Value Proposition: Adding a Convalescent Care Center to Your ASC

If your ASC operates in a state that allows convalescent care centers, there are numerous benefits of adding one to your existing continuum of care.  We outline some of those benefits in this value proposition.  

Convalescent Center Value Proposition

In some states, an ASC may maintain a separately licensed convalescent care center as part of its service offering.  This separate licensure provides an ASC with the opportunity to keep most commercial patients beyond the standard 23-hour stay of a regularly licensed ASC.  The extended stay is granted for observation and pain control for more extensive outpatient procedures.  

The ASC is generally directly compensated for the additional recovery time in the convalescent center.  Compensation occurs in a variety of ways including hourly rates, per day rates, or increased consideration in global or bundled fee arrangements.  In addition, the ASC may be indirectly compensated by securing greater reimbursement from commercial payers on lower acuity cases.  This is because payors recognize cost savings occur when higher acuity cases safely move from a hospital to an ASC with extended stay capability.  

The primary advantage for an ASC with a licensed convalescent center is the potential to provide services to higher acuity surgical patients.  Orthopaedics and neurosurgery specialties benefit most from this advantage, specifically in total joint replacement and spinal surgery.

The types of orthopaedic cases requiring extended stay that are well-suited for an ASC connected to a convalescent care center are: 

• Patella femoral arthroplasty
• Total hip arthroplasty
• Total knee arthroplasty
• Total shoulder arthroplasty
• Total ankle arthroplasty

These cases traditionally restricted both physicians and patients to an inpatient setting.  Although moving them to an outpatient setting represents significant savings for insurance carriers and patients alike, these higher acuity cases can provide a net revenue per case increase of 300-400% over traditional ASC orthopaedic cases.

Other types of extended stay cases well-suited for this arrangement are orthopaedic-spine and neuro-spine.  Specifically, the following:

• Single and multi-level anterior and/or posterior cervical and lumbar fusions
• Cervical and lumbar disc arthroplasty

Again, these spine cases may have traditionally restricted physicians and patients to inpatient settings.   Cost-savings for both insurance carriers and patients also occur when these cases move to ASCs with separately licensed convalescent centers.  The result for ASCs can be a net revenue per case increase of 600-700% over traditional orthopaedic cases and 250% above traditional spine cases.

Another advantage of these separately licensed facilities over inpatient hospitals and orthopaedic specialty hospitals occurs in payor contracting.  The value proposition for commercial payors, workers’ compensation, auto insurers, and the general public is significant.  A contracting advantage for surgeons in terms of future health care reimbursement may also be realized.  Future reimbursement will likely include, but not be limited to:  bundled payments, pay-for-performance, at risk contracting, clinically integrated networks, consumer-driven care, and price transparency.

Finally, having the capacity to accommodate higher acuity and higher paying surgical cases enhances surgeon and partner recruitment. With the saturation of “commodity” ASCs, an ASC with an adjoining convalescent care center offers the benefits of a mini-hospital. This is attractive to surgeons who may not otherwise be interested in using your facility, much less investing in it. 

What Value Does a Convalescent Center Represent for You?

Investigating convalescent care center licensure requirements in your state is a worthwhile endeavor if your facility is interested in performing higher acuity cases.  If your state allows these types of centers, conduct a thorough cost-benefit analysis to determine the feasibility of establishing one in conjunction with your ASC. 

If your state does not currently afford ASCs the opportunity to establish an adjoining convalescent center, consider these benefits, network with other facilities, then work together to rally legislative support for them in your locale.

Pinnacle III Leadership Team