State regulators have approved a first-of-its-kind plan between two of Chattanooga's biggest hospitals to build a multispeciality, outpatient surgery center inside a former U.S. Xpress office building off Interstate 75 in the rapidly growing East Brainerd community.
The $23.2 million facility, named Chattanooga East Surgicenter, will be housed on property purchased by Parkridge Health System for $36 million in August.
Chris Cosby, CEO of Parkridge, said during a Health Facilities Commission meeting last week that Parkridge's parent company, HCA, will form a general partnership with Erlanger Health — Chattanooga's largest hospital, only safety-net provider and a Parkridge competitor — in which the surgery center is 51% owned by HCA and 49% owned by Erlanger.
That partnership will come together to create a joint venture that's 51% owned by the general partners and 49% owned by the surgery center's physicians, with no physician owning more than 5%.
A joint venture of this scale has never been undertaken by two competing health systems in Chattanooga, Cosby said, calling the collaboration "historic for this city."
Gregg Gentry, chief administrative officer at Erlanger Health, said Erlanger has been trying for years to figure out how to bring an ambulatory surgery center to market.
"As we engaged in dialogue and discussion with HCA, we quickly realized they not only have the experience but the in-depth expertise to bring an ASC online and to do so in a cost effective, sustainable manner," Gentry said.
Once complete, the nearly 24,000-square-foot facility will include five operating rooms, four procedure rooms and recovery bay to provide a range of surgeries, including orthopedic; plastic; gynecological; ear, nose and throat; endoscopy; and urology.
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Recent advancements in health care technology enable surgeries traditionally performed in hospitals to be conducted in outpatient settings. Because outpatient care is more cost-effective than inpatient, health insurers are increasingly requiring more of these cases be performed outside of hospitals. Many patients also prefer the convenience of outpatient facilities.
Ambulatory surgery centers have proliferated across the nation as a result of the industry trends but not so much in Chattanooga compared to some other cities, Cosby said.
Currently, only 16.5% of outpatient cases that would be performed at Chattanooga East Surgicenter are conducted at an existing ambulatory surgery center in the area, and only 35% of total surgical cases in Chattanooga are conducted at ambulatory surgery centers, according to Cosby. Moving these cases to the new center will free up space for more complex surgeries at the hospitals, he said.
The facility is projected to open in 2025 and is estimated to see roughly 7,100 cases in the first year and more than 12,100 cases in the second year, according to a copy of the certificate of need application for the project.
Several local leaders and officials spoke at the meeting in support of the project. No one spoke in opposition.
Contact Elizabeth Fite at efite@timesfreepress.com or 423-757-6673.