Listen to article \u2022\u00a00:00 min<\/p>\n
The University of Pennsylvania<\/a> Health System and Independence Blue Cross, the Philadelphia area\u2019s largest insurer, have formed a new company with plans to open at least 18 regional surgery centers. <\/p>\n The for-profit company announced Thursday is part of an effort by Penn and IBX to bring lower-cost procedures closer to patients, while maintaining quality and safety, officials said. <\/p>\n For Penn, the venture represents a financial leap, because it means the nonprofit health system will intentionally accept significantly lower payments for part of its business.<\/p>\n \u201cWe need to work on affordability in healthcare. It\u2019s too expensive. It\u2019s bankrupting families,\u201d Penn health system CEO Kevin Mahoney said. <\/p>\n Medicare and private insurers like IBX who pay the healthcare bills \u201cwant to move to less costly settings,\u201d he said, and Penn needs to be ready to capture that business.<\/p>\n IBX\u2019s CEO Kelly Munson emphasized the importance of partnerships to tackle rising healthcare costs. She noted that shifting care to ambulatory surgery centers from hospital departments can generate as much as a 50% discount. <\/p>\n \u201cThe healthcare affordability crisis<\/a> won\u2019t be solved alone,\u201d Munson said.<\/p>\n A third investor in the company is Regent Surgical, a Tennessee firm with private equity investors that will manage the local centers. Its tasks include forcing efficiency. Regent already manages 40 sites in 15 states. Penn clinicians will provide services. <\/p>\n Regent\u2019s CEO, Travis Messina, called the new company the first of its kind nationally. \u201cI\u2019ve yet to see one that has involved both a payer, a provider, as well as a management company,\u201d he said.<\/p>\n Key details \u2014 such as the for-profit company\u2019s name, the ownership percentages, and the time frame for opening the anticipated facilities \u2014 were not disclosed.<\/p>\n The first local facility is expected to open next year, but officials did not say where.<\/p>\n The Penn-IBX initiative doesn\u2019t fit into the typical playbook for ASCs, said Dan Grauman, a healthcare consultant based in the Philadelphia area. <\/p>\n Usually, physicians are also involved as owners. \u201cThey\u2019re part owners of these surgery centers, and they drive the volume,\u201d said Grauman, a managing director at VMG Health, a national healthcare consulting firm.<\/p>\n Asked if non-Penn doctors could be involved in or be investors in the new centers, Penn and IBX said they are evaluating all options for future growth. <\/p>\n The case for more ASCs in the Philadelphia region<\/p>\n Southeastern Pennsylvania already has more than 100 ambulatory surgery centers, many of them specialized in gastroenterology<\/a> and mainly focused on colonoscopies, state heath department data show. <\/p>\n Yet the region lags the nation in the shift to lower-cost surgery centers.<\/p>\n Data provided by Regent show that in 2023 and 2024 only 33% of ASC-eligible procedures in the Philadelphia region had migrated to the ASCs, compared to 56% nationally. Regent uses data from Kythera Labs, a company that analyzes health insurance claims.<\/p>\n Messina attributed the slower adoption of surgery centers to the concentration of physicians employed by local health systems. \u201cThat tends to limit the amount of ASC availability in markets across the country,\u201d he said. <\/p>\n Historically, Philadelphia-area health systems tended to concentrate services in their hospitals, which have expensive fixed overhead, and in facilities that charge hospital rates. Executives focused on protecting revenue, so they could maintain broad hospital offerings, rather than on offering lower-cost options.<\/p>\n Healthcare trends now increasingly are pushing care into the community. Mahoney noted that half of Penn\u2019s chemotherapy and infusion services are provided in patients\u2019 homes<\/a>. Close to two thirds of Penn\u2019s $13.6 billion in revenue is from outpatient care, he said.<\/p>\n \u201cWe\u2019ve been trying to deconstruct away from hospitals for a long time, and this is a natural step on that continuum,\u201d he said.<\/p>\n Penn previously invested an undisclosed amount of money in the Ambulatory Cardiovascular Center of Pennsylvania near King of Prussia<\/a>. That facility is a partnership<\/a> that also includes Cardiology Consultants of Philadelphia, Cardiovascular Logistics, and SCA Health. <\/p>\n To incentivize more surgery centers and reduce costs for employers, IBX introduced a policy this year that it will only pay for certain procedures if they are done in a low-cost ASC<\/a>. At the same time, IBX does not force patients to change doctors if their provider does not have privileges at an appropriate ASC. <\/p>\n How Penn could go about opening centers<\/p>\n Mahoney called the initial target of 18 locations the start.<\/p>\n \u201cEighteen is half of what I want to do. These are not mega hospital buildings,\u201d he said. \u201cThey\u2019re going to be convenient. They\u2019re going to be spread throughout the five counties, easy for people to get to, close to their homes.\u201d <\/p>\n