By Pete Mercer
March 2024 – The Journal of Healthcare Contracting
Businesses are built off relationships in every industry, but they are especially critical in healthcare. With all the challenges that healthcare organizations face with issues of compliance, it’s important to partner with someone you can trust to meet the needs of your business. But what does it take to maintain those relationships in an environment that’s constantly changing?
The Journal of Healthcare Contracting recently sat down with Marc Toth, Market President, Cardiovascular Services at Atlas Healthcare Partners; Kristen Richards, Regional VP of Cardiovascular Operations at Atlas Healthcare Partners; and Adam King, Senior Director Ambulatory Surgery Centers at Medtronic, to discuss the value that ambulatory surgery centers can provide for patients and providers, a new agreement for Atlas Healthcare Partners and Medtronic, as well as a close look at the relationship between vendors and surgery centers.
Who is Atlas Healthcare Partners?
Atlas Healthcare Partners is a company that partners with health systems and physicians to develop and own ambulatory surgery centers. Atlas provides comprehensive management and revenue cycle services as well as all non-physician staff to these ambulatory surgery centers through a professional management team with the necessary experience to help operate and grow the center’s business.
Toth said, “As a company, we do all the procurement, staffing, and day-to-day operations. When we buy from companies like Medtronic, the contract is negotiated with Atlas and its in-house experts, including legal. All of our ASCs involve physician and health system ownership.”
The mission of Atlas is to deliver exceptional care and outstanding service to every single patient, every single time, as Toth put it. Part of what differentiates Atlas from other organizations in this field is that they have a dedicated cardiovascular team – Toth and Richards are both on the cardiovascular leadership team.
While many companies might have taken steps to include cardiovascular services, Atlas is focused on all of the nuances regarding cardiovascular. MedAtlasCV is the direct result of that focus – a partnership formed between Atlas and MedAxiom to provide higher quality clinical care and operational outcomes for cardiovascular ambulatory surgery centers.
In addition to the focus on cardiovascular care, Atlas is also unique in that it forms a master joint venture with a health system for a particular market area (which in some cases is state-wide) and then serves as the strategic partner to the health system to develop a network of ASCs in the market area, all of which have physician investors. According to Toth, 49% of each surgery center is owned by the physicians and 51% is owned by the master joint venture between Atlas and the health system.
Adam King from Medtronic explained that ambulatory surgery center management companies are well positioned for vendors to collaborate with because of the expertise they can provide both hospital-owned and physician-owned centers. “As hospital systems look to open more ASCs, they may find that the management of those centers can vary greatly from their general acute care hospital. Services, staffing, and patient throughput can be different, and working with a partner that has expertise in surgery centers can be beneficial. From the physician perspective, working with a partner on the complex business side of managing ASCs can be equally beneficial, creating an opportunity for collaboration.”
The arrangement between Medtronic and Atlas is due in large part to Atlas’s cardiovascular specialization that allows it to diversify and provide deeper expertise to surgery centers than organizations that try to simply manage them.
The value of ambulatory surgery centers
With about 6,500 Medicare certified surgery centers in the United States, it’s important to understand how they operate, why they are valuable, and how they are supplied. The first surgery center was opened in Phoenix, Arizona in 1970 (which is, coincidentally, owned by Atlas) as a way for physicians to provide timely and convenient same-day procedures for patients in their community who needed them.
In recent years, Medicare has been shifting more procedures into surgery centers, which has the potential to benefit patients. Toth said, “Surgery centers tend generally to be lower-cost sites of care, so we get reimbursed about half of what the hospital gets reimbursed. That means the patient’s copay is less. It’s a comfortable, convenient setting for the patient to go to. You don’t have to park in a parking deck and wind through the hospital. Every procedure is same-day discharge. We have no overnight stay.”
Surgery centers can deliver positive results for all parties involved. “The physicians have an investment opportunity as well as a major say in operations,” Toth said. “Payers are happy with these sites because they are usually reimbursed at lower rates than hospitals, and patients are happy because of their convenience. I like to say that surgery center sites are better for the greater good.”
When it comes to keeping surgery centers stocked with all of the necessary supplies needed to provide adequate patient care, companies like Atlas will usually negotiate agreements with vendors for supplies. Because ambulatory surgery center reimbursement is usually lower than reimbursement for hospitals, Toth said that pricing is an important factor in his team’s negotiations with vendors. Options to achieve better pricing may include volume purchasing and a shift toward standardization across broader service lines.
Atlas’s Kristen Richards said, “Every one of our centers has a group of different physicians that have different needs and requests. It requires a fine balance of managing those needs. Our ultimate goal is to standardize and get the best pricing on supplies, which our physicians really do care about in this setting. In a hospital setting, they may not care so much because it’s the hospital paying for those supplies – that’s why the needs are so different from center to center.”
From the vendor’s perspective, King said, “The ability to standardize in an ambulatory surgery center is more realistic than standardization in a hospital. In a surgery center, you’re going to get more uniformity by patient type and procedures, which allows some potential standardization for the vendor as well.”
Atlas’s rebate arrangement with Medtronic
Medtronic and Atlas recently agreed to a new arrangement that provides Banner Cardiovascular Center West Valley the option to apply rebates earned on purchases of Medtronic products to the cost of third-party capital equipment used in the center. This arrangement is known as the Medtronic Customer Choice Rebate Program, where the customer chooses the capital that it needs for its surgery center and has the option to offset the cost by applying rebates earned on associated product purchases.
King said, “There are a lot of options. We work with the customer to determine appropriate commitment levels based on their own projections and customize a program.”
For Toth, this program is a beneficial offering by Medtronic. He said, “Partnering with Medtronic enables our surgery centers to offset capital expenses and use best-in-class products that they already use and our physicians like.”
This program adds to the already existing relationship between Atlas and Medtronic and differentiates Medtronic from the other vendors in this space.
Richards said, “Our relationship with Medtronic helps to further establish Atlas in the cardiovascular space. The Medtronic cardiovascular portfolio is deep and broad, and its technologies are expanding throughout Atlas’s organization. That’s why King continues to work with our procurement team, because we see how Medtronic can support the surgery centers we manage and, in turn, the patients they serve.”