Two Bend surgery centers are interested in adding extended stay centers that would allow them to keep patients in recovery rooms for up to two days, a move that could cut costs for patients and insurance plans.

Under current law, ambulatory surgery centers must discharge or transfer patients within 24 hours from the time of admission. But House Bill 4020, passed by the Oregon Legislature earlier this month, creates a process for surgery centers to add recovery rooms that would double the time they can care for patients.

Officials from both the Bend Surgery Center and the Cascades Surgicenter indicated they will explore adding extended stay centers once regulations are finalized by the state.

“We’ve seen this model work well in other states, and it would prevent some patients from having to stay overnight in the hospital,” said Neal Maerki, administrator of the Bend Surgery Center. “It will lighten the load for the hospital, especially if somebody has a little bit of pain and we need to keep them in house a little longer.”

The bill requires that extended stay centers report patient safety and discharge data to the Oregon Health Authority, and charges the state’s Health Evidence Review Commission to develop guidelines for what types of patients and surgeries are appropriate for surgery centers with extended stay services. The state will now draft regulations and establish a licensing process for the new centers, which could take about a year.

That could clear the way for surgery centers to apply to add recovery rooms in the spring of 2019.

“Maybe, at the earliest, these could be in operation by 2020,” said Chris Skagen, director of the Oregon Ambulatory Surgery Center Association. He expected there could eventually be up to 10 to 12 extended stay centers across Oregon.

“We’re definitely interested in being one of the participating entities,” said Cammy Gilstrap, director of the Cascades Surgicenter in Bend. “We don’t have all the details … but we’re definitely planning to and we’re in a great position to look at that.”

Gilstrap said Cascades Surgicenter has shelled-out space that could be easily converted into recovery rooms if the center decides to go that route.

“I think it would allow us to do some other types of surgeries,” Gilstrap said. “Some patients have reasons that they have to stay overnight.”

That could include patients who travel long distances for surgeries and can’t easily get back home, or those who don’t have someone at home to care for them for the first day after surgery. Other patients might need another night or two of pain management, because they’re not ready to transition to oral pain medications.

Shifting trends

Ambulatory surgery centers have been around since the 1970s, and initially performed surgeries that took a short amount of time and left patients in good enough condition to go straight home that same day. Over the past two decades, as surgical techniques improved, surgery centers moved toward increasingly complex procedures in patients that required longer recovery times. Many now keep patients for nearly a full 24 hours after knee or hip replacements. Some centers have expanded into shoulder and spine cases, sinus or thyroid procedures, and general surgeries, such as mastectomies, that were once done only in hospitals.

Oregon hospitals have seen their number of inpatient stays decline by 1,500 in each of the past two years. Meanwhile, their outpatient visits have increased, from 2.74 million in the fourth quarter of 2016, to 2.92 million in the same quarter in 2017.

A recent analysis found that nationwide between 2012 and 2015, elective total joint replacements done in outpatient settings increased nearly 50 percent, and are expected to more than quintuple over the next decade. The average length of stay after a total knee or hip replacement is now down to between one or two days.

The extended care model would allow for a greater percentage of those cases to be done at surgery centers.

House Bill 4020 took more than three years to pass, primarily due to hospital objections. Many hospitals complained that surgery centers were siphoning off surgeries and undercutting the financial viability of local hospitals. But as more procedures have shifted from inpatient to outpatient settings, hospital chains have opened or invested in their own surgery centers, and resistance has waned.

“This continuing trend of shifting from inpatient to outpatient is something we’re seeing, and I think our members are looking for new ways to continue that care in a safe manner,” said Andy Van Pelt, executive vice president of the Oregon Association of Hospitals and Health Systems. “This new model, the extended care center, allows for parallel care in a safe setting.”

The hospital and surgery center groups in Oregon negotiated the parameters of the 2018 version of the legislation, reaching an agreement that lawmakers then readily endorsed.

“(Extended stay centers) are part of the evolution and innovation that needs to happen in health care,” St. Charles Health System CFO Jennifer Welander said. “As we expand the setting, you’re going to have care be able to be done in the most appropriate setting for the risk the patient faces.”

St. Charles co-owns the Cascades Surgicenter in a joint venture with surgeons from The Center: Orthopedic and Neurosurgical Care and Research. The hospital has seen more of the procedures once done in its main operating room migrate to its outpatient department and outside to surgery centers in the region. Officials expect that trend to continue, which factored into their decision on how many inpatient beds to add as part of its current expansion project at the Bend hospital.

HB 4020 aims to protect smaller, rural hospitals by allowing extended stay centers only within 10 miles from the center of a population area of at least 40,000. That would allow such centers in towns as small as Corvallis or Grants Pass, but no area east of the Cascades other than Bend.

Extended stay centers will be limited to two recovery beds per operating room and no more than 10 beds in total. Surgery centers must operate for two years before they can add an extended stay center. Centers would also be required to have a transfer agreement in place with a nearby hospital.

Only five other states — Arizona, Colorado, Florida, Illinois and Nevada — allow for extended care centers. None has more than the 11 in Colorado.

“From what I’ve seen in the facilities in Colorado,” Skagen said. “They actually have the identical procedure list, so they are not doing more surgeries.”

Medicare, however, does not pay for extended care services, and surgery centers are prohibited by law from billing Medicare beneficiaries for the extra costs. Lawmakers directed the Oregon Health Authority to apply to the federal Centers for Medicare & Medicaid Services for a demonstration project to test Medicare payment for extended care centers.

“Hopefully, if it’s presented in the right way, potentially the federal government will begin to embrace this,” Skagen said.

Surgery centers currently are paid at about 56 percent of the hospital rate for the same surgery, and patients often benefit from lower co-payments as a result. Extended stay centers could also cut patient costs by avoiding an ambulance transfer to the hospital if a longer recovery is needed, as well as the costs for an inpatient hospital stay.

Extended stay centers could also cut costs for both public and private insurance plans. Skagen said a preliminary analysis found that the plans serving Oregon state employees could save $12 million to $15 million per biennium as more surgeries move from hospital to surgery centers.

“If we were to walk that same cost savings out in the larger health care market,” Skagen said, “I think there could be some very significant cost savings for the state of Oregon.”

—Reporter: 541-633-2162,

Editor’s note: This article has been corrected. In the original version, the name of the executive vice president of the Oregon Association of Hospitals and Health Systems was misstated. The Bulletin regrets the error.