Ambulatory Surgery Centers (ASCs) Pose Competitive Threat to Hospitals

THE INCREASED COMPETITION OF AMBULATORY SURGERY CENTERS (ASCS) TO US HOSPITALS As hospitals and health systems accelerate towards population health models, such as Accountable Care Organizations (ACOS), lower priced ASCS will become more critical competitors to hospitals. THE NUMBER OF ASC OPERATING ROOMS HAS DOUBLED HISTORICALLY, FOR PROCEDURES SUCH AS SHOULDER ARTHROSCOPY, ASCS AND HOSPITALS HAVE SHARED IN GROWTH... OVER THE LAST DECADE... NUMBER OF ASC OPERATING ROOMS IN THOUSANDS NUMBER OF SHOULDER ARTHROSCOPY PROCEDURES IN MILLIONS, ALL PAYORS23 2х GROWTH OVER 10 YEARS 1.4x 0.25 20 ANNUAL GROWTH IN SHOULDER ARTHROSCOPY PROCEDURES ACROSS ALL 0.20 15 CARE SETTINGS 0.15 HOSPITAL OUTPATIENT 10 0.10 ASC ASC ASC 0.05 ASCS 2001 2006 2007 2008 2009 2006 2011 ...AND NOW 60% OF HOSPITALS HAVE AN ASC WITHIN A 5 MINUTE DRIVE' ..BUT AS THE INDUSTRY SHIFTS TOWARDS POPULATION HEALTH MODELS, ASCS' PRICE ADVANTAGE POSITIONS THEM TO GROW AT HOSPITALS' EXPENSE 60% MEDICARE PAYMENT RATE FOR SHOULDER ARTHROSCOPY PROCEDURES, 20123 OF HOSPITALS 2000- 1500- 42% 1000- LOWER $1.201 500 - HOSPITAL OUTPATIENT ASC SOURCES Objective Health de-identified client data CMS Provider of Services files 2001, 2006, 2009 and 201 - RAND. 2008. Medicare Payment Differentials Across Ambulatory Settings SDI. 2009. Free-standing Outpatient Surgery Centers (FOSC) Database. FOOTNOTES: OBJECTIVEHEALTH" 1. N = 3081 short term acute care hospitals with more than 30 beds, 2009 2. Total procedure volumes are estimated and triangulated from multiple sources: RAND, ŠDI, and McKinsey articles; Objective Health and Premier de-identified client databases 3. CPT 4 Medicare po9624: Shoulder arthroscópy/surgery standardized. Some differentials remain due to different conversion factor update methods and separate budget-neutrality adjustments for recalibration of relative weights. A MCKINSEye SOLUTION FOR HEALTHCARE PROVIDERS - CMS CY2012 AACCODS g for the cost of U.S. health care. - Premier discharge database - Objective Health analysis payment differentials between ASČS and hospital outpatient have been largely payment rates Copyright 2012, Oojectve Heath, a Mnsey Soluton for Heathoare Providers. THOUSANDS MILLIONS $2,085e THE INCREASED COMPETITION OF AMBULATORY SURGERY CENTERS (ASCS) TO US HOSPITALS As hospitals and health systems accelerate towards population health models, such as Accountable Care Organizations (ACOS), lower priced ASCS will become more critical competitors to hospitals. THE NUMBER OF ASC OPERATING ROOMS HAS DOUBLED HISTORICALLY, FOR PROCEDURES SUCH AS SHOULDER ARTHROSCOPY, ASCS AND HOSPITALS HAVE SHARED IN GROWTH... OVER THE LAST DECADE... NUMBER OF ASC OPERATING ROOMS IN THOUSANDS NUMBER OF SHOULDER ARTHROSCOPY PROCEDURES IN MILLIONS, ALL PAYORS23 2х GROWTH OVER 10 YEARS 1.4x 0.25 20 ANNUAL GROWTH IN SHOULDER ARTHROSCOPY PROCEDURES ACROSS ALL 0.20 15 CARE SETTINGS 0.15 HOSPITAL OUTPATIENT 10 0.10 ASC ASC ASC 0.05 ASCS 2001 2006 2007 2008 2009 2006 2011 ...AND NOW 60% OF HOSPITALS HAVE AN ASC WITHIN A 5 MINUTE DRIVE' ..BUT AS THE INDUSTRY SHIFTS TOWARDS POPULATION HEALTH MODELS, ASCS' PRICE ADVANTAGE POSITIONS THEM TO GROW AT HOSPITALS' EXPENSE 60% MEDICARE PAYMENT RATE FOR SHOULDER ARTHROSCOPY PROCEDURES, 20123 OF HOSPITALS 2000- 1500- 42% 1000- LOWER $1.201 500 - HOSPITAL OUTPATIENT ASC SOURCES Objective Health de-identified client data CMS Provider of Services files 2001, 2006, 2009 and 201 - RAND. 2008. Medicare Payment Differentials Across Ambulatory Settings SDI. 2009. Free-standing Outpatient Surgery Centers (FOSC) Database. FOOTNOTES: OBJECTIVEHEALTH" 1. N = 3081 short term acute care hospitals with more than 30 beds, 2009 2. Total procedure volumes are estimated and triangulated from multiple sources: RAND, ŠDI, and McKinsey articles; Objective Health and Premier de-identified client databases 3. СРТ 4 Medicare po9624: Shoulder arthroscópy/surgery standardized. Some differentials remain due to different conversion factor update methods and separate budget-neutrality adjustments for recalibration of relative weights. A MCKINSEye SOLUTION FOR HEALTHCARE PROVIDERS - CMS CY2012 AACCODS g for the cost of U.S. health care. - Premier discharge database payment differentials between ASČS and hospital outpatient have been largely payment rates - Objective Health analysis Copyright 2012, Oojectve Heath, a Mnsey Soluton for Heathoare Providers. THOUSANDS MILLIONS $2,085e THE INCREASED COMPETITION OF AMBULATORY SURGERY CENTERS (ASCS) TO US HOSPITALS As hospitals and health systems accelerate towards population health models, such as Accountable Care Organizations (ACOS), lower priced ASCS will become more critical competitors to hospitals. THE NUMBER OF ASC OPERATING ROOMS HAS DOUBLED HISTORICALLY, FOR PROCEDURES SUCH AS SHOULDER ARTHROSCOPY, ASCS AND HOSPITALS HAVE SHARED IN GROWTH... OVER THE LAST DECADE... NUMBER OF ASC OPERATING ROOMS IN THOUSANDS NUMBER OF SHOULDER ARTHROSCOPY PROCEDURES IN MILLIONS, ALL PAYORS23 2х GROWTH OVER 10 YEARS 1.4x 0.25 20 ANNUAL GROWTH IN SHOULDER ARTHROSCOPY PROCEDURES ACROSS ALL 0.20 15 CARE SETTINGS 0.15 HOSPITAL OUTPATIENT 10 0.10 ASC ASC ASC 0.05 ASCS 2001 2006 2007 2008 2009 2006 2011 ...AND NOW 60% OF HOSPITALS HAVE AN ASC WITHIN A 5 MINUTE DRIVE' ..BUT AS THE INDUSTRY SHIFTS TOWARDS POPULATION HEALTH MODELS, ASCS' PRICE ADVANTAGE POSITIONS THEM TO GROW AT HOSPITALS' EXPENSE 60% MEDICARE PAYMENT RATE FOR SHOULDER ARTHROSCOPY PROCEDURES, 20123 OF HOSPITALS 2000- 1500- 42% 1000- LOWER $1.201 500 - HOSPITAL OUTPATIENT ASC SOURCES Objective Health de-identified client data CMS Provider of Services files 2001, 2006, 2009 and 201 - RAND. 2008. Medicare Payment Differentials Across Ambulatory Settings SDI. 2009. Free-standing Outpatient Surgery Centers (FOSC) Database. FOOTNOTES: OBJECTIVEHEALTH" 1. N = 3081 short term acute care hospitals with more than 30 beds, 2009 2. Total procedure volumes are estimated and triangulated from multiple sources: RAND, ŠDI, and McKinsey articles; Objective Health and Premier de-identified client databases 3. СРТ 4 Medicare po9624: Shoulder arthroscópy/surgery standardized. Some differentials remain due to different conversion factor update methods and separate budget-neutrality adjustments for recalibration of relative weights. A MCKINSEye SOLUTION FOR HEALTHCARE PROVIDERS - CMS CY2012 AACCODS g for the cost of U.S. health care. - Premier discharge database payment differentials between ASČS and hospital outpatient have been largely payment rates - Objective Health analysis Copyright 2012, Oojectve Heath, a Mnsey Soluton for Heathoare Providers. THOUSANDS MILLIONS $2,085e THE INCREASED COMPETITION OF AMBULATORY SURGERY CENTERS (ASCS) TO US HOSPITALS As hospitals and health systems accelerate towards population health models, such as Accountable Care Organizations (ACOS), lower priced ASCS will become more critical competitors to hospitals. THE NUMBER OF ASC OPERATING ROOMS HAS DOUBLED HISTORICALLY, FOR PROCEDURES SUCH AS SHOULDER ARTHROSCOPY, ASCS AND HOSPITALS HAVE SHARED IN GROWTH... OVER THE LAST DECADE... NUMBER OF ASC OPERATING ROOMS IN THOUSANDS NUMBER OF SHOULDER ARTHROSCOPY PROCEDURES IN MILLIONS, ALL PAYORS23 2х GROWTH OVER 10 YEARS 1.4x 0.25 20 ANNUAL GROWTH IN SHOULDER ARTHROSCOPY PROCEDURES ACROSS ALL 0.20 15 CARE SETTINGS 0.15 HOSPITAL OUTPATIENT 10 0.10 ASC ASC ASC 0.05 ASCS 2001 2006 2007 2008 2009 2006 2011 ...AND NOW 60% OF HOSPITALS HAVE AN ASC WITHIN A 5 MINUTE DRIVE' ..BUT AS THE INDUSTRY SHIFTS TOWARDS POPULATION HEALTH MODELS, ASCS' PRICE ADVANTAGE POSITIONS THEM TO GROW AT HOSPITALS' EXPENSE 60% MEDICARE PAYMENT RATE FOR SHOULDER ARTHROSCOPY PROCEDURES, 20123 OF HOSPITALS 2000- 1500- 42% 1000- LOWER $1.201 500 - HOSPITAL OUTPATIENT ASC SOURCES Objective Health de-identified client data CMS Provider of Services files 2001, 2006, 2009 and 201 - RAND. 2008. Medicare Payment Differentials Across Ambulatory Settings SDI. 2009. Free-standing Outpatient Surgery Centers (FOSC) Database. FOOTNOTES: OBJECTIVEHEALTH" 1. N = 3081 short term acute care hospitals with more than 30 beds, 2009 2. Total procedure volumes are estimated and triangulated from multiple sources: RAND, ŠDI, and McKinsey articles; Objective Health and Premier de-identified client databases 3. СРТ 4 Medicare po9624: Shoulder arthroscópy/surgery standardized. Some differentials remain due to different conversion factor update methods and separate budget-neutrality adjustments for recalibration of relative weights. A MCKINSEye SOLUTION FOR HEALTHCARE PROVIDERS - CMS CY2012 AACCODS g for the cost of U.S. health care. - Premier discharge database payment differentials between ASČS and hospital outpatient have been largely payment rates - Objective Health analysis Copyright 2012, Oojectve Heath, a Mnsey Soluton for Heathoare Providers. THOUSANDS MILLIONS $2,085e THE INCREASED COMPETITION OF AMBULATORY SURGERY CENTERS (ASCS) TO US HOSPITALS As hospitals and health systems accelerate towards population health models, such as Accountable Care Organizations (ACOS), lower priced ASCS will become more critical competitors to hospitals. THE NUMBER OF ASC OPERATING ROOMS HAS DOUBLED HISTORICALLY, FOR PROCEDURES SUCH AS SHOULDER ARTHROSCOPY, ASCS AND HOSPITALS HAVE SHARED IN GROWTH... OVER THE LAST DECADE... NUMBER OF ASC OPERATING ROOMS IN THOUSANDS NUMBER OF SHOULDER ARTHROSCOPY PROCEDURES IN MILLIONS, ALL PAYORS23 2х GROWTH OVER 10 YEARS 1.4x 0.25 20 ANNUAL GROWTH IN SHOULDER ARTHROSCOPY PROCEDURES ACROSS ALL 0.20 15 CARE SETTINGS 0.15 HOSPITAL OUTPATIENT 10 0.10 ASC ASC ASC 0.05 ASCS 2001 2006 2007 2008 2009 2006 2011 ...AND NOW 60% OF HOSPITALS HAVE AN ASC WITHIN A 5 MINUTE DRIVE' ..BUT AS THE INDUSTRY SHIFTS TOWARDS POPULATION HEALTH MODELS, ASCS' PRICE ADVANTAGE POSITIONS THEM TO GROW AT HOSPITALS' EXPENSE 60% MEDICARE PAYMENT RATE FOR SHOULDER ARTHROSCOPY PROCEDURES, 20123 OF HOSPITALS 2000- 1500- 42% 1000- LOWER $1.201 500 - HOSPITAL OUTPATIENT ASC SOURCES Objective Health de-identified client data CMS Provider of Services files 2001, 2006, 2009 and 201 - RAND. 2008. Medicare Payment Differentials Across Ambulatory Settings SDI. 2009. Free-standing Outpatient Surgery Centers (FOSC) Database. FOOTNOTES: OBJECTIVEHEALTH" 1. N = 3081 short term acute care hospitals with more than 30 beds, 2009 2. Total procedure volumes are estimated and triangulated from multiple sources: RAND, ŠDI, and McKinsey articles; Objective Health and Premier de-identified client databases 3. СРТ 4 Medicare po9624: Shoulder arthroscópy/surgery standardized. Some differentials remain due to different conversion factor update methods and separate budget-neutrality adjustments for recalibration of relative weights. A MCKINSEye SOLUTION FOR HEALTHCARE PROVIDERS - CMS CY2012 AACCODS g for the cost of U.S. health care. - Premier discharge database payment differentials between ASČS and hospital outpatient have been largely payment rates - Objective Health analysis Copyright 2012, Oojectve Heath, a Mnsey Soluton for Heathoare Providers. THOUSANDS MILLIONS $2,085e THE INCREASED COMPETITION OF AMBULATORY SURGERY CENTERS (ASCS) TO US HOSPITALS As hospitals and health systems accelerate towards population health models, such as Accountable Care Organizations (ACOS), lower priced ASCS will become more critical competitors to hospitals. THE NUMBER OF ASC OPERATING ROOMS HAS DOUBLED HISTORICALLY, FOR PROCEDURES SUCH AS SHOULDER ARTHROSCOPY, ASCS AND HOSPITALS HAVE SHARED IN GROWTH... OVER THE LAST DECADE... NUMBER OF ASC OPERATING ROOMS IN THOUSANDS NUMBER OF SHOULDER ARTHROSCOPY PROCEDURES IN MILLIONS, ALL PAYORS23 2х GROWTH OVER 10 YEARS 1.4x 0.25 20 ANNUAL GROWTH IN SHOULDER ARTHROSCOPY PROCEDURES ACROSS ALL 0.20 15 CARE SETTINGS 0.15 HOSPITAL OUTPATIENT 10 0.10 ASC ASC ASC 0.05 ASCS 2001 2006 2007 2008 2009 2006 2011 ...AND NOW 60% OF HOSPITALS HAVE AN ASC WITHIN A 5 MINUTE DRIVE' ..BUT AS THE INDUSTRY SHIFTS TOWARDS POPULATION HEALTH MODELS, ASCS' PRICE ADVANTAGE POSITIONS THEM TO GROW AT HOSPITALS' EXPENSE 60% MEDICARE PAYMENT RATE FOR SHOULDER ARTHROSCOPY PROCEDURES, 20123 OF HOSPITALS 2000- 1500- 42% 1000- LOWER $1.201 500 - HOSPITAL OUTPATIENT ASC SOURCES Objective Health de-identified client data CMS Provider of Services files 2001, 2006, 2009 and 201 - RAND. 2008. Medicare Payment Differentials Across Ambulatory Settings SDI. 2009. Free-standing Outpatient Surgery Centers (FOSC) Database. FOOTNOTES: OBJECTIVEHEALTH" 1. N = 3081 short term acute care hospitals with more than 30 beds, 2009 2. Total procedure volumes are estimated and triangulated from multiple sources: RAND, ŠDI, and McKinsey articles; Objective Health and Premier de-identified client databases 3. СРТ 4 Medicare po9624: Shoulder arthroscópy/surgery standardized. Some differentials remain due to different conversion factor update methods and separate budget-neutrality adjustments for recalibration of relative weights. A MCKINSEye SOLUTION FOR HEALTHCARE PROVIDERS - CMS CY2012 AACCODS g for the cost of U.S. health care. - Premier discharge database payment differentials between ASČS and hospital outpatient have been largely payment rates - Objective Health analysis Copyright 2012, Oojectve Heath, a Mnsey Soluton for Heathoare Providers. THOUSANDS MILLIONS $2,085e