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Sunday, 02 April 2017 16:07

Seizing a growth market, providers push to develop outpatient surgery centers

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ZEELAND — On the heels of opening an outpatient surgery center in Grand Rapids in February, a California firm has set its sights on developing another facility in West Michigan. 

In a move that adds capacity locally for doing procedures outside of hospital operating rooms, SurgCenter Development proposes to renovate an office building off Chicago Drive in Zeeland for the West Michigan Surgical Center. The facility would house one operating room and two procedure rooms at an overall cost of $4.5 million, including a 20-year lease on the property, which is located near Spectrum Health Zeeland Community Hospital.

The Zeeland center would become SurgCenter Development’s third outpatient surgery center in Michigan, along with sites in Grand Rapids and East Lansing. The Pismo Beach, Calif.-based SurgCenter Development, which partners with physicians in local markets to develop outpatient surgery centers, does not presently have plans for other locations in Michigan, although the company remains open to additional partnerships, said Vice President of Development Stephanie Leventis.

“If there are more opportunities than present in Michigan, we’re open to looking at them. We definitely are open to other developments,” Leventis said. “If we have interested physicians and we get a group of committed physicians, that’s what we’re looking for.”

SurgCenter Development opened the $4.5 million Grand Rapids Surgical Suites in mid February on East Paris Avenue, about a year after launching its first Michigan location, the Red Cedar Surgery Center in East Lansing. 

The Grand Rapids outpatient center expects to handle 1,283 total cases in its first year of operation and 1,824 cases in the second year, according to projections in the company’s certificate-of-need application to the state.

SurgCenter Development recently filed a letter of intent with the Michigan Department of Health and Human Services signaling plans to seek full certificate-of-need (CON) approval for the West Michigan Surgical Center. The company hopes to open the proposed Zeeland center in the first quarter of 2018, Leventis said.

The 23-year-old SurgCenter Development operates 101 outpatient surgery centers in 21 states and has another dozen under various stages of development, Leventis said.

Rather than recruit physicians for a new facility, SurgCenter Development generally enters a new market at the request of prospective partners who often reach out to the company at the urging of colleagues. That was the case in Lansing, Grand Rapids and the planned center in Zeeland, Leventis said.

“We get the interest and then we look at the state. What’s the feasibility of the market?” she said.

The Grand Rapids Surgical Suites and the planned Zeeland center add to the number of ambulatory surgery centers operating across the state. The outpatient facilities bill themselves as offering convenient patient access and a lower-cost setting for procedures that do not require post-surgery hospitalization.

The growth of the surgical centers reflects advances in techniques, anesthesiology and pain management that allow surgeons to perform more procedures safely in an outpatient setting, saving costs and increasing access, said Julie Greene, CEO of the Muskegon Surgery Center. That center opened in 2009 and has experienced steady growth in its annual case volume.

“What we’re trying to do is offer people an alternative. We want high quality at a low cost and with high patient satisfaction, and that’s what the whole country is trying to do,” Greene said. “We’ve been concentrating on the triple aim (cost, quality and patient satisfaction) long before it was vogue.”

A 2016 report by the industry’s trade group, the Ambulatory Surgery Association of America, estimates outpatient surgery centers save $38 billion annually in health care spending nationwide. The association’s report, conducted with Healthcare Bluebook and Dallas-based HealthSmart that works with self-insured employers, based the estimate on a review of commercial medical claims in the U.S.

The association estimates that a little less than half of surgical procedures that qualify are actually done in an outpatient setting. If they were, that would add another $41 billion to the cost savings.

The Muskegon Surgery Center, owned by local physicians with a minority stake held by Mercy Health, is presently undergoing a $2.1 million expansion to add recovery rooms. The additional rooms are needed as patients require longer post-surgery monitoring for the more complex procedures they’re receiving, such a total knee replacement and spinal surgeries. The center handled 4,636 total cases in 2015, the most recent year for which data are available from the state. That’s nearly double the volume from 2010.

Greene credits the volume growth to the center launching total knee replacement surgery in early 2015, as well as to the overall increase in the number of procedures now performed on an outpatient basis. The Muskegon Surgery Center also earned CON approval in 2016 from the state to add lithotripsy to treat patients with kidney or gall stones, and a separate expansion will provide a second story to the center for Orthopaedic Associates of Muskegon, where Greene also serves as CEO.

Down the shoreline in Grand Haven, Health Pointe Inc., a joint venture between Spectrum Health and Holland Hospital, included a $12.1 million surgery center as part of a medical campus it’s developing. The Health Pointe surgery center will have one operating room, procedures and endoscopy rooms, and space for two additional ORs in the future as volume grows.

In its 2016 CON application to the Michigan Department of Health and Human Services, Health Pointe projected performing 1,144 total cases in its first year of operation and 2,000 in the second year. 

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Mark Sanchez

Senior Writer

msanchez@mibiz.com

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