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Nation's First Dual-Licensed Surgery Center Opens in Colorado

Inside the little-known CMS ruling that lets ASCs operate as timeshare properties.

Published: May 5, 2016

TIMESHARE Under a little-known CMS ruling, ambulatory surgery centers can operate as timeshare properties if they are dually licensed by the states in which they operate.

The timeshare model has come to outpatient surgery. The nation's first dual-licensed ambulatory surgical center has opened in Littleton, Colo., a joint venture between a hospital and a neurosurgeon who'll lease one operating room and staff on the first and third Fridays of each month.

The timeshare arrangement was enabled by a little-known CMS ruling that lets ASCs operate as timeshare properties if they're dually licensed by the states in which they operate. Where permitted under state law, multiple ASCs may use the same physical space, including the same ORs, as long as they do not have concurrent or overlapping hours of operation.

"Now, physicians and hospitals can share ASC space without the multimillion-dollar burden of costly capital expenditure and slow market entry," says nursing executive and ASC developer Beverly Kirchner, BSN, RN, CNOR, CASC, the founder of Texas-based SurgeryDirect, the developer of this new class of ASC. "Surgeons can save millions of dollars in land and development costs, as well as 18 to 24 months of valuable time."

Before the CMS ruling 2014, when ASCs leased time and space to surgeons and split receipt of technical fees and fees for surgical services, the federal Office of the Inspector General (OIG) deemed this activity to be questionable because it appeared to be business inducement — otherwise defined as fraud and subject to heavy penalties, says Ms. Kirchner.

How did the timeshare model come about? Years ago, Ms. Kirchner helped Littleton Adventist Hospital develop a traditional ASC. In early 2014, after CMS released rules governing the new dual-licensed ASC model, neurosurgeon David VanSickle, MD, PhD, contacted the hospital about the possibility of leasing space in its ASC not far from the hospital.

Dr. VanSickle's neurosurgical practice includes deep brain stimulation for patients with Parkinson's disease, dystonia, essential tremor and severe obsessive-compulsive disorder. Dr. VanSickle begins the two-part asleep deep brain stimulation procedure at Littleton Adventist Hospital. There patients who previously had to be awake to help guide the surgeon to the targeted insertion site are now anesthetized while a CT scan and robotic guidance system identify where two electrical devices must be placed to slow too-rapid brain activity. One week later the patient enters the ASC for a very brief (one hour or less) procedure to insert a small battery-powered generator (similar to a pacemaker) into his chest. On April 15, Dr. VanSickle performed his first procedures at his timeshare facility, called Functional Neurosurgical ASC, on 2 Parkinson's patients.

The joint venture is now 51% owned by Littleton Adventist and 49% owned by Dr. VanSickle. The host center lessor and the ASC lessee joint venture hold separate licenses granted by the Colorado Department of Public Health and Environment.

"This is the same concept as a condo timeshare," says Todd Masten, the CEO of SurgeryDirect. "For 3 days out of the month or 1 day out of the week, the brick and mortar stops being Facility A and starts being Facility B in the eyes of the state. Patients have no idea that this facility is somebody else's on the other days of the week."

There are, however, stringent rules that must be followed to the letter. For example:

  • Each center is required to have a separate locking storage for its own surgical supplies and devices, medications, locked carts and other exclusive material exclusive to that ASC lessee.
  • Licensed centers shall not operate at the same time or on the same days of the week.
  • There shall be clear public signage stating the separate names of each center and their distinct days and times of operation.
  • Each licensed center must have its own policies and procedures as well as maintain separate, confidential and locked patient records.
  • All Medicare-certified ASCs that share the same space are subject to citation for deficient practices even if only one such center violates code.
  • Each lessee ASC may use the same nursing and ancillary staff under an arrangement with the staff employer and each lessee is required to separately comply with all staff utilization requirements in the ASC.

The ability for surgeons to acquire scalability, lease staff and equipment only as needed, ensure greater patient safety in the ASC setting, and cut costs for their patients and their practices is revolutionary," says Ms. Kirchner. "Leasing outpatient operating room space is an easier way for young surgeons and single-specialty physicians to acquire ASC space."

Once development of dual-licensed ASCs becomes more recognized by state governments and rules for their licensing become more uniform, Ms. Kirchner and Dr. Van Sickle say total development time should take about one year to repurpose an existing center and acquire capital equipment. Because it is the first such center, the Littleton timeshare project took 21 months (with a 4-month interruption while Colorado and CMS requirements were being negotiated).

"Total development cost was under $500,000," says Ms. Kirchner. "By leasing days to other licensed surgery center operations, the owners believe they will cover their total overhead."

Dan O'Connor


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