Dan O’Connor, editor in chief of “Outpatient Surgery” magazine has written yet another stinging article, one he has kindly allowed me to post on my blog…sorry about the disjointed format.  Important definitions:  ASC, ambulatory surgery center, typically physician-controlled.  HOPD, Hospital Outpatient Departments.

The industry suffers every time an ASC is converted to an HOPD.

Last month in Springfield, Ill., ophthalmologist Sandra Yeh, MD, did what a growing number of ASC physician-owners are doing these days:

She sold out to the local hospital. Boy, did she. Dr. Yeh sold Prairie Surgery Center to St. John’s

Hospital for a cool $8.5 million. Dr. Yeh paid $3 million to build and equip the center 3 years ago. Not only did she flip her ASC for nearly 3 times what she paid for it, but she’ll continue cashing the hospital’s checks.

St. John’s will lease from Dr. Yeh the building in which the surgery center operates. The hospital will hire 19 of Dr. Yeh’s employees who staff the surgery center and offer them signing bonuses of $500 to $2,500. Best of all, Dr. Yeh will continue doing sur- gery and running the facility under a management contract with St. John’s. She’s not boasting when she tells you that she can do 20 8-minute cataract cases by noon. “I do great surgery, have happy patients and make a profit,” she says. “There’s noth- ing wrong with that.”

St. John’s made Dr. Yeh, 51, an offer she couldn’t refuse. The burden of running an ASC was getting to

her: the growing disparity in Medicare’s payment rates, slow-paying payors, increasing reporting require- ments, EMRs, ICD-10. “ASCs are paid 47% less than the hospital,” she says. “You can’t throw a thousand- pound weight on a horse and expect it to jump a wall.”

Plus, she knows St. John’s. She worked for 20 happy years at the hospital. Three years ago, things changed. Cataract patients were forced to wait 11 weeks to get on the schedule. A disruptive renovation project. An interim CEO who wanted to phase out ophthalmology and all but showed Dr. Yeh the door.

“When I left there, I knew they were making a mis- take,” she says. “You can’t hide the exit of 1,200 cases.”

We can’t fault Dr. Yeh for selling out and seeking shelter. But let’s examine why the hospital is forking over a boatload of cash to a surgeon it let walk away 3 years ago. It’s not the naming rights. The hospital has renamed the ASC St. John’s Hospital Surgery Suites. Nor is it the cataract profits it was surely and sorely missing since Dr. Yeh hung her shingle across town. Pride of ownership and a booming book of business are nice, but the real prize is that the hospital now gets to bill cataract cases at much higher HOPD rates.

For 2014, the Medicare rate for cataract removal with IOL insertion (CPT 66984) is $959.97 in an ASC and $1,740.50 in an HOPD, a difference of $780.53. Good intentions and glad reunions aside, Medicare’s cockeyed payment rates are what’s driving today’s ASC-to-HOPD conversions.

Of the 285 ASCs that left the Medicare system from 2009 through 2013, at least 101 were converted to HOPDs, according to the Ambulatory Surgery Center Association. If Dr. Yeh and her colleagues perform the same number of cases this year that they did last year (3,498), St. John’s will bill insurers an additional $2.73 million. Whoever thought that the ASC model would be used as a pawn to need- lessly drive up healthcare costs?


Keep in mind that the source of the money the hospitals use to buy out practices like Dr. Yeh’s, is the gross overcharging for “care” rendered in their facilities, resulting ultimately in the bankruptcy of the sick.  I thought this was a timely editorial to share, as the media focuses on Medicare payments to physicians, shedding no light on the much more outrageous and abusive hospital billing practices.  While a few doctors game the system for millions, the hospitals make off with billions, using this taxpayer dough to buy out practices like Dr. Yeh’s by the hundreds (thousands, actually).  

One more thing.  Doctors accused of Medicare fraud go to jail, innocent or not, as the cost of defense would leave their families homeless.  Hospitals and their execs accused of Medicare fraud?  Like big bankers, paltry fines.  Since the government will never abolish Medicare, there is really only one solution and it is fast approaching, as physicians walk away from this program en masse.

N.B.  I am embarrassed to have accepted Medicare money in my past but happy to say that I kicked this habit in 1992, 2 years after I began my practice. 

G. Keith Smith, M.D.

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