NEW JERSEY AMBULATORY SURGERY CENTERS

NEW JERSEY
AMBULATORY SURGERY CENTERS
Where Patient Safety
Is the Number One Priority
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NEW JERSEY ASSOCIATION OF AMBULATORY SURGERY CENTERS
WELCOME LETTER
It has been thirty years since New Jersey’s first freestanding surgery center
opened its doors in Roseland. Paralleling the national experience, surgery
centers have proliferated to the extent they are a key component in our State’s
health care delivery system. This evolution is clearly a concomitant response to
ongoing technological treatment advances and a societal acknowledgement
of the virtues of receiving surgical care in the outpatient setting.
Sponsored and authored by the New Jersey Association for Ambulatory
Surgery Centers, this report is intended to summarize the key elements and
forces driving the explosive growth. Moreover, the report is aimed at stressing
and reaffirming the industry’s core values and priorities (i.e. the State’s laudable
reputation for patient safety, patient and physician satisfaction, operational
economies and financial cost-benefits).
Equally important is that the report synthesizes and epitomizes the NJAASC’S
mission; namely, to fervently uphold the best interests of its member
institutions while serving as a fulcrum to inspire efforts to achieve patient
outcomes surpassing industry standards and expectations.
Last but not least, the report identifies the substantial economic impact of
New Jersey’s ambulatory surgery centers. Hopefully the reader will emerge
with a new found and broader appreciation of ambulatory surgery centers
and recognize their continued place as a vital provider of patient care services.
It is our hope that the primacy of surgery centers will be upheld such that
they continue to represent a desirable alternative to other more traditional,
impersonal and costly modalities.
As always, the NJAASC’s Board of Directors and Member facilities welcomes
your feedback consistent with its perpetual endeavor to convey its positive
message and preserve its exemplary reputation.
Larry Trenk
President, NJAASC Board of Directors
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WHO WE ARE
An ambulatory surgery center (ASC) is a health care facility that specializes
in providing surgery and diagnostic services in an outpatient setting.
Procedures commonly performed in ASCs include:
■
gastroenterology
■
gynecology
■
orthopedic
■
ophthalmology
■
otolaryngology
■
pain management
■
plastic surgery
■
podiatry
■
urology
An ambulatory surgery
center (ASC) is a health
care facility that specializes
in providing surgery and
diagnostic services in an
outpatient setting.
The first ASC was established in 1970 in Phoenix, Arizona by two physicians
who wanted to provide safe, timely, convenient and comfortable surgical
services to patients in their community, avoiding more impersonal venues like
regular inpatient hospitals.1 Today, there are thousands of ASCs across the
United States, with approximately 230 in New Jersey alone, and nationwide
these facilities perform roughly 20 million surgeries each year, while
continuing the tradition of prioritizing patient safety, while providing high
quality health care services at lower costs to the patients they serve.
About NJAASC
The New Jersey Association of Ambulatory Surgery Centers (NJAASC)
is an incorporated non-profit organization which was founded in 1992.
Our mission is to promote and advance the efforts of New Jersey’s
ambulatory surgery centers in the delivery of optimum patient care
in a cost-effective manner.
1
The Arizona Ambulatory Surgery Center Association, www.arizonaasc.org
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ASCs that want to demonstrate
a commitment to quality, seeking
oversight and accreditation from:
New Jersey Department of
Health and Senior Services
N.J.A.C. Title 8, Chapter 43A
Department of Health &
Senior Services
Centers for Medicare &
Medicaid Services
The Joint Commission (TJC)
Accreditation Association for
Ambulatory Health Care (AAAHC)
American Association for
Accreditation of Ambulatory
Surgery Facilities (AAAASF)
OVERSIGHT
ASCs must maintain high levels of patient safety and quality care because
they are some of the most strictly regulated providers of health care in the
country. Medicare has certified approximately 85% of ASCs nationwide,
and 43 states require ASCs to be licensed, including New Jersey.2 In
order to become licensed in a particular state, ASCs must satisfy very
specific criteria regarding patient safety mechanisms, infection prevention,
staff qualifications, facility policies and procedures, and physical plant
requirements, including Life Safety Code compliance. Both states and
Medicare survey ASCs regularly to verify that each facility is in compliance
with the established standards.
In addition to state and federal inspections, many facilities choose to obtain
voluntary accreditation through a process conducted by their peers. ASCs
that want to demonstrate a commitment to quality can seek accreditation
from one of four accrediting bodies: the Joint Commission, Accreditation
Association for Ambulatory Health Care (AAAHC), the American Osteopathic
Association (AOA), or the American Association for Accreditation of
Ambulatory Surgery Facilities (AAAASF).3 Each of these associations has its
own set of standards for accreditation, and each is recognized by Medicare
for their rigorous adherence to the highest standards of quality care.
Accredited ASCs are also subject to on-site surveys on a regular basis.
In New Jersey alone, there are approximately 200 ASCs that have been
accredited by AAAHC.4 Also, New Jersey law mandates that one-room
surgery practices obtain accreditation in order to ensure that these practices,
like multi-room ASCs are held to the highest standards for providing safe,
quality medical care.5 As a result, patients visiting accredited ASCs can
be assured that these centers provide the highest levels of surgery and
diagnostic services.
NEW JERSEY’S ASCs
New Jersey has approximately
230 Ambulatory Surgery
Centers providing safe, timely,
convenient and comfortable
surgical services to patients
in their community,
1
2
3
4
5
2
The Arizona Ambulatory Surgery Center Association, www.arizonaasc.org
New Jersey is one of these states. See N.J.S.A. 45:9-22.4; N.J.A.C. 8:43A-1.1, et seq.
Ambulatory Surgery Center Association; www.ascassociation.org/
www.aaahc.org
N.J.S.A. 25:2H-12
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SAFETY
Patient safety is the top priority of the ASC industry. As a result, ASCs
are successful at maintaining very low infection rates. The results of the
Outcomes Monitoring Project organized by the national ASC Association
showed that more than half of the ASCs participating in the project have
infection rates of zero.6 Another study conducted by AAAASF in 2004, which
studied over 400,000 outpatient surgical procedures performed at AAAASF
accredited facilities nationwide, showed that the infection rate was 0.09%
or one infection for every 1,061 procedures. Any infection that did occur
responded successfully to conservative wound care and/or antibiotics, and
was cured quickly as a result.
More than half of ASCs
reporting have infection
rates less than zero per
results from the national
ASC Association’s Outcomes
Monitoring Project.
The ASC Quality Collaboration collected data from more than 1,000 ASCs,
representing every state except Vermont and West Virginia, regarding patient
admissions for the third quarter of 2010. The data showed, per 1,000
patient admissions, that:
■
the patient fall rate in participating ASCs is 0.167
■
the rate of patient burns is 0.033
■
the rate of hospital transfers/admissions is 1.183
■
the rate of wrong site, side, patient, procedure, implant events is 0.0247
The rate of wrong site, side, patient, procedure, implant events has been on
a steady decline since the first quarter of 2009 and all other rates declined
from the second quarter in 2010. Another study showed that ASC patients
are less likely than hospital patients to require unscheduled follow-up care
at an emergency department or hospital within one week of surgery.8 These
statistics further demonstrate that patient safety is the primary concern for
ASCs, and as a result patients receive the highest quality care with minimal
complications and/or errors.
6
7
8
3rd Quarter 2008 ASC Association Outcomes Monitoring Project
ASC Quality Collaboration Quality Report 3rd Quarter 2010. Available at: www.ascquality.org/qualityreport.cfm.
Fleisher LA, Pasternak LR, Herbert R, Anderson GF. Inpatient hospital admission and death after outpatient surgery
in elderly patients; importance of patient and system characteristics and location of care. Arch Surg. 2004 Jan.;
139(1):67-72.
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PATIENT SATISFACTION
Patient satisfaction is another hallmark of the ASC industry. The U.S.
Department of Health and Human Services Office of the Inspector General
(the OIG) surveyed more than 1,000 Medicare beneficiaries who had a
procedure performed at ASC.9 Results showed that 98% of the people were
satisfied with their experience at the ASC. Some respondents to the survey
volunteered reasons why they preferred the ASC setting such as:
98% of Medicare patients
who had a procedure
performed at an ASC
were satisfied with their
experience according to a
survey conducted by the OIG.
“I by far prefer the ASC setting…because of less paperwork,
less cost, a more convenient location and easier parking.”
“I much prefer the ASC: no wait, very pretty, more organized,
friendlier staff, transportation and good food.”
“Cast my vote for the single-day surgery centers—they are much
better than hospitals. The food is better, they are twice as fast
and they didn’t charge for a million things you didn’t even know
you got. I’d like to stay as far away from the hospital as possible.”
“I liked the individualized attention at the ASC.
ASCs are much better than hospitals.” 10
The OIG survey also found that 90% of the respondents reported they
had no postoperative complications regardless of the type of procedure
performed at the ASC. Further, 92% were able to go home immediately
following surgery. Those who did not go home were able to stay at a hotel
or in the home of a relative, friend or neighbor. 97% of the respondents
reported that they were given very clear instructions about their post
operative care, and such care was not a burden for the patient him or
herself or anyone who cared for the patient post-surgery.
A 2008 Press Ganey survey showed that patient satisfaction is high for
ASC patients across all age groups, including the youngest patients who
are 17 years of age or less, and the oldest patients, who are more than 80
years old.11 This study also demonstrated that residents of New York, New
Jersey, and Pennsylvania have a 91% patient satisfaction rate for procedures
performed at ASCs. Further, the ASC Association’s Outcomes Monitoring
Project showed that 75% of ASCs started more than 95% of their cases on
time, leading to increased patient satisfaction. It is clear that patients prefer
ASCs because ASCs offer safe, quality care at more convenient locations
with shorter wait times and easier scheduling. In addition, ASCs provide
patients with clear instructions for care post-surgery leading to minimal
complications, if any, after the surgical procedure.
Procedures included cataract surgery, upper gastrointestinal endoscopy, colonoscopy and bunionectomy.
Department of Health and Human Services Office of Inspector General, Patient Satisfaction with Outpatient
Surgery: A National Survey of Medicare Beneficiaries, December 1989; Available at: oig.hhs.gov/oei/reports/
oei-09-88-01002.pdf
11
Press Ganey, Inc., Satisfaction Monitor, May/June 2008.
9
10
4
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ACSs provide more efficient
medical care:
•
20% less time spent in the
operating room at ASCs
•
faster turnaround time
•
easier to schedule and
perform surgeries at ASCs
EFFICIENCY
In addition to offering a high level of patient safety and medical care, ASCs
allow surgeons to perform cases more efficiently. One study comparing spine
procedures performed at hospitals and ASCs indicated that there is 20% less
time spent in the operating room at the ASC. The turnaround time between
procedures is also significantly less at an ASC than at a hospital. One spine
surgeon found that the turnaround time between procedures at his ASC
is 12 minutes, compared to a turnaround time of 1 hour and twenty 20
minutes at the local hospital.12 This substantial decrease in turnaround time
is attributable to the specialized nature of ASC operating rooms, which is
especially true for single-specialty ASCs. For example, an ASC that performs
only spine procedures has operating rooms designed specifically for such
procedures, and equipment and supplies for the procedures are set up by the
same clinical staff who often works together on a daily basis.13 This makes it
much easier to schedule and perform surgeries in an ASC, which translates
into improved efficiency and cost effectiveness. By way of example, spine
surgeries performed at an ASC can be performed at a 60% cost savings
as compared to a hospital. Most of this savings is a result of reduced time
associated with the procedure.
12
13
Lindsey Dunn, Providing Quality Spine Care at a Reduced Cost: The Impact of ASC Based Spine Surgery, Becker
ASC, August 12, 2009. Available at: www.beckersorthopedicandspine.com/news-analysis/170-providing-qualityspine-care-at-a-reduced-cost-the-impact-of-asc-based-spine-surgery#
Ambulatory Surgical Centers Position Statement, American Academy of Orthopaedic Surgeons, December 2010.
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THE FUTURE OF ASCS
In 1982, Medicare first agreed to pay for surgeries performed in ASCs.
Since that time, the Medicare program has saved a significant amount of
money as more and more procedures are performed in outpatient settings.
Importantly, ASCs account for less than 1% of Medicare spending, while
inpatient hospital procedures account for a much larger portion of Medicare
dollars.14 When the Office of Inspector General issued its final rule regarding
safe harbor provisions in 1999, it commented that ASCs can significantly
reduce costs for Federal health care programs, while simultaneously
benefiting patients.15 The OIG also commented that the ASC serves a bona
fide business purpose, minimizing the risk of healthcare fraud and improper
payments for referrals. CMS continues to promote the use of ASCs as costeffective alternatives to higher cost settings, where the risk for improper
payments may be greater, such as hospital inpatient surgery. Currently, more
than 2,400 ASC procedures have been approved for Medicare coverage.
ASCs are a critical part of
the surgical care continuum
in New Jersey and they
provide important services
for New Jersey’s residents.
ASCs can significantly
reduce costs for Federal
health care programs,
while simultaneously
benefiting patients.
ASCs are a critical part of the surgical care continuum in New Jersey and
they provide important services for New Jersey’s residents. For example,
71% of cataract surgeries for New Jersey residents were performed in ASCs
in New Jersey.16 Over one third of arthroscopic shoulder surgeries for
New Jersey Medicare beneficiaries were performed in ASCs. 64% of lesion
removal colonoscopies in New Jersey occur in ASCs. ASCs also provide
crucial surgical services to residents of communities in need of medical care.
66% of colonoscopies for residents of Newark, New Jersey were performed
in ASCs and 81% of arthroscopic knee surgeries for residents of Trenton,
New Jersey were performed in ASCs. Because ASCs are typically located
in close proximity to patients’ homes, residents of these communities are
receiving quality and cost effective health care services. Without ASCs in
these communities, residents’ medical conditions may go untreated.
The number of ASCs continues to grow in New Jersey and throughout
the United States. Growth continues despite the rigorous licensure and
accreditation processes ASCs must endure prior to and throughout their
operation. However, these stringent requirements ensure that ASCs
continuously provide the highest levels of care to their patients. As a result,
patient safety and patient satisfaction levels are high and patients return to
ASCs each time an outpatient surgical procedure is needed. In addition to
the safety and high quality of care, patients appreciate the expediency of an
ASC due to its close proximity to the patient’s home, short waiting times,
efficient procedure times, and minimal complications post-surgery. The ASC
is perhaps the most effective means of health care delivery, and as medicine
and technology continue to advance, ASCs will continue evolve in their
delivery of high quality health care services.
14
15
16
6
MedPAC Report to Congress, Medicare Payment Policy March 2010, p. 105.
64 FR 63536
Advancing Surgical Care; New Jersey ASC Fact Sheet; available at: www.horizon-bcbsnj.com/SiteGen/Uploads/
Public/horizon_bcbsnj/pdf/2466-SECert.pdf
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NJAASC
ECONOMIC IMPACT
ANALYSIS
The New Jersey Association of
Ambulatory Surgery Centers
conducted a study in 2010 to
measure the net economic
impact of ambulatory surgery
centers (ASCs) on New Jersey’s
economy. The financial data for
the analysis was from 2009.
New Jersey’s ASCs contributed
a total economic impact of
$2.6 billion.
Ambulatory Surgery Centers
in New Jersey are a vital
importance to the state’s
economy.
The Economic Impact of
Ambulatory Surgery Centers
in New Jersey
Introduction
AMBULATORY SURGERY CENTERS (ASCs) HAVE BECOME A VERY
IMPORTANT PART OF THE U.S. HEALTH CARE SYSTEM. Nationally, there
are more than 5,300 freestanding ASCs, and the number continues to grow
at approximately 3% per year.1 An estimated 57.1 million surgical and nonsurgical procedures were performed during 34.7 million ambulatory surgery
visits in 2006. Of the 34.7 million visits, 19.9 million occurred in hospitals and
14.9 million occurred in freestanding ASCs.2 The rate of visits to ASCs increased
three-fold from 1996 to 2006, whereas the rate of visits to hospital-based
surgery centers has remained essentially unchanged during that time period.3
Frequently performed ambulatory procedures include endoscopy of large
intestine (5.8 million), endoscopy of small intestine (3.5 million), extraction of
lens (3.1 million), injection of agent into spinal canal (2.7 million), and insertion
of prosthetic lens (2.6 million). The leading diagnoses at ambulatory surgery
visits included cataract (3.0 million); benign neoplasms (2.0 million), malignant
neoplasms (1.2 million), diseases of the esophagus (1.1 million), and diverticula
of the intestine (1.1 million).
Ambulatory surgery centers in general provide high-quality medical care at
lower costs than their hospital counterparts. For example, in one of the earlier
studies of ambulatory surgery quality, Warner et al. (1993)4 studied 38,598
patients undergoing 45,090 ambulatory procedures and were “surprised by
the low incidence of overall major morbidity and mortality in [the study] patient
population” and that morbidity rates in the ambulatory setting “occurred less
often than we would have expected in [the study] patient population” (p.1140).
Similarly, Fleisher et al. (2004) examined patients undergoing 16 different
surgical procedures using a nationally representative sample of Medicare
beneficiaries. They found that surgery at various outpatient settings in the
high-risk elderly population was associated with similar rates of inpatient
hospital admission and death, though mortality rates were lowest in ASCs.5
Seven-day mortality rates were 25 per 100,000 outpatient procedures at ASCs,
compared to 50 per 100,000 in hospital outpatient departments. In addition
to the well-documented quality advantages, ASCs are economical surgical
settings;6 according to a large number of ASC studies, even when differences
in patient acuity is taken into account, ASCs can perform the same procedures
at lower cost than their community hospital counterparts.
1
2
3
4
5
6
Trendwatch Chartbook, American Hospital Association, 2008. Also see Cullen, Hall, and Golosinskiy (2009)
Cullen, Hall, and Golosinskiy (2009) The estimates are based on data collected through the 2006 National Survey
of Ambulatory Surgery by the Centers for Disease Control and Prevention’s National Center for Health Statistics
(NCHS). The survey was conducted from 1994-1996 and again in 2006. Diagnoses and procedures presented
are coded using the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM).
Cullen, Hall, and Golosinskiy (2009)
Warner, Shields, and Chute (1993)
Fleisher et al. (2004)
Freestanding ambulatory surgery centers cost less to run than in-hospital ORs (1999); Balicki, Kelly, and Miller
(1995); Castells et al. (2000); Healy, Cromwell, and Thomas (2007); Jacobs and Morrison (2008); Joshi (2008);
Marcinko and Hetico (1996)
NJAASC Economic Impact Analysis
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New Jersey’s ASCs employ
more than 6,000 “full-time
equivalent” workers.
The costs of medical care are driven in large part by technology and labor.
Medical care is a “high touch” service, which means that it is very laborintensive. Medical care is also a “high tech” service, meaning that in order to
deliver high-quality care to their patients providers make use of many valuable
technological advances in medicine. Both of these “inputs” in the medical
care delivery process are costly, which means that the typical health care facility
spends a lot of money in order to continue providing high-quality medical
care. The vast majority of these expenditures end up staying within the state in
which the facility is located. This is particularly true for ASCs, where labor costs
take up a proportionally larger share of total operating expenses due to lower
facility overhead (compared to larger general hospitals).
In this study, we calculate the statewide economic impact of the ASCs in
New Jersey, using a variety of data sources and the application of economic
multipliers. In sum, we find that ambulatory surgery centers add considerable
value to the New Jersey economy, with a 2009 total statewide economic
impact of $2.6 billion, including more than $60.3 million in tax payments
and the employment of about 6,017 full-time equivalent workers.
Methods
To obtain a measure of the total impact that a policy might have on an
economy, several components of that total impact need to be measured. The
first component is the “direct” effect. This is the initial effect that a business or
policy has on an economy. In this case, the direct effect is the added payroll,
trade payables, and capital expenditures generated by ASCs in the state. The
remaining effects are referred to as the “indirect” and “induced” effects.
To measure these effects, an Input/Output (IO) model of a local economy
is employed. An IO model describes an economy as a series of inter-linked
industries or sectors. A stimulus to one sector, say a tax on a particular sector,
then impacts all other sectors in the economy, to varying degrees, through a
“multiplier effect.”
The multiplier effect measures the indirect and induced impact of a direct
injection. As a matter of technical exposition, indirect effects are those
“re-spending” effects that filter through other industries in an economy as
a result of the direct injection. For instance, suppose a direct impact on hotel
expenditures boosts demand for cleaning services at these hotels (an initial
indirect effect). This stimulates demand for those sectors that supply cleaning
capital and cleaning products (a secondary indirect effect). This secondary
indirect effect stimulates demand in other sectors, and so on. The sum of all
these effects on other industries is the indirect effect. The induced effect is the
effect on final demand in an economy. Final demand can be characterized in
the following way. All of these sectors employ people locally. Increased
demand for output from these sectors induces additional labor inputs, paid
for via wages and salaries. The resulting increase in employee incomes induces
8
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additional spending locally. This additional spending is the induced effect.
The continual “re-spending” of the original direct injection accumulates
through to the local economy.7
The method conducted is
known as “input-output”
analysis, with the state
economy viewed as a
series of inter-linked
industries and business
sectors. A stimulus to one
sector impacts all other
sectors in the economy
in varying degrees.
2009 TOTAL
ECONOMIC IMPACT
$1 Billion
Total Direct
Expenditures
(payroll, trade
payables, capital
expenditures)
$2.62 Billion
Total Direct Expenditures
x Multiplier + Taxes
$2.56 Billion
Total Direct Expenditures
x Multiplier
The total effect is then the sum of the direct, indirect, and induced effects. From
these figures, we obtain economic multipliers, which can be thought of as
measures of the impact of one dollar’s worth of direct injections. For example,
if an additional $100 of direct expenditure is spent on groceries, this would
stimulate spending by the grocery sector (e.g., added spending on suppliers,
farmers, etc.). This additional spending will be less than the initial $100; let us
assume it is $40. In turn, there may be a need for additional labor in the grocery
sector, generating additional income and thus additional “secondary” spending.
Let assume this additional spending is $60. Taken together, the aggregate
impact of the initial $100 injection was $200 to the economy. Thus, in this
simple example, the multiplier would be 2.00.
In order to conduct the ASC impact simulation models, we obtain industry
multipliers from the Bureau of Economic Analysis (BEA) RIMS II database. The
BEA multipliers are derived by the BEA from several data sources, including the
U.S. Economic Census, the U.S. Bureau of Labor Statistics, and other industry
data. The stimulus that we model is simply total ASC operating expenditures.
Our database of ASC financial data is based on data supplied by a sample
of ASCs in the state (n=4).8 We calculated per-ASC estimates based on the
sample, and multiplied those estimates by the number of ASCs in the state.9
The simulation models use economic data from 2008 and ASC count data
from August 2009, and the models project to 2009 by applying a conservative
4% inflation factor. Given the small sample size, we verify our survey findings
using data from two reputable sources: detailed industry data from the U.S.
Economic Census and annual regional ASC survey data from VMG Health.
The ASC sector in New Jersey makes a markedly large contribution to the
state’s economy, with a multiplier of 2.49,10 meaning that for every dollar
spent in the ASC sector of the state economy, $2.49 worth of economic value
is created in the state. The ASC multiplier, like other health care multipliers,
is substantially higher than multipliers for other services industries. For example,
the multiplier for professional (non-health care) services in New Jersey is
approximately 1.75. In addition, the ASC multiplier of 2.49 is somewhat higher
than the general hospital multiplier in New Jersey (2.21), implying that (per
dollar spent) there is essentially no difference between the economic value of
a dollar spent by an ASC versus the same dollar spent by a general hospital;
proportionately, the two kinds of facilities generate the same level of indirect
economic activity.
For a complete survey of IO models and their various strengths and weaknesses, see for example Raa, T.T.,
(2005) “The Economics of Input-Output Analysis” Cambridge University Press
8
Given the sample is relatively low response rate, we (1) compared ASC characteristics of respondents vs.
characteristics of ASCs reported by VMG Health in their annual ASC report; and (2) compared total expense data
(the most important variable in calculating economic impact) with VMG Health and the U.S. Economic Census
(discussed in text).
9
Source: www.New Jerseyhealthfinder.gov/CompareCare/ListFacilities.aspx
10
Bureau of Economic Analysis, RIMS II Multipliers (1997/2006) Table 3.5 Total Multipliers for Output, Earnings,
Employment, and Value Added by State: 621B00: Other Ambulatory Health Care Services (Type II).
7
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Economic Impact
In 2009, New Jersey’s 230 ASCs employ approximately 6,017 full-time equivalent
individuals. The average ASC incurred is approximately $4,446,898 in total
operating expenses, resulting in a direct economic impact (excluding taxes paid)
of more than $1.0 billion statewide. After applying the ASC multiplier, the total
statewide expenditure impact of the ASC sector in New Jersey is approximately
$2.56 billion. Adding the total taxes paid by New Jersey ASCs ($262,150 per
ASC; $60.3 million statewide), the total economic impact of New Jersey ASCs
in 2009 is approximately $2.6 billion statewide (see chart below).
In 2009 ASCs added
significant value to
the state’s economy
with $60.3 million
paid in taxes.
ECONOMIC IMPACT OF AMBULATORY SURGERY CENTERS
IN NEW JERSEY IN 2009
Average per ASC
State Total
Number of ASCsa
NA
230
Number of Full-Time
Equivalent Employees (FTEs)b
26
6,017
$4,468,898
$1,027,846,642
Expenditure Multiplierd
NA
2.49
Expenditure Impact (total effect)
NA
$2,555,843,459
$262,150
$60,294,394
Total Operating Expenditures (direct effect)c
Tax Expenditurese
TOTAL IMPACT
$2,616,137,853
Sources and Notes: (a) NJ ASC Association; (b) To calculate FTEs, consider this example: if there are a total of 30
employees on the payroll, but 10 of those are part-timers, working about 50% time, then you would report that you
have 20 + (10 x 50%) = 25 FTEs. We are interested only in paid FTEs. An alternative is to base the calculation on the
total number of paid work hours in a year (typically 2,080). An employee is equal to one FTE if they work 2,080
hours per year. A part-time employee working 20 hours per week (1,040 hours per year) would be considered half
of one FTE because 1040 / 2080 = 0.5; (c) Defined as the sum of expenses attributable to payroll, benefits, capital
(equipment; building), supplies, maintenance, insurance (property; general liability; malpractice), rent/lease costs,
and other expenses commonly referred to as “trade payables;” (d) Source: Bureau of Economic Analysis, RIMS II
Multipliers (1997/2006) Table 3.5 Total Multipliers for Output, Earnings, Employment, and Value Added by State:
621B00: Other Ambulatory Health Care Services (Type II); (e) Defined as the sum of all municipal, and state taxes paid
10 NJAASC Economic Impact Analysis
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Sensitivity Analysis
To verify these estimates, we examined data from two different sources: (1)
detailed industry data from the 2002 U.S. Economic Census (USEC), and
regional ASC financial and benchmarking survey data compiled by VMG Health.
Both of these sources are confirmatory of survey results reported here.
Initial results of the study
were confirmed through
examination of data from the
2007 U.S. Economic Census
and VMG Health’s regional
ASC financial/benchmarking
survey data. Interestingly,
the VMG Health data
suggests that this study’s
findings–including the 2009
total economic impact figure
of $2.6 billion–tend to be
rather conservative.
The U.S. Census Bureau conducts the Economic Census every five years, profiling
U.S. businesses at the national to the local level. In 2002, that latest year for which
complete data is available, the USEC collected data on nearly 25 million business
establishments in the U.S., accounting for about 97% of business receipts. The
Census results in a substantial amount of information at both the industrial sector
and geographic level of detail, including industry-level information (categorized
by NAICS, or North American Industrial Classification System, code) on number
of establishments, employment, revenues generated and operating expenses. It
also provides detailed data at the national, state, MSA and county level, although
in many cases geographic-specific estimates for detailed (5+ digit) NAICS codes
are not supported.11 While the industry information provided in the Economic
Census is detailed, it does not provide enough detail to obtain direct estimates
of ASC operating costs (the key variables in calculating overall economic impact).
The closest NAICS code is 621493 (entitled “Freestanding Ambulatory Surgical
and Emergency Centers”). This vast majority of establishments in this category
are ASCs, but the category also captures a large number of urgent care centers.
Urgent care centers have considerably lower operating costs, thereby biasing
downward the operating expense data in this category.
The USEC reports average operating expenses for NAICS 621493 of about
$3.2 million per ASC12 (2002 census data trended forward using CPI). However,
this number does not include “construction and all other capital improvements.”
We believe that this exclusion is likely to exclude a large amount of equipment
expenses common to ASCs. Although there is considerable range in our ASC
dataset, reported capital expenses average $352,516. If we add capital to the
USEC expenses estimate, the U.S. average “total expenditures” per ASC is
approximately $3.5 million, which is very similar to the survey estimate reported
(see chart on page 10), but even closer considering the average size of New Jersey
ASCs is 26 FTEs, compared to an average of 22 FTEs per ASC nationwide.13
As a further sensitivity test, we compared our survey data to 2009 data collected
annually by VMG Health in their Intellimarker ASC Benchmarking Study.14
The 2009 VMG study is based on a national survey of 174 ASCs of various sizes
and representing more than 1.1 million cases. VMG obtains enough responses
to support calculations of key variables at regional levels, and performs several
analyses to verify consistency and comparability. For the Northeast region,
which includes New Jersey and eight other states, the median total operating
expenditures per ASC is $6,057,000. This estimate is similar to our sample
estimate of $4,468,898. The implication of the VMG findings is that our
sample results in a conservative estimate–lower than the VMG sample.
Further details on the 2002 Economic Census and NAICS classification schemes can be found at the following
web site: www.census.gov/econ/census02/.
2007 operating expense data is not available
13
VMG Health, Dallas, TX (www.vmghealth.com)
14
VMG Health, Dallas, TX (www.vmghealth.com)
11
12
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Conclusions
ASCs provide a vital component of the economy in New Jersey. The ASC industry
in New Jersey employs approximately 6,017 full-time equivalent individuals.
The industry is associated with a relatively high multiplier, which results in a
large amount of economic activity attributable to ASCs. ASCs add $2.5 billion
in economic activity to the statewide economy, and another $60.3 million in
taxes. The net result is a total statewide ASC economic impact of more than
$2.6 billion. As lawmakers consider new policies aimed at ASCs, policy makers
must take into consideration the large economic value generated by ASCs.
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12 NJAASC Economic Impact Analysis
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New Jersey Association of
Ambulatory Surgery Centers
CONTRIBUTORS
BOARD OF DIRECTORS
John D. Fanburg, Esq.
Brach Eichler, LLC
Larry Trenk, President
Surgem, LLC, Oradell, NJ
Roseanne Ottaggio, Secretary/Treasurer
Titan Health Corp, Yardley, PA
Joan Balducci, Board Member
North Jersey Center for Surgery, Newton, NJ
Bonnie Brady, Board Member
Special Surgery Center, Sparta, NJ
Patient Safety is the Number One Priority
Economic Impact Analysis
John E. Schneider, PhD
Oxford Outcomes Inc.
Department of Economics, Drew University
Cara Scheibling, BA
Oxford Outcomes Inc.
Enza Guagenti, Board Member
Ridgedale Surgery Center, Cedar Knolls, NJ
Meg Stagliano, Board Member
Seashore Surgical Institute, LLC, Brick, NJ
Dawn Spencer, Board Member
The Center For Ambulatory Surgery,
Mountainside, NJ
Claudette Downs, Board Member
Short Hills Surgery Center, Short Hills, NJ
Maryellen Murray, Board Member
Short Hills Surgery Center, Short Hills, NJ
Andrew Weiss, Board Member
The Endo Center at Voorhees, Voorhees, NJ
Sharon Demato, Immediate Past-President
Endo Surgi Center, Union, NJ
Linda Bartolo, Executive Director
ADVOCACY COMMITTEE
Jeffrey Shanton, Committee Chair
Journal Square Surgical Center, Jersey City, NJ
Enza Guagenti
Ridgedale Surgery Center, Cedar Knolls, NJ
Sharon Demato
Endo-Surgi Center, Union, NJ
Andrew Weiss
Endo Center at Voorhees, Voorhees, NJ
Marc Reichman
Patient Care Associates, Englewood, NJ
Meg Stagliano
Seashore Surgical Institute, LLC, Brick, NJ
Maryanne Dahman
Eltra LLC, West Orange, NJ
Mark Manigan, Esq.
Brach Eichler, LLC
The Alliance for Quality Care, Inc.
NJAASC Economic Impact Analysis
Summary_final.indd 15
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NEW JERSEY ASSOCIATION OF
AMBULATORY SURGERY CENTERS
26 Eastmans Road, Parsippany, New Jersey 07054
800.848.4323
www.njaasc.org
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