OR Manager Conference session: Converting HOPDs to ASCs—What do hospitals need to know?

Editor's Note

This session on converting hospital outpatient departments (HOPDs) into ambulatory surgery centers (ASCs), presented at the recently concluded OR Manager Conference, saw Joan Dentler, MBA, founder of Avanza Healthcare Strategies, share practical insights for healthcare leaders contemplating this transition. Dentler began by highlighting the history of ASCs, which started in the 1960s and grew significantly in the 1980s. Many hospitals initially built HOPDs instead of ASCs to avoid the lower reimbursement rates associated with ASCs, she explained.

Today, however, hospitals are increasingly looking to convert HOPDs to ASCs to meet growing patient and payer demand for lower-cost, outpatient procedures. “Every hospital health system in the country really needs to have access to at least one ASC in its portfolio to stay competitive,” Dentler said, pointing out that COVID-19 accelerated this trend as patients and providers sought facilities that separated routine outpatient procedures from acute hospital settings.

One of Dentler’s key messages was the need to consider both the financial and operational implications of an HOPD-to-ASC conversion. Since ASCs are reimbursed at about half the rate of HOPDs, healthcare leaders must assess whether an ASC can still operate profitably at these lower rates. “The culture and operations of ASCs are different,” she noted. “ASCs are leaner, operate with fewer staff, and can adjust their processes more quickly compared to hospitals.” Additionally, she stressed the importance of involving physicians early in the planning process. Physicians not only drive case volume but are also more likely to support the transition if they understand the rationale and can contribute insights.

Dentler provided a list of practical steps for leaders considering the conversion:

• First, form a steering committee to discuss the feasibility of conversion, including representatives from both hospital administration and the physician community.
• Assess the building's ability to meet ASC life-safety guidelines, which differ from those for hospitals. "We've seen groups go down the road of promising an ASC to their surgeons, only to find out the building can’t be converted to meet ASC standards,” she said, advising that an ASC life-safety expert should conduct a walkthrough before proceeding.
• Carefully calculate financial projections to determine whether an ASC can sustain operations on a reduced budget. She cautioned against assuming that converting an HOPD to an ASC is a quick or inexpensive process.

Another important topic was the need for ASC-specific staffing and supply chain models. Unlike hospitals, ASCs often cross-train staff to perform multiple roles, which requires fewer employees but also necessitates a different approach to hiring and training. Dentler explained that hospitals converting an HOPD to an ASC should plan for streamlined staffing and reduced equipment, including opting for technology suited to ASCs, not larger, costlier hospital systems. For example, ASCs typically don’t require the level of IT support that hospitals do, and some rely on external providers for services like HR and housekeeping.

She concluded with insights on regulatory requirements and best practices, emphasizing the conversion involves all the regulatory steps of opening a new ASC, including surveys and certifications. She also recommended that HOPDs converting to ASCs adopt LEAN management strategies. “Outsourcing certain services can significantly reduce costs, especially in areas where the hospital’s own services may not be competitive,” Dentler said, adding that leaders should ensure that internal stakeholders, particularly physician office staff who handle scheduling, understand the operational and cultural shifts involved in an HOPD-to-ASC transition.