Study: Using Ambulatory Centers Reduces Outpatient Costs

Stephen Miller, CEBS By Stephen Miller, CEBS September 9, 2016

Encouraging health plan enrollees to use ambulatory surgery centers (ASCs) instead of hospital outpatient departments for common procedures can lower the cost of outpatient surgery, an analysis of health insurance claims found.

The research concluded that ASC prices are significantly lower than hospital outpatient prices for the same procedures throughout the U.S.

The analysis was conducted by Healthcare Bluebook, a national provider of quality and cost data for health care services, in partnership with HealthSmart, an administrator of health plans for self‐funded employers, and the Ambulatory Surgery Center Association, a trade association for more than 5,400 outpatient surgery centers.

The study concluded that ASC patients' out-of-pocket costs were reduced by more than $5 billion annually, due to lower costs for surgical procedures. The data analyzed represents more than 400,000 individuals with health coverage across the country, conducted using a national sample of de-identified commercial claims for calendar year 2014.

In Charleston, W.Va., for instance, the researchers found that for enrollees in the equivalent of a silver-level plan ($2,700 deductible, 80 percent co-insurance and $5,000 maximum out-of-pocket limit), whether coverage was provided through an employer's group plan or was purchased individually on a public exchange or through a broker:

  • Cataract patients would save $566 in out-of-pocket costs by choosing an ASC over a hospital outpatient facility, and the payer—including employers that self-fund their insurance coverage—would save an additional $2,264.

  • Knee arthroscopy patients would save $1,275 in out-of-pocket costs and the payer would save $5,100.

Savings Examples: ASCs vs. Hospital Outpatient Facilities:

Procedure Market Average Price: Ambulatory Surgery Center Average Price: Hospital Outpatient Department
Cataract surgeryCharleston, W. Va.$2,932$5,762
Cataract surgeryEvansville, Ind.$3,316$6,992
Cataract surgeryTulsa, Okla.$2,249$3,833
Knee ArthroscopyFayetteville, N.C.$7,658$11,575
Knee ArthroscopyCharlotte, N.C.$6,118$12,493
Knee ArthroscopyTulsa, Okla.$2,844$4,807
Knee ArthroscopyPhoenix, Ariz.$2,972$4,306

Source: Commercial Insurance Cost Savings in Ambulatory Surgery Centers

But only 48 percent of procedures that can be performed in an ASC are actually performed in one, the researchers found. If the remaining 52 percent were performed at ASCs instead of hospitals, $41 billion in health care costs could be saved annually, they concluded.

"While a small percentage of patients have health conditions that require outpatient care to be received in proximity to a full-service hospital should complications arise, most patients can receive the same level of care at lower cost by seeking treatment in an ASC," the report stated. "Advances in medical technology and pain control are allowing increasingly complex procedures, such as total joint replacements, to be performed in an outpatient setting."

The researchers advise policymakers, insurers and employers to create strategies "to generate additional savings by ensuring that the most efficient site of service for outpatient care is selected whenever possible. In particular, innovative plan design and increased consumer awareness of the benefits of receiving care in an ASC can save thousands of dollars per procedure."

Plan design features to achieve that end could include in-network tiers, by which employers pay a greater share of the cost based first on the quality of health services provided as shown by clinical evidence, and then on the average cost for procedures by facility.

"The analysis highlights how important it is for both employers and consumers to understand the large differences in local in-network prices," said Jeff Rice, CEO of Healthcare Bluebook. "Both the employer and consumer can realize substantial savings by better utilizing the lower-cost ASC providers in their existing networks."

Related SHRM Articles:

Health Benefits Take Bigger Bite Out of Paychecks, SHRM Online Benefits, September 2016

Employers Project Health Premium Hike of 6% in 2017, SHRM Online Benefits, August 2016

Costliest Claims Put Outsized Burden on Health Plans, SHRM Online Benefits, July 2016



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