How to Beat Hospital Costs

By Claudia Wallis

Many patients are turning to independent surgical clinics

At 9:30 in the morning Ann Logan, 29, breezed through the doors of the Ar cadia Outpatient Surgery Inc. in Arcadia, Calif. Within an hour, she would undergo surgery to remove a lump of scar tissue from her breast. Logan snapped a plastic name band on her wrist, took her seat on a soft, brown leather sofa and began thumbing through a magazine. Hers was not going to be a long stay: a quick (55 minute) visit to the lemon-yellow operating suite, a brief rest in an equally cheerful recovery room, and then on her feet and out the door by 1:30 p.m. "This is much easier than going to a hospital," says Logan, a registered nurse. "You're in and out in a couple of hours. It's more like a doctor's office."

For a growing number of patients in need of minor surgery, the overnight stay in a hospital room, the wobbly-kneed walk down a long, sterile corridor, and, most important, the enormous bill after ward, are things of the past. About 150 outpatient surgical centers around the country now offer fast opera tions in a relaxed environment at a fraction of hospital prices.

Such facilities can perform up to 40% of all surgical procedures.

Among them: cataract surgery, tonsillectomy, breast biopsy, D & C (dilatation and curettage of the uterus), knee arthroscopy, vasectomy and facelifts. Essentially, the centers can perform any operation that does not require prolonged general anesthesia and extensive post-op care. Because they avoid the overhead costs of such services, the surgical centers can charge as little as one-third of what a hospital asks for a given procedure. Boasts Surgeon Darrell Holman, a co-founder of the Arcadia center: "We've streamlined our costs so that we're as efficient as a submarine."

At Arcadia, for example, a hernia operation for a two-year-old child recently cost $450; the same surgery, if performed at a local children's hospital, would have run to $ 1,200 (excluding the surgeon's and anesthesiologist's fees in both cases). Similarly, cataract surgery at the center costs $700, compared with $1,700 charged at nearby Methodist Hospital of Southern California. Instead of paying $100 to $400 for a night in the hospital, patients at the new clinics are sent home with instructions on how to care for themselves. "They know what to anticipate in the way of pain, swelling and the course of their recovery," says Orthopedic Surgeon Lyn Thompson of Salt Lake Surgical Center, a Utah facility that performs nearly 8,000 operations a year.

The outpatient surgery movement, which began in the early 1970s, stemmed from the dissatisfaction of both doctors and patients with the escalating costs, inefficiency and indifferent service of hospitals. "Hospitals dropped the ball," asserts Los Angeles Plastic Surgeon Robert Kotler. "Our patients complained about the bills and lack of service. We doctors complained because they couldn't provide us with specialized personnel and forgot about personal attention." Frustrated doctors began to set up operating rooms in their own offices. The more enterprising put their resources together to create independent surgical centers. Such centers, which are licensed by individual states, have generally established records of good service. Indeed, most have lower rates of post-operative infection than hospitals.

Eager to rein in the galloping costs of American medical care, many insurance organizations have begun offering incentives to patients who choose nonhospital surgery. "Anything we can do to keep people out of the hospital is a move in the right direction," says Larry Rodriggs, a spokesman for Blue Cross of California. Blue Cross and Blue Shield of Indiana last year began offering subscribers a new policy that would require outpatient care for 125 types of elective surgery, unless the patient could show that hospitalization was essential. Minnesota's Blue Cross and Blue Shield has a similar policy, and others are following suit. Medicare has also encouraged wider use of outpatient surgical clinics by agreeing, last year, to provide 100% coverage.

Traditionally, minor operations like those now performed at surgery centers have provided hospitals with revenues that could subsidize less profitable services, like open-heart surgery. But the American Hospital Association has taken no stand against the rival movement. Says A.H.A. President Alex McMahon: "We in the hospital industry can't object to quality surgical centers just because their procedures are less expensive to the patient."

So, in the spirit of "if you can't beat 'em, join 'em," hospitals are opening up their own outpatient surgical centers, some within their existing facilities and some outside. Humana Inc., a hospital chain based in Louisville, reports that 76 of its more than 90 hospitals have established "day surgery" centers. "It's one of the fastest growing services we have," says Chris Wurster, a spokesman for Denver's Lutheran Medical Center, which is building a $14.6 million outpatient surgical wing. The competition between conventional hospitals and surgical centers is fierce, but the winners, most observers agree, are the patients, who now have more and better choices for minor surgery than ever before. -- By Claudia Wallis.

Reported by Cheryl Crooks/Los Ange les, with other bureaus

With reporting by Cheryl Crooks This file is automatically generated by a robot program, so viewer discretion is required.