Operators of Outpatient Facilities Want NJ to Consolidate Oversight

Different agencies oversee different types of surgery centers, confusing patients and making growth difficult

ambulatory surgery center
Nearly seven out of ten patients who are referred for a colonoscopy, cataract surgery, knee operation, or scores of other minor but invasive procedures have the treatment performed in outpatient facilities as opposed to hospital operating rooms.

Over the past four decades a growing percentage of this work is handled by ambulatory surgery centers (ASCs) — free-standing facilities with no more than a handful of operating rooms — that are able to provide lower-cost treatments in a setting patients often find more comfortable.

In New Jersey, this has led to a confusing system in which single-room facilities are licensed by one government agency and ASCs, with multiple operating suites, are regulated by another. As a result, the two types of facilities are subject to different standards and the industry’s growth has been constrained, explained Andrew Weiss, president of the New Jersey Association of Ambulatory Surgery Centers.

The NJAASC, which was founded in 1992 to represent all facilities, gathered for its annual conference Wednesday in West Orange. It is seeking relief through a Democratic-led proposal that would consolidate much of the licensing process in the state Department of Health, permit one-room facilities to grow and allow others to merge or be acquired by non-profit hospitals — changes that currently are prohibited, Weiss said.

There are more than 360 surgery centers (of both types) in New Jersey – among the highest density per population in any state – with about half licensed by the health department and the rest by the Board of Medical Examiners, within the Department of Community Affairs, he explained.

“We want the same standards for the sake of the patients,” Weiss said last month.

The legislation, S-1881, sponsored by Sen. Joseph Vitale (D-Middlesex) and former acting governor Sen. Richard Codey (D-Essex), is scheduled for a vote Thursday in the Senate health committee, which Vitale leads. A version cleared the Assembly’s health committee earlier this year and awaits action by the full house.

Although the new bill does not directly address safety issues, concerns about unsafe conditions that could result from two different regulatory standards were raised in a 2011 report from the New Jersey Health Care Quality Institute. It reviewed 91 DOH inspections from the two previous years – half of single-room sites and half of ASCs — and found serious safety problems in the visits to 45 percent of one-room surgeries. Inspectors found major compliance issues in 15 percent of the ASC facilities.

This is not the first time lawmakers have sought to clarify the regulatory structure related to ASCs. Vitale backed a different bill that would have addressed other regulatory issues that made it all the way to the governor’s desk in 2012, but Gov. Chris Christie vetoed the measure after health department officials raised concerns about the way it would tax some facilities.

ASCs licensed with the health department pay a gross receipts tax that generates more than $16 million a year. The latest proposal would phase in the gross receipts tax on facilities newly registered with the health department over five years, until these operations are paying the same 2.95 percent fee that applies to existing ASCs. The tax would only apply to facilities that evolved under the new rules that take in more than $300,000 a year. (Weiss said the tax was first levied in 2010 to help balance the budget and has continued ever since, which puts a strain on the association’s members).

These facilities, the majority of which are owned by physicians, are designed to keep down costs and can often deliver care at half the cost of a traditional hospital facility, Weiss said. They also receive lower rates of reimbursement for some patients – as much as 25 percent less than hospitals would get for the same procedure.

“We provide the lowest-cost, highest-quality services,” Weiss said, “and we provide access to care that people need.”