California’s Ambulatory Surgery Centers: A Black Box of Care FEBRUARY 2018 Ambulatory Surgery Centers Introduction Overview Many surgeries are performed in freestanding, or “same-day,” ambulatory surgery centers (ASCs). The CONTENTS number of freestanding ASCs in California has increased dramatically over the past 11 years. However, Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 due to a legal decision that removed reporting requirements for ASCs in the state, little is known about the volume of procedures, type of procedures, and financial operation of the vast majority of Operating Rooms. . . . . . . . . . . . . . . . . . . . . . . . . 4 these facilities. Facility Ownership. . . . . . . . . . . . . . . . . . . . . . . . 8 This report looks at the most recent data on the supply, use, quality, and finances of freestanding ASCs Reported Surgeries. . . . . . . . . . . . . . . . . . . . . . . 9 in California, as well as trends from 2005 to 2016. Reported Encounters. . . . . . . . . . . . . . . . . . . . 11 KEY FINDINGS INCLUDE: • From 2005 to 2016, the number of Medicare-approved freestanding ASCs increased by 26%, Quality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 from 626 to 791, while the number of operating rooms (ORs) in these facilities increased Financial Analysis. . . . . . . . . . . . . . . . . . . . . . . . 15 even more, from 1,311 to 1,905 (45%). In 2016, California had slightly fewer freestanding ASC ORs per 100,000 population than the average state. Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 • Despite the decline in the number of facilities and surgeries reported to the Office of Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Statewide Planning and Development (OSHPD), the number of surgeries per facility remained relatively stable, around 2,500. • Among freestanding ASCs that reported data to OSHPD, private insurance was the dominant payer, representing 41% of ASC encounters while Medi-Cal covered one-third. • In 2017, the Centers for Medicare & Medicaid Services (CMS) started publicly reporting quality measures for ASCs. In the first set of measures reported, California performed similarly to the national average. CALIFORNIA HEALTH CARE FOUNDATION 2 Ambulatory Surgery Centers Freestanding ASCs, by Data Source Overview California, 2005 to 2016 According to CMS data, there was CMS-Reported Facilities OSHPD-Reported Facilities a 26% increase in the number of 800 791 +26% freestanding ambulatory surgery 700 626 centers (ASCs) between 2005 and 600 2016, reflecting the continued 500 movement of surgical procedures 432 from inpatient to outpatient 400 settings. A 2007 legal decision 300 removed any requirement for 200 physician-owned ASCs in California 100 to report data to OSHPD, resulting 34 –92% in a rapid drop-off in the number 2005 2006 2007* 2008 2009 2010 2011 2012 2013 2014 2015 2016 of licensed ASCs reporting — *The September 2007 Capen v. Shewry decision was interpreted to mean that ASCs with physician owners come under the oversight of the Medical Board of California, not the California Department of Public Health (CDPH), thereby removing any requirement for these ASCs to report data to OSHPD. Notes: Represents facilities operating and reporting data in the current year. The difference between Centers for Medicare & Medicaid Services (CMS) and California’s Office of Statewide only 34 in 2016. Health Planning and Development (OSHPD) data prior to the Capen decision is likely due to the lack of reported data on facilities in which the only physicians providing services were the owners. Sources: “Provider of Services Current Files,” CMS, 2005-2016, www.cms.gov; “Specialty Care Clinics Annual Utilization Data,” OSHPD, 2005-2016, www.oshpd.ca.gov. CALIFORNIA HEALTH CARE FOUNDATION 3 Ambulatory Surgery Centers Operating Rooms in Freestanding ASCs Operating Rooms California, 2005 to 2016 Between 2005 and 2016, the 2,000 number of ASC operating rooms 1,900 increased by 45%, compared to a 1,905 +45% 26% growth in ASC facilities. 1,800 1,700 1,600 1,500 1,400 1,300 1,311 1,200 1,100 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 NUMBER OF ASCs 626 645 674 702 734 744 763 767 767 779 790 791 Note: Represents Medicare-approved facilities. Source: “Provider of Services Current Files,” Centers for Medicare & Medicaid Services (CMS), 2005-2016, www.cms.gov. CALIFORNIA HEALTH CARE FOUNDATION 4 Ambulatory Surgery Centers Operating Rooms in Freestanding ASCs, by Region Operating Rooms California, 2016 Orange County had the highest PER 100,000 POPULATION number of ambulatory surgery 9 9.4 center operating rooms per 100,000 8 population, while the Sacramento 7 area had the lowest. 6 7.0 5 5.3 5.1 4 4.0 3 3.5 3.6 3.4 2 2.7 1 0 Central Greater Inland Los Angeles Northern Orange Sacramento San Diego San Joaquin Coast Bay Area Empire County and Sierra County Area Area Valley Notes: Represents Medicare-approved facilities. See appendix for a list of counties within each region. Sources: “Provider of Services Current Files,” Centers for Medicare & Medicaid Services (CMS), 2016, www.cms.gov; Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2010 to July 1, 2016 (NST-EST2016-01), US Census Bureau, www.census.gov. CALIFORNIA HEALTH CARE FOUNDATION 5 Ambulatory Surgery Centers Freestanding ASCs and Operating Rooms, by Region Operating Rooms California, 2010 and 2016 Since 2010, all regions except Northern and Sierra have seen FACILITIES OPERATING ROOMS 2010 2016 CHANGE 2010 2016 CHANGE an increase in the number of ASC Central Coast 73 73 0 142 164 22 facilities and operating rooms. Greater Bay Area 114 115 1 298 305 7 Los Angeles County saw the Inland Empire 65 70 5 141 158 17 Los Angeles County 226 261 35 420 537 117 greatest increase in this period — Northern and Sierra 32 22 –10 61 51 –10 an additional 35 facilities and Orange County 93 98 5 204 298 94 117 operating rooms. Sacramento Area 22 23 1 53 62 9 San Diego 39 45 6 96 118 22 San Joaquin Valley 80 84 4 165 212 47 Total 744 791 47 1,580 1,905 325 Notes: Represents Medicare-approved facilities. See appendix for a list of counties within each region. Source: “Provider of Services Current Files,” Centers for Medicare & Medicaid Services (CMS), 2010 and 2016, www.cms.gov. CALIFORNIA HEALTH CARE FOUNDATION 6 Ambulatory Surgery Centers Operating Rooms in Freestanding ASCs, by State Operating Rooms United States, 2016 In 2016, California had slightly PER 100,000 POPULATION fewer freestanding ASC operating í 0 to 3.0 í 3.1 to 4.0 í 4.1 to 5.7 í 5.8 to 6.7 í 6.8 to 14.4 rooms per 100,000 population than the average state. WA 0.3 ME MT ND OR MN VT NH ID SD WI NY MA MI CT RI WY IA PA NE NJ NV OH MD UT IL IN DE 14.4 CO WV CA VA ◼ DC KS 4.9 MO KY NC TN AZ OK NM AR SC MS AL GA TX LA AK FL HI STATE AVERAGE: 5.1 Note: Represents Medicare-approved facilities. Sources: “Provider of Services Current Files,” Centers for Medicare & Medicaid Services (CMS), 2016, www.cms.gov. Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2010 to July 1, 2016 (NST-EST2016-01), US Census Bureau, www.census.gov. CALIFORNIA HEALTH CARE FOUNDATION 7 Ambulatory Surgery Centers Freestanding ASC Facilities, by Ownership Facility Ownership California vs. United States, 2016 The vast majority of freestanding ambulatory surgery centers in California United States California and the United States N = 791 N = 5,543 were investor-owned. Many of í Government 2.3% 3.3% í Nonprofit 3.4% 2.9% these investor-owned ASCs were owned by physicians. Only 3% of ASCs in California and the US were nonprofit, and an additional 2% in California and 3% in the US were owned by the government. Investor-Owned Investor-Owned 94.4% 93.7% Note: Represents Medicare-approved facilities. Source: “Provider of Services Current Files,” Centers for Medicare & Medicaid Services (CMS), 2016, www.cms.gov. CALIFORNIA HEALTH CARE FOUNDATION 8 Ambulatory Surgery Centers Reported Surgeries in Freestanding ASCs Reported Surgeries California, 2005 to 2016 Since fewer facilities have been í Surgeries per Facility Total Surgeries Across All Facilities required to report these data since 2007, the number of 983,840 3,038 reported surgeries in freestanding 2,589 2,683 2,497 2,683 2,596 ambulatory surgery centers has 2,440 2,422 2,277 2,311 2,342 2,373 declined. The number of surgeries per reporting facility, however, has remained relatively stable. 88,265 2005 2006 2007* 2008 2009 2010 2011 2012 2013 2014 2015 2016 N U M B E R O F FA C I L I T I E S 432 409 451 200 84 52 32 32 35 30 34 34 *The September 2007 Capen v. Shewry decision was interpreted to mean that ASCs with physician owners come under the oversight of the Medical Board of California, not the California Department of Public Health (CDPH), thereby removing any requirement for these ASCs to report data to California’s Office of Statewide Health Planning and Development (OSHPD). Note: Represents facilities reporting data to OSHPD and operating in current year. Sources: “Specialty Care Clinics Annual Utilization Data,” OSHPD, 2005-2016, www.oshpd.ca.gov. Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2010 to July 1, 2016 (NST-EST2016-01), US Census Bureau, www.census.gov. CALIFORNIA HEALTH CARE FOUNDATION 9 Ambulatory Surgery Centers Reported Surgeries in Freestanding ASCs, by Region Reported Surgeries California, 2007 and 2016 The number of reported ASC 283,717 surgeries dropped sharply in Los Angeles County 4,572 all California regions after the Greater Bay Area 223,789 43,562 reporting requirements changed 136,891 San Joaquin Valley in 2007. In 2016, two California 18,842 Central Coast 111,440 regions — Sacramento Area 1,411 110,800 STATE TOTALS Surgeries Facilities and Northern and Sierra — Inland Empire 11,484 í 2007* 1,167,583 451 í 2016 88,265 34 reported no surgeries. Orange County 103,875 5,342 San Diego Area 76,617 3,052 Sacramento Area 64,072 0 Northern and Sierra 56,382 0 0 50000 100000 150000 200000 250000 300000 *The September 2007 Capen v. Shewry decision was interpreted to mean that ASCs with physician owners come under the oversight of the Medical Board of California, not the California Department of Public Health (CDPH), thereby removing any requirement for these ASCs to report data to California’s Office of Statewide Health Planning and Development (OSHPD). Notes: Represents facilities reporting data to OSHPD and operating in current year. See appendix for a list of counties within each region. Source: “Specialty Care Clinics Annual Utilization Data,” OSHPD, 2007 and 2016, www.oshpd.ca.gov. CALIFORNIA HEALTH CARE FOUNDATION 10 Ambulatory Surgery Centers Reported Encounters in Freestanding ASCs, by Payer Reported Encounters California, 2015 In 2015, public payers represented N = 91,857 over half of all reported encounters 40 at ASCs, with Medi-Cal covering 40.8% over one-third of those encounters. 32 35.6% Private insurers were the dominant payer, representing 24 41% of encounters. 16 20.3% 8 1.8% 0.7% 0.8% 0 Private Medi-Cal Medicare Self-Pay Worker’s Other Insurance Compensation Notes: Represents facilities reporting data to OSHPD and operating in current year. An encounter is a face-to-face contact between an outpatient and a provider who has primary responsibility for assessing and treating the patient, during which at least one ambulatory surgery procedure is performed. Other includes other nonfederal programs, automobile medical, disability, CHAMPUS, Veterans Affairs, and other. Source: “Ambulatory Surgery Encounter Data,” Office of Statewide Health Planning and Development (OSHPD), 2015, www.oshpd.ca.gov. CALIFORNIA HEALTH CARE FOUNDATION 11 Ambulatory Surgery Centers Reported Encounters in Freestanding ASCs, by Category Reported Encounters California, 2016 A variety of procedures are handled at ambulatory surgery centers and are reported to OSHPD. In 2016, surgery for the digestive system Other was the most-reported procedure 30% category in California ASCs, Digestive System making up over one-third of 37% all reported encounters. 3% Female Genital System Musculo- 5% Ocular skeletal Nervous System 15% System 10% Notes: An encounter is a face-to-face contact between an outpatient and a provider who has primary responsibility for assessing and treating the patient, during which at least one ambulatory surgery procedure is performed. Other includes integumentary system surgery, urinary system surgery, respiratory system surgery, anesthesia, radiology, and other procedures. Source: “Ambulatory Surgery Encounter Data,” Office of Statewide Health Planning and Development (OSHPD), 2016, www.oshpd.ca.gov. CALIFORNIA HEALTH CARE FOUNDATION 12 Ambulatory Surgery Centers CMS Quality Indicators for ASCs Quality United States, 2017 CMS operates a pay-for-reporting DESCRIPTION YEAR INITIATED Patient Burn Patients experiencing any burns (including electrosurgical, electrical, chemical, thermal) 2014 quality program that requires ASCs prior to discharge. Patient Fall Patients experiencing a fall within confines of ASC prior to discharge. 2014 to report data on standardized Wrong Site, Wrong Side, Patients experiencing wrong site, side, patient, procedure, or implant in the ASC. Wrong Patient, Wrong Implant 2014 measures in order to receive the Hospital Transfer/Admission Patients requiring hospital transfer or admission upon discharge from ASC. 2014 full annual update to their ASC Prophylactic IV Antibiotic Timing Patients who received IV antibiotic for prevention of surgical site infection on time. 2014 Safe Surgery Checklist ASC uses checklist that includes safe surgery practices during three critical periods: prior to anesthesia 2015 payment rate. The program began administration, prior to skin incision, and from closure of incision to patient leaving OR. in 2014 with five measures and Volume Data on Selected ASCs provide aggregate count of selected surgical procedures in 34 procedure categories, including 2015 ASC Surgical Procedures GI endoscopy procedures, joint arthroscopy, and cataract procedures. has expanded to 12 for the 2018 Flu Vaccine Coverage Among ASCs report vaccination data for employees on payroll, licensed independent practitioners, and 2016 Health Care Personnel students, trainees, and volunteers age 18 and older. payment determinations. Normal Colonoscopy Patients age 50 to 75 receiving a screening colonoscopy without biopsy or polypectomy with 2017 Follow-Up Interval documented recommended follow-up of at least 10 years for repeat colonoscopy. Colonoscopy Interval for Patients 18 and older receiving surveillance colonoscopy with history of prior colonic polyp(s) in 2017 Patients with History of previous colonoscopy findings, who had a follow-up interval of three or more years since their last Colonic Polyps colonoscopy. Cataract Surgery Improvement Patients 18 and older who had cataract surgery and had improvement in visual function achieved 2017 in Visual Function* within 90 days following surgery. Seven-Day Risk-Standardized An estimate of facility-level rate of risk-standardized, all-cause, unplanned hospital visits within seven 2018 Hospital Visit Rate After days of an outpatient colonoscopy among Medicare fee-for-service patients 65 and older. Outpatient Colonoscopy *ASCs had the option to voluntarily submit data for 2017 payment determination. Sources: “ASC Quality Reporting,” Centers for Medicare & Medicaid Services (CMS), last modified December 8, 2016, www.cms.gov; “Ambulatory Surgical Center Quality Reporting Specifications Manual, version 6.0a,” QualityNet, www.qualitynet.org. CALIFORNIA HEALTH CARE FOUNDATION 13 Ambulatory Surgery Centers ASC Quality Performance Quality California vs. United States, 2015 In 2017, CMS started publicly RATE PER 1,000 PATIENTS reporting ASC performance 0.40 í California í United States 0.410 on quality measures. On four measures related to poor patient 0.32 health outcomes, scores were low (indicating higher-quality 0.24 0.247 performance) in California and the US. Other quality measures that 0.16 0.183 0.181 CMS reports include use of safe surgery checklists, facility volume 0.08 0.095 for select ASC procedures, and 0.079 0.011 0.022 flu vaccination coverage among 0.00 Patient Burn Patient Fall Wrong Site, Wrong Side, Hospital Transfer/ Wrong Patient, Wrong Implant Admission health care personnel. Notes: Lower rates indicate higher-quality performance. For details on measure specifications, see page 13. Source: “Ambulatory Surgical Center Quality Reporting Program,” Centers for Medicare & Medicaid Services (CMS), www.medicare.gov. CALIFORNIA HEALTH CARE FOUNDATION 14 Ambulatory Surgery Centers Operating Margin, Freestanding ASCs Financial Analysis California, 2005 to 2016 California ASCs reporting to OSHPD have enjoyed a healthy overall 33.3% 32.4% operating margin in each year 28.0% 28.6% 28.3% 28.1% from 2005 to 2016, with margins 26.0% 26.3% exceeding 20% in all but two years. 22.9% 20.7% 18.6% 17.4% 2005 2006 2007* 2008 2009 2010 2011 2012 2013 2014 2015 2016 N U M B E R O F FA C I L I T I E S 432 409 451 200 84 52 32 32 35 30 34 34 *The September 2007 Capen v. Shewry decision was interpreted to mean that ASCs with physician owners come under the oversight of the Medical Board of California, not the California Department of Public Health, thereby removing any requirement for these ASCs to report data to the Office of Statewide Health Planning and Development (OSHPD). Note: Represents facilities reporting data to OSHPD and operating in current year. Source: “Specialty Care Clinics Annual Utilization Data,” OSHPD, 2005-2016, www.oshpd.ca.gov. CALIFORNIA HEALTH CARE FOUNDATION 15 Ambulatory Surgery Centers Operating Revenues and Expenses, Freestanding ASCs Financial Analysis California, 2005 to 2016 Revenue at ASCs reporting to AVERAGE PER FACILITY (IN MILLIONS) OSHPD exceeded operating 2005 $3.0 $2.4 í Operating Revenue expenses in every year from 2006 $3.3 í Operating Expenses $2.5 2005 to 2016. The data for 2008 2007* $3.9 $3.2 through 2016 are based on a 2008 $4.2 $2.9 much smaller set of reporting 2009 $5.0 $3.4 facilities than previous years. 2010 $7.0 $5.0 2011 $3.7 $3.0 2012 $3.9 $2.9 2013 $4.3 $3.2 2014 $5.3 $3.8 2015 $5.4 $3.9 2016 $6.2 $4.5 0.000000 0.928571 1.857143 2.785714 3.714286 4.642857 5.571429 6.500000 *The September 2007 Capen v. Shewry decision was interpreted to mean that ASCs with physician owners come under the oversight of the Medical Board of California, not the California Department of Public Health, thereby removing any requirement for these ASCs to report data to the Office of Statewide Health Planning and Development (OSHPD). Source: “Specialty Care Clinics Annual Utilization Data,” OSHPD, 2005-2016, www.oshpd.ca.gov. CALIFORNIA HEALTH CARE FOUNDATION 16 Ambulatory Surgery Centers Methodology This report summarizes information about ambulatory surgery centers 2) California Office of Statewide Health Planning and (ASCs) from three sources: Development (OSHPD) specialty clinic annual utilization reports. Data from annual utilization reports filed by freestanding facilities with ABOUT THIS SERIES 1) Medicare provider of service (POS) files. These files contain a surgical clinic license were assessed. OSHPD did not collect data on The California Health Care Almanac is an online information about facilities that are approved to provide services facilities in which the owning physician(s) were the only physician(s) clearinghouse for data and analysis examining to Medicare recipients. Facilities designated as “ambulatory surgery that practiced at the facility. To be included in the analysis for a given the state’s health care system. It focuses on issues centers” (category 15) were selected, and within this group the focus year, facilities had to be in operation for at least part of the year. of quality, affordability, insurance coverage and was on facilities designated as “freestanding,” which generally excludes those associated with hospitals. For each facility, the data include The reports include information about the number of operating rooms, the uninsured, and the financial health of the information about the number of operating rooms, accreditation, unique patients, patient encounters by service type, and surgeries system with the goal of supporting thoughtful geographic location, and whether the facility is for-profit, nonprofit, performed. Also included are revenues, expenses, and other financial planning and effective decisionmaking. Learn or government-owned. indicators. more at www.chcf.org/almanac. The POS files are cumulative and include facilities that have ever been 3) OSHPD ambulatory surgery encounter data. These files contain AU T H O R among the providers of services for Medicare recipients, even if they summaries of information reported to OSHPD about each ASC Laurence Baker, PhD are no longer in operation. The base set of facilities studied were those encounter, including patient demographics (age and sex), expected Professor of Health Research and Policy that appeared in the 2016 POS file, and each facility was included for source of payment, and types of procedures performed. Data on the years between its initial Medicare participation date and 2016 procedures at facilities with a clinic license type indicating freestanding Stanford University School of Medicine (or the date it stopped operating). Data on attributes of facilities that facilities were selected. may vary by year, such as the number of ORs in operation, were drawn The 2007 court decision in Capen v. Shewry significantly affected the from the POS file for the given year. The POS files typically include amount of data available on surgery centers from OSHPD. OSHPD freestanding facilities in which the owning physician(s) are the only reports that this decision essentially held that an ASC that is wholly physician(s) to operate, so the POS data may report more facilities or partially owned by physicians cannot be licensed by the California than the OSHPD data. F O R M O R E I N F O R M AT I O N Department of Public Health. This license was the basis of OSHPD’s While the OSHPD data report more detailed information than the POS authority to collect the data. Therefore, the number of facilities California Health Care Foundation data, the POS data are not affected by the Capen v. Shewry decision, providing data dropped dramatically in subsequent years. OSHPD 1438 Webster Street, Suite 400 and so provide a much more reliable source of information for tracking reports that by 2010 more than 400 facilities had been delicensed. Oakland, CA 94612 trends over time in key variables. The POS files also contain data on 510.238.1040 ASCs throughout the country, allowing for cross-state comparisons. www.chcf.org Sources: “Specialty Care Clinics Annual Utilization Data,” OSHPD, www.oshpd.ca.gov; “Provider of Services Current Files,” Centers for Medicare and Medicaid Services (CMS), www.cms.gov; “2015 Ambulatory Surgery Pivot Profile,” OSHPD, www.oshpd.ca.gov. CALIFORNIA HEALTH CARE FOUNDATION 17 Ambulatory Surgery Centers Appendix: California Counties Included in Regions REGION COUNTIES Central Coast Monterey, San Benito, San Luis Obispo, Santa Barbara, Santa Cruz, Ventura NORTHERN Greater Bay Area Alameda, Contra Costa, Marin, Napa, San Francisco, AND SIERRA San Mateo, Santa Clara, Solano, Sonoma Inland Empire Riverside, San Bernardino Los Angeles County Los Angeles SACRAMENTO Northern and Sierra Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, Glenn, AREA Humboldt, Inyo, Lake, Lassen, Mariposa, Mendocino, Modoc, Mono, Nevada, Plumas, Shasta, Sierra, Siskiyou, Sutter, Tehama, Trinity, Tuolumne, Yuba Orange County Orange Sacramento Area El Dorado, Placer, Sacramento, Yolo GREATER BAY AREA San Diego Area Imperial, San Diego San Joaquin Valley Fresno, Kern, Kings, Madera, Merced, San Joaquin, NORTHERN Stanislaus, Tulare AND SIERRA CENTRAL COAST SAN JOAQUIN VALLEY INLAND EMPIRE LOS ANGELES COUNTY ORANGE COUNTY SAN DIEGO AREA CALIFORNIA HEALTH CARE FOUNDATION 18