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How doctor-owned outpatient medical centers differ from hospitals

September 12, 2014 at 6:25 PM EDT
Outpatient medical centers perform 23 million surgeries in the U.S. per year. The death of comedian Joan River from complications after surgery has prompted investigation of how these clinics operate. Hari Sreenivasan talks to Shannon Pettypiece of Bloomberg News about how these clinics differ from hospitals and what’s driving their rising popularity.

JUDY WOODRUFF: Now: the rising use of outpatient medical centers for surgeries and other procedures.

It’s a corner of the American health care market that rarely gets public attention. But after the death of comedian Joan Rivers, who suffered from complications at one facility in Manhattan, there are larger questions being asked about those centers, as their numbers are growing. There are more than 5,000 of them performing a total of 23 million surgeries a year.

Hari Sreenivasan fills in the picture from our New York studios.

HARI SREENIVASAN: Joan Rivers first went to the Yorkville Endoscopy Center on August 28. But she suffered complications and was rushed by ambulance to Mount Sinai Hospital that day. She never regained consciousness and died September 4. It is still not clear what went wrong or what procedure she was undergoing.

There are no allegations of wrongdoing. But the facility is the subject of a state investigation. It also announced the departure today of its medical director. And there are questions being asked about similar facilities.

Shannon Pettypiece is covering this for Bloomberg News. She joins me now.

So, what exactly is the type of facility that Ms. Rivers was at?

SHANNON PETTYPIECE, Bloomberg News: It’s actually very common.

There’s more than 5,000 of these — they’re called ambulatory surgery centers. They’re basically a freestanding surgery facility for outpatients only. And they’re typically owned by the doctors, rather than a hospital.

Some of them are small, like the one that Ms. Rivers was at, with just a few doctors that focuses on one or two types of procedures like endoscopy or colonoscopy, but some of them are quite big and do a whole range of outpatient procedures, shoulder surgeries, cataracts, eye surgeries, plastic surgery. Some of them even almost look like an actual hospital.

And so it can be kind of tricky for patients to tell the difference between what is a hospital, what is an outpatient surgery center. But, essentially, these facilities don’t have an emergency room. They don’t have an ICU. And, like I said, they are owned by the doctors who are performing the procedures there, rather than a nonprofit or a large corporation.

HARI SREENIVASAN: So, why are they increasing in number?  What’s creating the market for them to exist?

SHANNON PETTYPIECE: Well, there’s two things.

One, more and more procedures are being done outpatient because of improvements in technology. You don’t have to spend the night in the hospital for one or two days. The second is that they’re cheaper. They cost about half as much as having a procedure done in a hospital because they don’t carry that huge hospital overhead, like the emergency room or the charity care that a hospital has to provide.

So they save insurance a lot of money. And with people having these $5,000 deductibles and co-pays now, they can save individuals a lot if it’s $1,000 at the outpatient surgery center vs. $2,000 at a hospital.

HARI SREENIVASAN: So, the insurance companies would actually pay less. The patients might pay less out of the deductible.

When we think about money, is there a different kind of conflict of interests, if the doctor tells you to go to one of their facilities where they have a stake in it vs. go to a hospital, where they make money a little differently?


Well, the doctor is going to make more money if he sends you to a facility that he owns, rather than going to a hospital, where he’s basically just paid for his labor. So, there has been a concern and some studies that have shown that doctors who have an ownership stake in one of these facilities refer more patients, do more of a certain type of procedure.

Why that is, is kind of hard to tell. Some people have said it’s because they think the doctors have a financial stake. It could also just be because it’s more convenient to do these procedures now. They can schedule them easily, more quickly. But that’s one of the main concerns that has been raised about these facilities.

HARI SREENIVASAN: So, are there concerns about the health outcomes?  If you don’t have an emergency room on the premises and if something goes wrong, like in Mrs. Rivers’ case or in otherwise, what happens?

SHANNON PETTYPIECE: Well, there’s no data that shows that, for the general population, an outpatient surgery center is any more risky than having it done at a hospital.

But for that one-in-a-million case where something does go wrong, there’s not an emergency room, so there has to be a backup plan. Usually, that backup plan is just calling 911, which was the case with Joan Rivers. And then you have to be rushed to a hospital where there is an emergency room.

So one of the big questions is, what type of emergency equipment do they have on hand and how far are they from an emergency room facility if it is one of those rare cases where something happens?

HARI SREENIVASAN: So what kind of questions should a consumer be thinking about when they might go in for one of these procedures?

SHANNON PETTYPIECE: Well, first, there’s the stuff you should always ask before you go in for a procedure, the surgeon’s history, how many procedures they have done, what their safety record is like, is the facility accredited and certified.

There is an accreditation process for these facilities. But the other thing to ask specifically for an outpatient center would be, what’s the backup plan if something does goes wrong? How close am I to a hospital if I do need to get to the emergency room?  And you might want to ask if the doctor has some sort of ownership stake in it, and then question, is this procedure really necessary, or is it possible the doctor is suggesting this because he does have a financial motive?

HARI SREENIVASAN: And, obviously, this particular tragedy kind of put this into light. But has this been a debate or a struggle in the health care community over the past few years now?


As these outpatient facilities have become more prevalent — there has been a 28 increase in the number of them over the past decade. There has been a lot of studies, a lot of research. Groups — physicians groups have raised concern about them. Anesthesiology groups have raised concern.

So this is not necessarily something new in the medical debate just because of this event, though it’s getting a lot of attention.

HARI SREENIVASAN: All right, Shannon Pettypiece of Bloomberg News, thanks so much.