Tony Kilgore is eager to see the ambulatory surgery sector adopt value-based contracting at a higher clip. But the CEO of Surgical Care Affiliates knows it’ll take time. SCA, which operates roughly 210 ASCs nationwide, is pursuing value-based contracts built around quality metrics and has started to explore same-day surgery bundles. SCA was acquired by UnitedHealth Group’s subsidiary Optum in 2017. Kilgore spoke with Modern Healthcare Managing Editor Matthew Weinstock. The following is an edited transcript.
MH: The Leapfrog Group recently published a report suggesting that outpatient centers lag in following quality practices. What’s your take on their findings?
Kilgore: There are some points that we broadly would agree with. I also think there’s some sensationalism in some of the commentary that doesn’t feel intellectually perfect.
SCA in general is a big proponent of increasing transparency and defining the quality metrics that we want to report on. That’s just not for SCA centers, but that’s for the industry as a whole. I think it helps us to provide information to consumers to make great choices.
It also benefits the ASC industry as a whole so patients can compare the outcomes they’re getting, which are broadly very good. But as we get to standardization, we’ll be able to compare results not just against each other but have a better platform to be able to compare the outcomes you get at an ambulatory surgery center versus that of a hospital outpatient department versus that of a hospital inpatient department.
MH: There’s a dearth of quality metrics being used for ambulatory surgery centers and outpatient care. Why do you think that is?
Kilgore: The metrics exist. The ASC industry as a whole has not had the same level of working together. There’s a number of large providers like SCA, United Surgical Partners International and Amsurg that are probably further down this path.
But we’re also made up of literally thousands of independent operators. When you compare that to the hospital industry, with a large centralized lobbying effort, with a large focus on how things get done, they’re able to aggregate that information, agree on metrics, and push them out more efficiently.
Over time, as we see more connectivity among the independent ASCs, as we see more connectivity through health plans and the way contracts are starting to be written with more value-based components, it’s going to drive that need for clarity around reporting.
MH: Where do you think Leapfrog missed the mark?
Kilgore: I’d like to see more balance in the reporting when highlighting either adverse events, or where things did not go perfectly within the ambulatory industry. I’d like to see a balance that highlights how that is handled in a very similar way on the inpatient side. So it’s not that one side is better or worse, but I think when we talk about it, we’ve got to try to remain as impartial as possible.
Because at the end of the day, patients in this country need inpatient care, they need outpatient care, and they need all of this system working well together to improve our overall healthcare outcomes, and reduce our overall costs.
MH: You’re pretty bullish on ASCs moving toward value-based care. Where does SCA stand in its ability to take on risk?
Kilgore: We’re still early on the risk spectrum. We’re not yet to the point where we’re taking on full risk in the way that a large practice might take on risk. However, we’re taking on risk as it relates to making quality commitments with health plans; talking about ensuring that we’re getting the right patient to the right site of care. It could be things like antibiotic timing, it could be transfer rates.
We started this conversation around what metrics are most important and over the last few years, as we’ve gotten clearer about what health plans find important, we’re able to put our money where our mouth is and say, “We’re willing to report out on this. We’re willing to commit to improvements here. We’re willing to commit to drive the right types of surgeries, to the right physicians.”
MH: You haven’t built in the full financial incentives yet, right?
Kilgore: That’s correct. I do believe that in the next few years we’ll be in a spot where we can start to get to the further end of that. When I think about risk, I think about a spectrum. At the initial part, it’s around quality, metrics and upside bonus versus downside clawbacks.
In the middle, we’re starting to build a day-of-surgery bundle that includes the technical fee that the ASC gets, the anesthesia fee, and then the surgeon’s professional fee. Packaging those together can make us very competitive from a price standpoint to other options in a given market. And it allows the surgeon who is performing the surgery to have a lot more control over some of the variables like costs, drugs, implants, surgical time, some of the more variable components.
We’re moving into that middle section of bundling, which gives predictability to patients and insurers, and employers that are ultimately paying the bill. As that spectrum continues to grow, I can foresee a time when we’ve got some groups that are very interested in going down the path of sub-capitated risk pools with either at risk medical groups and/or employers.
Now, I do believe that ultimately surgery is an episodic treatment, so this industry’s always going to have a strong fee-for-service component. But as we (push further) into value, we want to make sure that we’re well positioned to (impact those conversations).
MH: How do you see smaller ASCs being able to move down this road?
Kilgore: This industry is inherently highly variable based on the market you’re in. There’s going to have to be a level of sophistication required to embrace value-based contracting. If you go into it without a full understanding of what you’re signing up for, it could be a recipe for disaster for a single stand-alone business. Being part of something that’s a bit bigger is certainly going to be helpful.
I think there will continue to be aggregation into regional groups, into national platforms like SCA. We’re also seeing the independent providers continue to be bought up by health systems as part of their strategy to expand share and expand touch and reach within the markets that they serve.
