Hospitals are snapping up ambulatory surgical centers and converting them to hospital outpatient surgery centers, but here's a new one: a hospital becoming an ASC. That's what happened a couple months ago in Arlington, Texas, when the JPS Diagnostic and Surgery Hospital closed its doors and 10 days later re-opened as the JPS Surgical Center.

The unusual move of de-licensing the general acute care surgery hospital and re-licensing as an ambulatory surgical center was a first for the state of Texas. As such, both hospital officials and governmental agencies had to learn together the ins and outs of a hospital-to-ASC transition.

The story starts in 2005, when the JPS group purchased the 30-bed facility as a physician-owned surgical hospital. The hospital was open for 6 years. As a county hospital funded by tax dollars, the bottom line was always in the crosshairs of hospital and county officials alike.

And the numbers just weren't adding up.

The average daily census for inpatient services was 1 — yes, 1— patient a day, says Chris Dougherty, JPS senior vice president for community health.

"But with that, we had all the responsibilities of an acute-care facility," he says. "We were mandated to provide 24-hour emergency room services. We had to have a kitchen that lived up to (food service) codes that provided meals round the clock. We had to carry 24-hour security." In November 2009, Mr. Dougherty and his team took a look at the demographics that the county-funded hospital serves. By and large, the hospital was mandated to serve uninsured and underinsured patients that were at 200% of the Federal poverty limit.

The hospital's funding came from tax dollars — a line item that taxpayers saw on their yearly tax bill. Most of the patients that entered the emergency room were whisked away by ambulance to JPS's 537-bed sister hospital in Fort Worth.

"What we really saw was a need for ambulatory services," says Mr. Dougherty. "Most of the work we did in the acute-care hospital was ambulatory and endoscopy services."

Armed with that information and an extensive community needs assessment done in January 2010, JPS management embarked on the unusual step of de-licensing the acute-care facility and re-licensing as an ASC.

"After we vetted the community needs assessment, we had to come up with a plan to convert the (acute-care) facility to an ASC," says Mr. Dougherty. "We started with the state of Texas, and we quickly learned there was no clear road map on how to achieve our goal. This just had never been done before."

So far, so good, says Mr. Dougherty. A month into life as an ASC, the facility is seeing between 50 and 60 patients per day, and with endoscopic procedures he expects that number to climb to 90.

The surgical center is open 6 a.m. to 6 p.m., Monday through Friday. It employs 50 staff members, 20 surgeons and resident doctors. Their service menu runs the gamut of ASC offerings, including orthopedic surgery, general surgery, endoscopy and gastroenterology.

Nobody lost their job due to the de-license, says Mr. Dougherty. "We reassigned 13 staffers to other JPS facilities, and a few decided to leave because their hours changed," he notes. "But we didn't lose a single employee because of the de-licensing."

But the bigger number is the total cost savings to the taxpayer. "We're a county-paid facility," says Mr. Dougherty, "and annualized we're saving the taxpayer $1.6 million a year." That's 15% more than the acute-care facility was saving the county.

"With us being a public ASC, it is vitally important to be good stewards of the taxpayers' money. Our mission is to take care of the under-served."

JPS is not the only hospital to become an ASC. In July, Erie Shriners Hospital for Children reopened as an ASC and outpatient clinic. The hospital in Erie, Pa., stopped all inpatient surgeries as part of its transition. Erie Shriners continues to perform same-day surgeries and see patients in its outpatient clinics and motion-analysis lab, and plans to convert its inpatient surgery unit into pediatric specialty clinics.