This year, South Carolina eliminated certificate-of-need laws across the state, with its neighbor, North Carolina, planning to follow suit by the end of 2025.
This change will have several major benefits for ASCs, allowing them to restructure their existing ownership structures, expand more freely and save even more money for patients and payers.
While many surgeons agree that, overall, CON reform is a positive, there is one service line that posed trouble for Charlotte, N.C.-based OrthoCarolina.
In April, OrthoCarolina finalized a deal to sell its 18 MRI locations to Charlotte, N.C.-based Novant Health.
“North Carolina has been a certificate-of-need state, and CON for MRI is going away. We did take a hard look at what happens with regards to the profitability, the margins on MRIs, in states that were CON, post-CON reform. We knew that that was a service line that was going to be under some pricing pressure with the changing CON,” Leo Spector, MD, CEO of OrthoCarolina, told Becker’s, regarding the decision.
“Therapy, for us, was a service line where we were only able to care for about 50% of our patients. We looked at that and made the determination that either we needed to invest both human and financial capital to grow therapy to be able to care for all of our patients, or go ahead and pass from it,” Dr. Spector said. “So, to do that, well, as margins start to decrease, you really need to expand capability and capacity. So, again, we looked at that and said, ‘Should we invest the capital, both human and financial, to grow MRI, given the new challenge that will occur?’ or, ‘Do we take those finances and human capital and invest it in what we see as the future for us?,’ which is ASCs.”
“ASCs are unique in the Carolinas as well, because while CON reforms may have a negative impact on the MRI business, it has a very positive impact for surgery centers. … [I]t creates the opportunity for us as a private practice to own our own ASCs,” Dr. Spector continued.
Dr. Spector estimated that 70% of OrthoCarolina’s musculoskeletal surgeries could be done in an ASC. “We feel that really aligns with our core mission and our values, which is, we are here to make lives better. If we can move patients appropriately from inpatient to outpatient, and move from [hospital outpatient departments] to ASCs, we can lower the cost of care by our estimates,” he said. “To have the opportunity to invest and to grow outpatient care will be a win to not only our patients but our practitioners.”
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