.,

Department of Health and Human Services


OFFICE OF


INSPECTOR GENERAL


SURGERY IN OUTPATIENT SETTINGS:


A FOUR-STATE STUDY


\ Sf.RVIC'to 

Richard P. Kusserow 

INSPECTOR GENERAL 

"III-aoa APRIL 1992 
OFFICE OF INSPECfOR GENERA


The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services' (HHS) 

programs as well as the health and welfare of beneficiaries served by those programs. This 

statutory mission is carried out through a nationwide network of audits, investigations, and 

inspections conducted by three OIG operating components: the Office of Audit Services, the 

Office of Investigations, and the Office of Evaluation and Inspections. The OIG also informs 

the Secretary of HHS of program, and management problems, and recommends courses to 

correct them. 

OFFICE OF AUDIT SERVICES 

The OIG's Office of Audit Services (OAS) provides all auditing services for HHS, either by 

conducting audits with its own audit resources or by overseeing audit work done by others. 

Audits examine the performance of HHS programs and/or its grantees and contractors in 

carrying out their respective responsibilities and are intended to provide independent 

assessments of HHS programs and operations in order to reduce waste, abuse, and 

mismanagement and to promote economy and efficiency throughout the Department. 

OFFICE OF INSTIGATIONS 

The OIG's Office of Investigations (01) conducts criminal, civil, and administrative 

investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of 

unjust enrichment by providers. The investigative efforts of 01 lead to criminal convictions 

administrative sanctions, or civil money penalties. The 01 also oversees State Medicaid fraud 

control units which investigate and prosecute fraud and patient abuse in the Medicaid program. 

OFFICE OF EVALUATION AN INSPECTIONS 

The OIG's Office of Evaluation and Inspections (OEI) conducts short-term management and 

program evaluations (called inspections) that focus on issues of concern to the Department 

the Congress, and the public. The findings and recommendations contained in these inspection 

reports generate rapid, accurate, and up-to-date information on the efficiency, vulnerability, 

and effectiveness of departmental programs. 

This report was prepared in the Kansas City Regional Office under the direction of Don 

McLaughlin, Regional Inspector General and Jim Wolf, Deputy Regional Inspector General. 

Project staff: 

Kansas City Headquarters 

Dennis Tharp (Project Leader) Cathaleen Ahern 

Tim Dold 

Hope Hartshorn 

Deborah Walden 

Julie Quirin 
,. 

Department of Health and Human Services


OFFICE OF


INSPECTOR GENERAL


SURGERY IN OUTPATIENT SETTINGS:


A FOUR-STATE STUDY


\ Sf.RVIC'to 

Richard P. Kusserow 

INSPECTOR GENERAL 

1-

"III-aoa OEI-07-91-01470 
EXECUTIVE SUMMAR 


PUROSE 

To determine the tyes of surgical procedures which are commonly performed in 

outpatient settings in four States and the extent to which such outpatient settings are 

subject to licensure or accreditation.


BACKGROUN 

An increasing number of surgical procedures performed in freestanding outpatient 

facilities has raised concerns about the appropriateness of the setting and the quality 

of care. Since many procedures are no longer performed in hospitals, consumers need 

to be confident that they will receive adequate quality of care in an outpatient setting. 

This inspection is a companion to a related study conducted by the Office of Inspector 

General entitled "Surgery in Outpatient Settings: Forms of Oversight" (OEI-07-91­

00690). In that report, we identified the forms of oversight in place in each State. 

Both studies were requested by the Subcommittee on Regulation, Business 

Opportunities and Energy of the House Committee on Small Business. 

METHODOLOGY 

We chose four States on a judgmental, non-random basis. The four States selected 

include California, Texas, Ohio, and Maryland. We then selected 160 facilities from 

the directories for those areas. We targeted non-Medicare certified facilities that 

perform risk-associated procedures. We also targeted facilities which advertised 

surgery or emergency servces. We conducted 40 on-site visits consisting of intervews 

and a tour of the facilities (10 per State). We conducted telephone intervews with 

representatives from another 120 facilties (30 per State). 

FIINGS 

Thireen Perent of the Faciiti We Sureyed Condt Procedes Which We Clasi as 

High-RilC' 

Thirteen percent of the facilities conduct procedures we classify as "high-risk" 

procedures employing general anesthesia or intravenous sedation. 

Over Thee-Fourhs of the Sureyed Faci Are Neither Licensed Nor Accredited; A 

Third of the Faciit Performing "High-RilC' Procedes Are Neither Licened Nor 

Accreded 

Of the 160 facilities in our sample, 131 are neither licensed nor accredited. Of the 21 
facilties performing procedures we have classified as "high-risk " 7 (33 percent) are 

neither licensed nor accredited.


Medical Emeen Eqpmet An Procedes Are Not Uniform Availble 

Over half of the sampled facilities have no written medical emergency procedures or 

could not produce them during an on-site visit. Eight percent of the sampled facilities 

have no life support/resuscitation equipment available. 

Some Faci Inaccuately Adverted Surer or Emeen Seres 

Some facilties in our sample advertised surgery or emergency servces. However 

when reviewed, these servces were seldom offered on-site. 

RECOMMNDATION 

States Shoul Exmin the Licene Ru to Ense Qualit of "High-RilC' Procedes 

Perorm in Outpatit Settgs 

States nationwide should examine their rules for licensure and procedures for 

oversight and make any necessary changes to ensure the quality of surgery performed 

in outpatient settings, particularly in those facilties performing "high-risk" procedures. 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................. . . . . . . . . . . . . . . .. ... .........

TABLE OF CONTENTS


EXECUSUMY 

INODUCfON................................................. 

Puse.............. .......... 


Backgound 

Methodology . . . . . . . . . . . . . . . 2 

FIINGS . . . . . . . . . . . . . . . . . . . 4 

Theen Percent of the Facities We Sureyed Conduct 

Procdures Whch We Oassif as ''Hgh-Rik'' . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

Over Thee-Fourhs of the Sureyed Facities Are


Neither Licensed Nor Accedited; A Thd of the


Facities Performg ''Hgh- Rik'' Procures Are


Neither Licensed Nor Accedited


Medica Emergency Equipment And Procdures Are Not


Uniorm Avaable. . . . . . . . . . 8 

Some Facities Inaccately Advertd Surgery or 

Emergency Servces . . . . . . . . . . 9 

RECOMMNDAlll0N ............................................


APPENDIX A . . . . . . . . . . . . . . . A­
INTRODUCTION


PUROSE 

To determine the tyes of surgical procedures which are commonly performed in 

outpatient settings in four States and the extent to which such outpatient settings are 

subject to licensure or accreditation.


BACKGROUN 

This inspection is a companion to a related study conducted by the Office of Inspector 

General entitled "Surgery in Outpatient Settings: Forms of Oversight" (OEI-07-91­

00690). In that report, we identified the forms of oversight in place in each State. 

Both studies were requested by the Subcommittee on Regulation, Business 

Opportunities and Energy of the House Committee on Small Business. 

Th Shif Toward Ouatit Settgs 

Over the past ten years, there has been a visible shift in the health care marketplace. 

Many risk-associated procedures! traditionally conducted only in hospitals on an 

inpatient basis are now performed in freestanding facilties.2 This trend is expected to 

continue. 

Surgical volume was approximately 2 milion in 1989 and is expected to grow to 3. 

milion procedures by the end of 1992. The Joint Commission on Accreditation of 

Health Care Organizations (JCAHO) estimates that by 1995, 65 percent of all surgical 

procedures will be performed outside the hospital. Several factors have contributed to 

this shift. 

Advances in technology, anesthesia, and surgical techniques have increased the 

number of procedures that can be safely performed on an outpatient basis. 

Outpatient procedures are usually less expensive and more convenient for the 

patient. 

Risk-associated Procedures: medical procedures involving the prior and/or

concurrent administration of general, spinal, regional or local anesthesia or of 

sedation and/or analgesia that is sufficient to compromise a patient s protective 

reflexes. 

Freestanding Facilities: medical facilties where physicians conduct riskassociated procedures on an outpatient basis. 

Health Care Competition Week. Vol. 7, No. 28, 1990. 
Medicare and some private insurance companies provide incentives for riskassociated procedures performed on an outpatient basis by authorizing payment 

of facility fees and other physician incentives for outpatient surgery. 

Type of Freestanding Faci 

Freestanding facilties vary greatly. Due to increased technology and specialization 

many tyes of facilties conduct a variety of risk-associated procedures. These facilities 

include, but are not limited to, physician s offices, ambulatory surgical centers, cancer 

treatment centers, emergency/minor emergency centers, abortion clinics 

cosmetic/plastic surgery centers, pain treatment centers, and diagnostic imaging 

centers. 

Form of Overght 

The principal forms of oversight in place for outpatient facilities which perform 

surgery are licensure, certification, and accreditation. Other forms of oversight are 

provided by peer review organizations, insurance companies, and professional medical organizations. For a complete discussion of the forms of oversight in place in each 

State, see our companion report "Surgery in Outpatient Settings: Forms of Oversight" (OEI-07-91-00690). 

METHODOLOGY 

We selected four States on a judgmental, non-random basis. The four States selected 

include California, Texas, Ohio, and Maryland. We selected California as a State that 

has comparatively extensive requirements for regulation of freestanding facilties and 

Texas, Maryland, and Ohio as States where regulation is less extensive. We 

determined this from data collected for the inspection entitled "Surgery in Outpatient Settings: Forms of Oversight" (OEI-07-91-00690). 

We selected the largest metropolitan area in each State to conduct on-site visits to 10 

different facilities. We selected these facilties from the metropolitan areas 

directories. We targeted non-Medicare certified facilties that perform risk-associated 

procedures. We also targeted facilties which advertised surgery or emergency 

servces. Facility tye was a consideration in selection of the sample as we sought 

facilities representing a variety of specialties. (For a list of sampled facilities by tye see Appendix A). 

While visiting each facility, we intervewed either the office manager, physician registered nurse (RN), or other person familar with the specific operation of the

facility. We asked questions addressing the tyes of procedures performed in the facilty. We also inquired about the regulation of the facility, staffing of the facility, 

and medical emergency equipment and procedures. Mter completing the intervew we toured the facility to observe emergency equipment and procedures that the facility 
had available. We also gathered information about the physical layout of the facility, 

advertising strategies, and general cleanliness. 

To complete the sample, we selected an additional 30 facilties from each of the four 

States in the sample. We selected these facilities from the metropolitan areas 

directories. Our goal was to target facilities that perform risk-associated procedures. 

We conducted telephone intervews with either the office manager, physician, or RN 

of these facilities. For consistency, we used identical intervew guides for on-site visits 

and for telephone intervews. 

We conducted our review in accordance with the Int Standrds for Inspectins 

issued by the President's Council on Integrity and Efficiency. 
FINDINGS


Thireen Perent of the Faci We Sureyed Condt Predes Which We Clasi as 

High-RilC' 

We asked the representative(s) from each facilty about the procedures they perform 

in their facilty and whether these procedures require the use of any form of 

anesthetic. For purposes of this study, anesthesia is an indication of the risk 

associated with a procedure. We classify "high-risk" as those procedures involving 

general anesthesia or intravenous (IV) sedation.


The following chart provides the percentage of the sampled facilities determined by 

the tye of anesthetic. 

Sampled Facilities 

Anesthesia Used 

Legend 

Lol Anesthesa 

IV Seation 

Geneal Anesthsia


No Aneshesa 

(9%) 

Thirteen percent of the facilities conduct procedures that utilze IV sedation (9 

percent) or general anesthesia (4 percent). Seventy-eight percent of the facilties use 

local anesthesia (low risk), and 9 percent use no anesthesia. 

Single specialty and multi-specialty physician s offices have the largest variance in the 

tyes of procedures performed in the facility. Intervewees mentioned 22 different 

procedures they conduct in their freestanding facilities. Usually, we found that they 

utilize local anesthetia during these procedures. 

In the remaining facilties the physician did not perform such a large variance of 

procedures. This is primarily due to the increased specialization of the other facility 

tyes. Table 1 on the following page presents the facilty tye, examples of the highest 
risk procedures performed in any of the particular facilties, and the tye of anesthesia 

used for that procedure. 

Table 1


TYE OF PROCDUR PERFORMD IN VAROUS FACILIT 

FACILIT TYE PROCDUR ANTHTIC 

Ambulatory Surgical Ctr. Laparoscopy General 

Abortion Clinic Abortion General 

Cosmetic Surgery Ctr. Face Lift General 

Ophthalmologist Cataract Surgery IV Sedation/Lcal 

Dermatologist Dermabrasion IV Sedation/Lcal 

Pain Treatment Ctr. Nerve Block IV Sedation/Lcal 

Physician s Office Sigmoidoscopy IV Sedation 

Podiatrist Office Toenail Removal Local 

Multi-specialty Office Repair Lacerations Local 

Emergency Ctr. Repair Lacerations Local 

Cancer Treatment Ctr. Bone Marrow Biopsy Local 

Diagnostic Imaging Ctr. Breast Biopsy Local 

Kidney Dialysis Ctr. Needle Insertion Local 

Birthing Ctr. Child Birth None 

Of the 21 facilities performing "high-risk" procedures, 7 of the facilities use general 

anesthesia. These facilities include ambulatory surgical centers, abortion clinics, and 

cosmetic and plastic surgery centers. Fourteen facilties use sedation. 

The sampled facilities also varied in who administered anesthesia when it is necessary. This variance was due to the tye of procedure and the tye of anesthetic utilzed. 

the seven sampled facilities that perform "high-risk" procedures utilzing general anesthesia, three use a Certified Registered Nurse Anesthetist (CRNA) and four use 

an anesthesiologist. Of the 14 sampled facilties that perform "high-risk" procedures utilizing IV sedation, five facilities use physicians, three use registered nurses, five use

CRNA' , and one uses an anesthesiologist to administer the IV sedation. 

We found that the State Nursing Boards in the three States conducting procedures utilizing IV sedation administered by an RN were aware of this occurrence. We found 

that these States allowed an RN to administer IV sedation under a physician s order 
and under the supervsion of a physician. However, an RN performing this procedure 

presents a potential vulnerability in quality of care if the nurse has not received 

adequate training and if there is no emergency equipment on-site. Only one of the 

facilities utilizing an RN to administer IV sedation is licensed. None of the three 

facilities are accredited. Two of the three facilties had no emergency procedures, with 

one of the two stating they had procedures, yet unable to produce them on-site. 

We found that the three most common procedures utilzing general anesthesia were 

abortions, face lifts, and breast augmentation procedures. We found that the three 

most common procedures utilzing IV sedation were cataract surgeries, abortions, and 

facial reconstruction procedures. The graphs below show the tye of anesthesia used 

and who administers the anesthesia in those facilities performing "high-risk" 

procedures. 

Anesthesia Used and Administered 

High Risk" Facilties 

General Anesthesia IV Sedation 

(57%) Leend (36%) Leend 

Aneslois Anesesiois 

ii C. ii C.


(7%) I& Phsician 

Regisere nurse


(21%) 

(36%) 
Over Thee-Fourhs of the Sureyed Faci Are Nei Licened Nor Accredited; A Thir of the Faci Perorming "High-RilC' Predes Are Neihe Licened Nor 

Accredit 

Of the 160 facilties in our sample, 131 are neither licensed nor accredited. A large 

portion of these facilties are physician offices, which have tyically been left 

unregulated by the States. Of the 21 facilities performing procedures we have 

classified as "high-risk " 7 (33 percent) are neither licensed nor accredited. These 

include an ambulatory surgical center, an abortion clinic, a plastic surgery center, a 

pain treatment center, and three physician offices. 

For the purposes of this study, we considered only medical licenses as criteria for 

licensed medical facilities. We found that many facilities are licensed by a 

governmental entity (e. , city, county) as a business. These licenses are no different 

for a medical facilty than for a restaurant, hardware store, or barber shop. In our 

analysis, a business license was not considered licensure as a medical facility. 

Likewise, individual physician licensure should not be mistaken for facility licensure. 

Twelve of 21 (57 percent) of the sampled facilties that conduct "high-risk" procedures 

requiring IV sedation or a general anesthetic are not licensed. These facilities include 

six plastic surgery centers, three physician offices, one abortion clinic, one ambulatory 

surgical center, and one pain treatment center. 

Also, three-fourths (76 percent) of these 21 facilities are not accredited. These 

facilities are four abortion clinics, three physician offices, three ambulatory surgical 

centers, two plastic surgery centers, two ophthalmologists, one dermatologist, and one 

pain treatment center. All of the accredited facilties performing these "high-risk" 

procedures are plastic surgery centers. 

Even when facilties are licensed, standards and monitoring vary. Of the licensed or 

accredited facilities, 59 percent of the licensed facilties do not have specific 

requirements for staff, equipment, or the physical facilty. Six-five percent of the 

licensed facilities have not been inspected other than for their initial licensure. Only 

about one-third (35 percent) of the licensed facilities are inspected regularly. 

Facilities which receive accreditation are generally reviewed at least every two or three 

years by an on-site reviewer. Accredited facilties must meet certain criteria in many 

areas such as emergency procedures, equipment standards, operational efficiency, and 

medical and educational standards of the staff to obtain and maintain accreditation 

status. 

The Office of Inspector General companion report to this study entitled "Surgery in Outpatient Settings: Forms of Oversight" (OEI-07-91-00690) found that many facilties 

are not subject to licensure by the States and that physician s offices have little or no 

formal oversight. The report also found that the States are not consistent in their 
regulation of freestanding medical facilties. These findings are substantiated by data 

from this study. 

Medal Emeen Eqpmet An Predes Are Not Uniorm Availble 

Medical emergency equipment and procedures vary greatly by facilty. Over half of 

the sampled facilties (82 of 160) have no written medical emergency procedures or 

could not produce them during an on-site visit. 

Eight percent (13 of 160) of the sampled facilties have no life support/resuscitation 

equipment available. One of the physician offices performing procedures requiring 

sedation did not have emergency equipment. Some of these facilties mentioned local 

medical emergency "911" servces within minutes and access to a hospital across the 

street. Table 2 provides a summary of the facilities with no emergency equipment 

on-site. 

Table 2


SUMMAY OF 13 FACILITIES WITH NO EMERGENCY EQUIPMENT 

FACILITY TYPE ANESTHETIC USED OVERSIGHT 

Physician s Office Local None 

Physician s Office Local Accredited 

Physician s Office Local None 

Physician s Office IV Sedation None 

Physician s Office Local None 

Physician s Office Local None 

Physician s Office Local None 

Podiatrist Office Local None 

Emergency Center Local None 

Cosmetic Surgeon Local None 

Cosmetic Surgeon Local None 

Dermatologist Local None 

Pain Treatment Ctr. None None 

Our review entailed visiting 40 of the 160 medical facilities on-site. We conducted the 

remaining 120 intervews over the telephone. Tryng to verify responses to the 

telephone intervew question "whether a facilty has written medical emergency 
, 

procedures " we asked several of the facilties which had procedures to forward them 

to us. Of those facilties stating that they had procedures, we received only one 

response. 

Regarding preparedness for emergency response, 19 percent (31 of 160) of the 

medical facilities employ at least one physician who does not have admitting privileges 

at a local hospital. These physicians either prefer not to admit patients to hospitals or 

they have a network of physicians to whom they refer patients for admission. Also, a 

few of these physicians are retired, working part-time only. 

Some Faci Inaccutely Advered Surer or Emeen Seres 

We found that some facilities in our sample advertised surgery or emergency servces. 

However, when we visited these facilities, these tyes of servces were seldom offered 

on-site. 

In conducting our study, we called providers which listed emergency and surgical 

servces in the metropolitan areas' directories. However , when we spoke with the 

facility representatives, we found that most of the facilties were performing minor 

procedures with local anesthesia only. Most medical facilities are not performing 

high-risk" medical procedures, yet some of the facilties advertise performing major 

surgical procedures. 

The following examples are tyical of what we found at some of the outpatient 

facilities. At one facilty, a sign on the exterior of the physician office building 

advertised in-office surgery. During the intervew, we learned that the physician no 

longer performed outpatient surgery in his office. The outdated advertisement 

remained posted, although the physician stopped performing in-office surgery years 

ago. 

At a single specialty physician office facilty which advertised "EMERGENCY CARE 

personnel informed us that the medical emergency kit ("crash cart") was within 

immediate access. Upon a tour of the facilty, staffers had to move several boxes of 

supplies from a back closet to retrieve the emergency kit. Also, at another facility, we 

asked to see the facilty' s medical emergency kit. The physician produced a small 

briefcase then opened it up and said , that s not it. . . I think it is back there in 

another room." The physician did not produce the emergency kit. 
RECOMMENDATION


States Shoul Exmi the Licene Ru to Ense Quli of "High-RilC' Procedes 

Perorm in Outi Settgs 

States nationwide should examine their rules for licensure and procedures for 

oversight and make any necessary changes to ensure the quality of surgery performed 

in outpatient settings, particularly in those facilties performing "high-risk" procedures. 
APPENDIX A


SAMLED FACILIT BY TYE 

Single Specialty Physician s Office 

Multi-Specialty Physician s Office 

CosmeticlPlastic Surgery Center 

Emergency/Mnor Emergency Center 

Abortion Clinic 

Podiatrist Office 

Ophthalmologist 

Dermatologist 

Pain Treatment Center 

Ambulatory Surgical Center 

Cancer Treatment Center


Diagnostic Imaging Center 

Kidney Dialysis Center 

Birthing Center 

TOTAL 160