Article

Physician Ownership of Ambulatory Surgery Centers and Practice Patterns for Urological Surgery

Department of Urology, Division of Health Services Research, University of Michigan Health System, Ann Arbor, Michigan, USA.
Medical care (Impact Factor: 3.23). 05/2009; 47(4):403-10. DOI: 10.1097/MLR.0b013e31818af92e
Source: PubMed

ABSTRACT

To evaluate the relationship between ownership and use of ambulatory surgical centers (ASCs).
From 1998 through 2002, ambulatory surgical discharges for procedures within the genitourinary system were abstracted from the Florida State Ambulatory Surgery Database. State-wide utilization rates for ambulatory surgery were calculated by physician-level ownership (using an empirically-derived, externally-validated method) and financial incentives. A surgeon-level Poisson regression model was fit to compare the rates of surgery by year, ownership, and their interaction.
Rates of ambulatory surgery increased from 607 per 100,000 in 1998 to 702 per 100,000 in 2002 (P < 0.01 for trend). Although rates at the hospital increased only slightly (0.9%), those at the ASC were up by 53% (P < 0.01). Physician ownership was associated with this greater utilization as new owners increased their use from 9 per 100,000 to 94 per 100,000 (P < 0.01) in the first full year as owners. In the first year of ownership, the proportion of a new owner's surgeries comprising of financially lucrative procedures increased to 61% compared with 50% in the year preceding ownership (P < 0.01).
Physician ownership is associated with the increasing use of ASCs, although the extent to which this is attributable to previously unmet demand is unclear. However, new owners seem to alter their procedure mix after establishing ownership to include a greater share of financially lucrative procedures.

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Available from: Stephanie Daignault, Sep 11, 2014
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    • "In addition to these factors, ASCs also benefit from physician ownership . Approximately 83% of surgery centers are wholly or partly owned by physicians in comparison with only a very limited number of hospitals (Gabel et al., 2008; Lynk & Longley, 2002; Mitchell, 2007; Strope et al., 2009). Therefore , whereas new organizational forms might lack legitimacy and have a taken-for-granted status at the early periods of the forms emergence (Hannan & Freeman, 1989), physician involvement in ASCs, along with government pressures to increase outpatient delivery of care, might have helped potential investors, regulators, and even customers to support ASCs. "
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    ABSTRACT: General hospitals are consistently under pressure to control cost and improve quality. In addition to mounting payers' demands, hospitals operate under evolving market conditions that might threaten their survival. While hospitals traditionally were concerned mainly with competition from other hospitals, today's reimbursement schemes and entrepreneurial activities encouraged the proliferation of outpatient facilities such as ambulatory surgery centers (ASCs) that can jeopardize hospitals' survival. The purpose of this article was to examine the relationship between ASCs and general hospitals. More specifically, we apply the niche overlap theory to study the impact that competition between ASCs and general hospitals has on the survival chances of both of these organizational populations. Our analysis examined interpopulation competition in models of organizational mortality and market demand. We utilized Cox proportional hazard models to evaluate the impact of competition from each on ASC and hospital exit while controlling for market factors. We relied on two data sets collected and developed by Florida's Agency for Health Care Administration: outpatient facility licensure data and inpatient and outpatient surgical procedure data. Although ASCs do tend to exit markets in which there are high levels of ASC competition, we found no evidence to suggest that ASC exit rates are affected by hospital density. On the other hand, hospitals not only tend to exit markets with high levels of hospital competition but also experience high exit rates in markets with high ASC density. The implications from our study differ for ASCs and hospitals. When making decisions about market entry, ASCs should choose their markets according to the following: demand for outpatient surgery, number of physicians who would practice in the surgery center, and the number of surgery centers that already exist in the market. Hospitals, on the other hand, should account for competition from ASCs while making market-entry decisions and while developing their strategic plans.
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    • "Thus, physicians are ultimately the critical resource within this market. Surgery centers possess a competitive advantage when competing with hospitals for physician referrals because 83% of surgery centers are wholly-or partly-owned by physicians (Gabel et al., 2008; Lynk & Longley, 2002; Mitchell, 2007; Strope et al., 2009). Surgeons also report that surgery centers are considerably more sympathetic to their scheduling needs than general hospitals (Verispan, 2006). "
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    ABSTRACT: The literature on organizational niche suggests that competition between firms that have overlapping niches tends to elevate mortality risks. However, the vast majority of this research considers only competition between firms with a similar organizational form. Ambulatory surgery centers (ASCs) represent an emergent class of specialized organizational forms that are leaner versions of generalist forms. We apply niche overlap theory to the market for outpatient surgical procedures in order to explore whether ASCs and hospital compete with one another in fundamentally different ways. By manipulating patient-level datasets from the state of Florida, we were able to measure competition and firm entry/exit with a high level of precision. We broke down our explanatory variables by facility type (ASC vs. hospital) and utilized Cox proportional hazard models to evaluate the impact of competition from each on ASC and hospital exit. Although ASCs do tend to exit markets in which there are high levels of ASC competition, we found weak evidence to suggest that ASCs exit rates are lowest in markets with high hospital density. On the other hand, hospitals not only tend to exit markets with high levels of hospital competition but also experience high exit rates in markets with high ASC density. Our results suggest that specialized organizational forms representing "focused factories" are unaffected by generalist forms while generalists are hurt by the presence of competing specialists.
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    ABSTRACT: The literature on organizational niche suggests that competition between firms that have overlapping niches tends to elevate exit risks. Thus, firms tend to enter markets that are relatively uncrowded in order to minimize direct competition with other firms. Although this research has focused on organizational "micro-niches," it has not been applied to organizational populations occupying different "macro-niches" and possessing different organizational forms. We apply niche overlap theory to the market for outpatient surgical procedures in order to compare the entry and exit patterns of firms in a mature population of general hospitals to those of firms within a growing population of ambulatory surgery centers (ASCs). By manipulating patient-level datasets from the state of Florida, we were able to measure competition, market demand, and firm entry/exit with a high level of precision. We broke down our explanatory variables by facility type (ASC vs. hospital), and utilized Cox proportional hazard and negative binomial models to evaluate the impact of niche density on market entry/exit among ASCs and hospitals.Although hospitals tend to exit markets with high levels of ASC density, ASCs appear to be unaffected by the presence of nearby hospitals. This finding confirms the presence of asymmetric competition between these two organizational forms since specialized organizational forms representing "focused factories" are unaffected by generalist forms while generalists are hurt by the presence of competing specialists. We also find that hospitals display low entry rates in markets with overlapping ASCs while ASCs display high entry rates in markets with overlapping ASCs. These results are consistent with the notion that firms in growing populations tend to seek out crowded markets as they compete to occupy the most desirable market segments while firms in mature populations avoid direct competition as they compete on the basis of efficiency. Taken together, our results extend niche overlap theory to settings in which two different organizational forms compete and demonstrate that several key predictions are actually reversed in the case of these industries.
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