodate patients who need surgery routine enough to eliminate the requirement for an extended stay in a hospital.
As the health care industry evolves, most experts agree that hospitals, as we know them today, will be a thing of the past. Instead, the health system will feature “core” hospital units, where only the gravest of illnesses and injuries such as brain cancer and head trauma will be treated, health care experts say.
Spinning out from the core, experts say, will be a network of community-based institutions that will treat a majority of medical cases in a more cost-effective way.
In short, managed care will be the watchword in the medical industry for the foreseeable future, experts say. That point was driven home during the presidential campaign, when all three major candidates discussed the spiraling cost of health care and ways to control it.
A major component of this ongoing evolution is the ambulatory--or outpatient--surgery center, where operations can be performed on patients without having to admit them into a hospital.
“Up until now, hospitals have been the hub of medical care,” said Dr. Robert Olson, a one-time Hoag Hospital anesthesiologist and now a director at the Newport Beach Surgery Center. “Hospitals are the least cost-effective place to care for most people.”
Ambulatory surgery centers, as the federal government calls them, have been in existence for more than a decade and have slowly caught on as viable alternatives for many types of surgery. For the first time, more than half of all surgical procedures performed in 1988 were conducted in such facilities, while the total number of surgeries inside a hospital has steadily declined.
By the turn of the century, experts estimate, about 70% to 80% of all surgeries performed in the United States will be done outside the traditional hospital setting. And with current technology, safety and quality of care is not compromised, state and private health experts said. The shift will ultimately leave hospital operating rooms to handle only such dire operations as open-heart surgeries and kidney transplants.
Meanwhile, the number of outpatient surgery centers is expected to grow by as much as 15% a year. Annual revenue is expected to surpass $1.2 billion in 1993.
“They really streamline medicine,” said Lisa Remington, editor and publisher of the Remington Report, a Laguna Niguel medical industry newsletter that researched the growth of ambulatory surgery centers in a recent edition. “They cut out a lot of the fat.”
Remington and other health care observers said that the different types of surgical procedures performed on an outpatient basis have soared, from about 200 separate procedures 10 years ago to more than 2,000 today.
Once only used for such simple operations as wart removals and foot surgeries, physicians now conduct more complicated medical procedures on an outpatient basis, such as gallbladder removal, hernia repair, appendectomies, hysterectomies and arthroscopic joint surgery.
The list will grow even longer as medical device manufacturers discover improved treatment methods.
For instance, newly developed “cold” laser technology, manufactured by such Orange County companies as Trimedyne Inc. and Advanced Interventional Systems Inc., has made it possible to clear blocked arteries near the heart. Such a procedure, which only requires a small incision to insert the laser, may some day make open-heart surgery a thing of the past.
And such equipment as MRIs and CAT scans, which use computer and X-ray technology to look inside a patient, can make diagnoses possible without exploratory surgery.
“I believe (that) toward the end of the century, we will really begin to enter a century of bloodless surgery, which would be wonderful,” said Stephanie Anders, senior associate for ambulatory care services at UCI Medical Center in Orange.
During bloodless, or endoscopic surgery, doctors try to reduce major incisions to a patient’s body by making small openings for surgical tools that can be operated with the aid of television cameras. Recovery time is quicker, and doctors do not have to rely on supplying large amounts of blood during the surgery.
Four specialties--ophthalmology, or the treatment of eyes, orthopedics, gynecology and ear, nose and throat operations--make up about 65% of total surgeries performed at such centers.
Health care experts attribute much of the growth of ambulatory surgery centers to increasing pressure by insurance companies to restrict health care costs. While there are no exact figures available, most say that procedures performed in ambulatory surgery centers are generally less expensive.
For instance, without paying for overnight stays, patients can save thousands of dollars, depending on the procedure, experts said.
The Newport Beach Surgical Center, which opened in the fall, is owned by Nashville-based Heritage Surgical Corp., a year-old company that specializes in start-up ambulatory surgery centers. Heritage, with additional centers in Tennessee, Ohio, Texas and Florida, also owns three ambulatory surgery centers in San Diego County.
Heritage spokeswoman Pam Wayne said that free-standing centers can offer savings of up to 40% on various surgeries.
While the cost of the surgery itself is generally the same whether it is done at an outpatient or inpatient facility, the savings come mainly from elimination of costs associated with staying overnight in a hospital: inflated drug prices, all-night supervision and expensive tests and monitoring all contribute to the overall cost.
For instance, in 1960, an average day in the hospital, not counting the various medical procedures that might be needed, cost $32.27 per patient. In 1990, the average had jumped to an astronomical $820 a day.
Although Wayne said that “there will always be a need for hospitals,” she added that the lure of lower patient costs has allowed Heritage and other owners of surgery centers to reap the benefits.
“I think everyone sees the great need for a more integrated system,” Wayne said. “they (ambulatory surgery centers) are in the center of that vertical integration.”
A move toward more cost-effective outpatient services has created stiff competition among hospitals and medical centers and private consortiums of physicians and business people who invest in these free-standing surgical centers.
The competition has resulted in tremendous growth in the number of surgery centers not associated with hospitals. In that category, there were 865 such surgery centers across the country in 1987. That figure jumped to 1,247 last year. By next year, according to the Remington Report, the United States could have as many as 1,700 free-standing ambulatory surgery centers not associated with hospitals, which would perform up to 3.8 million surgeries.
That growth is not lost on hospital administrators.
Duane Donner, president of the Sacramento-based California Assn. of Hospitals and Health Care Systems, a nonprofit organization of private hospitals, acknowledged that hospitals facing lost revenue are changing their operations to stay financially sound and respond to their evolving role.
And hospital groups are best positioned to take advantage of the outpatient surgery trend--that is, if they are successful in holding prices down and avoiding the temptation of increasing the cost of outpatient surgery to recoup lost bed revenue.
Donner predicts a consolidation of hospitals: Smaller ones, which cannot absorb lost bed revenue, will eventually be swallowed by larger hospital chains. The remaining hospitals will evolve from all-purpose institutions to catastrophic care units, where only the most severe cases will be treated.
From that small core will extend a network of outpatient clinics and in-home health care companies that will treat the recovering patient at home.
Meanwhile, the number of free-standing centers owned by non-hospital groups would also be absorbed by chains as cost-containment requirements by insurance companies continue to add pressure to the system.
“There is no question that health care is changing,” Donner said.
In Orange County, a dozen surgery centers have opened for business--many of them in the past two years. That number does not include specialty surgery clinics that deal exclusively in eye or ear, nose and throat care.
Most of the centers are associated with hospitals, such as the Mission Ambulatory Surgicenter, which is next to Mission Hospital Regional Medical Center in Mission Viejo. That center, which opened two years ago, now has 180 physicians on staff or contract and is expecting 15% in patient growth for the next year, said administrator Tom Catlett.
At another hospital-owned center, Magnolia Outpatient Surgery Center in Westminster, business is also booming. With only two operating rooms, the center has treated as many as 10 patients a day since opening in August.
The Magnolia center is the first of its kind for the Summit Health Ltd. hospital group, which owns 12 hospitals including the 93-bed Santa Ana Hospital Medical Center.
Don Amarol, chief executive of the Burbank-based hospital chain, agreed that hospitals are under intense evolutionary forces.
“The hospital is definitely being restructured,” Amarol said. “Everything, or as much as possible, is being pushed to the outpatient level.”
Even UCI Medical Center is hoping to cash in on the evolution. UCI Medical Center, which is Orange County’s second largest medical center with 493 beds, opened an ambulatory surgery center in a wing adjacent to the main hospital in March.
The facility has three operating rooms and treats about 60 patients a week, said UCI Medical Center Associate Director Gerlinde Duffy, who oversees the day-to-day operation of the center. She said she expects a 40% growth rate in the center’s patient load by next June.
Nationwide, the outpatient surgeries conducted at hospitals has quadrupled in the past 10 years. In 1980, there were more than 15 million surgeries performed at hospitals on an inpatient basis--that is, the patients were admitted to overnight stays or longer. That figure compared to just about 3 million outpatient surgeries performed at hospitals in the same year.
In 1990, the number of outpatient surgeries performed in hospitals soared to about 11 million, while the number of inpatient surgeries fell to 10.8 million. These figures do not include surgery centers not owned by hospitals.
“That is the sign of the times,” Duffy said. “It will keep going in that direction.”
Dr. Patricia Chase, chief medical consultant for the policy branch of the state Department of Health’s licensing and certification division, said acceptance of this surgery alternative has made the difference.
Twenty years ago, she said, outpatient surgery was unheard of, as much because of attitudes about the perceived sanctity of the hospital as the lack of proper medical technology.
“People would have been horrified,” Chase said. “Now, it’s all we talk about.”
Insurance carriers were also reluctant 10 years ago to pay money to ambulatory surgery centers, Chase said.
Now, Chase said, insurers often demand procedures be done in an outpatient center to save money. “The real determining factor is how much patients need to be watched (after surgery) and how willing are insurers to pay for that.”
Such savings are tailor-made for health maintenance organizations such as PacifiCare Health Systems Inc. in Cypress and FHP Inc. in Fountain Valley, the county’s two largest HMOs. Both managed-care companies use ambulatory surgery centers, and both report a positive effect on the bottom line.
PacifiCare just released its year-end results and attributed its record earnings of $43.6 million, on revenue of $1.7 billion, in part to savings from ambulatory surgery centers, said chief executive Terry Hartshorn.
FHP Chief Operating Officer Jack Massimino said that as the health care industry moves further toward managing costs, outpatient surgery and other non-traditional services, such as in-home health care and birthing centers, will play a larger part in his company’s operations.
Outpatient surgery is a growing segment of the company’s overall health care program.
“We run the whole gamut in terms of outpatient services,” Massimino said. “We have developed a continuum of care and move our patients along that continuum. It’s more efficient health care.”
Surgery Centers: A Medical Trend Outpatient surgery centers--where patients can undergo surgery and go home the same day--are growing in popularity across the United States. Until the late 1980s, most surgeries were performed on an inpatient basis, meaning that the patient had to remain in a hospital at least one night. As many as eight out of 10 operations performed nationwide by the year 2000 are expected to be on an outpatient basis. *Outpatient Centers in California 1989: 729 1991: 858 *Outpatient Centers in the United States 1983: 239 1984: 330 1985: 459 1986: 592 1987: 865 1988: 964 1989: 1,221 1990: 1,381 1991: 1,510 1992: 1,643 *Trends in Surgeries In recent years, surgeries performed in outpatient centers have outpaced those done on an inpatient basis. *In millions Surgeries performed Inpatient 1983: 15.1 1984: 14.4 1985: 13.4 1986: 12.2 1987: 11.7 1988: 11.4 1989: 11.0 1990: 10.8 *Surgeries performed Outpatient 1983: 5.0 1984: 6.0 1985: 7.7 1986: 9.3 1987: 10.5 1988: 11.8 1989: 12.5 1990: 13.7 *Sources: American Hospital Assn.; SMG Marketing; state Department of Health Services
