What's Ahead for the ASC Industry in 2014?

Nap GaryResearch suggests that the forecasts of pundits with high confidence in the accuracy of their predictions are less likely to be accurate than those of pundits with more modest assessments of what can be foretold. If that's true, this column may contain the best projections about the ASC industry that you'll read all year.

Let's start by making an incomplete list of the factors generally acknowledged as having the most significant effect on the industry today. The growth in physician employment by hospitals is probably foremost. Others — and they're interrelated — include:

•    The Affordable Care Act and the timeliness and effectiveness of its implementation
•    The track record of existent ACOs
•    The relative strengths of the hospital and surgery center lobbies
•    The overwhelming pressure on government to cut costs everywhere
•    The proliferation of misinformation and questionable logic with respect to Medicare reimbursement analysis (Happy New Year, MedPAC!)
•    The pressure on insurers to consolidate
•    The pressure on healthcare systems to consolidate
•    Consolidation within our own industry
•    The stock market's appetite for ASC companies
•    Inherent inequities in reimbursement updates between HOPDs and ASCs
•    Saturation of ASCs in particular markets
•    Shortages of new surgeon investors and utlilizers caused by factors other than hospital employment

What will be the impact of the interplay of all those and many other elements on the ambulatory surgery industry in 2014? Don't trust anyone who answers that question with any confidence. Nevertheless, here are a few tentative thoughts:

1.    Healthcare reform is here to stay, and higher reimbursements aren't part of the equation. It probably won't look exactly like it does today, but it isn't going away.

2.    Lower reimbursement means increased pressure to improve efficiency. That will spur more consolidation among insurers, and also among healthcare systems. Consolidation will occur within the ASC industry, probably to a greater degree than in 2013, but not to the extent that it does with insurers and healthcare systems.

3.    Stratification will increase. Centers with the "right" profile (whatever that may be at any particular time or location) will have more opportunities to sell at attractive multiples, to partner with hospitals, to participate in ACOs and to get invited to all the right parties.

4.    There will still be opportunities for the industry and individual centers to thrive. Sources may include new procedures on the Medicare-approved list, technological change, the strength of the fundamental value proposition of surgery centers, new payor-provider alignment models, and the entrepreneurial nature of our business.

Beyond that I will not venture. If you're trying to stay abreast of our rapidly changing industry, your best bet is to pay close attention to updates from the Ambulatory Surgery Center Association at www.ascassociation.org. There you'll find information you can trust on the latest developments affecting our industry.

Nap Gary is president of the Ambulatory Surgery Center Association (ASCA) and chief operating officer of Regent Surgical Health (www.regentsurgicalhealth.com).

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