As part of an ongoing series, Becker's is talking to healthcare leaders who will speak at the conference on October 26-28, 2023. The following are answers from our speakers.
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If you would like to join as a speaker, contact Zoe McClain at zmcclain@beckershealthcare.com.
Question: Where do you see consolidation headed in the ASC industry in the next 5 years?
Adam J. Bruggeman, MD. Chief Executive Officer, Texas Spine Care Center (San Antonio): Overall healthcare continues to see significant consolidation, but ASCs should be somewhat less impacted related to the ability of physicians to own their own facilities — up to 100 percent of a facility. Certificate of need states will see higher consolidation while those states without certificate of need should see less consolidation when compared to the consolidation we see in the hospital market.
Todd Currier. Administrator, Bend Surgery Center (Cody, Wyo.): Consolidation will continue to see growth in the future, but maybe not as high as in the recent past. As more and more physicians are employed through a health system I foresee independent ASCs continuing to join forces with health systems, management companies or both. Growth will come from both acquisition and development of new centers.
Jason Goodwin, MS, MPH, RN, CNOR. Associate Professor, Nursing, Sacramento City College (Calif.): The ASC industry has seen significant consolidation over the past decade, with larger players acquiring smaller centers to expand their footprint and increase their market share. This trend is expected to continue in the next five years as ASCs face increasing pressure to reduce costs and improve quality.
Major drivers of consolidation are the shift toward value-based care, market and regulatory pressures, and the entry of private equity firms, which have a laser focus on profitability and reduced expenses. This shift is leading ASCs to collaborate with other healthcare providers, such as hospitals and physician groups, to create integrated networks that can offer more comprehensive and competitive care to patients.
Another factor contributing to consolidation is the increasing competition from other healthcare providers, such as outpatient clinics and urgent care centers. ASCs are using technology in many cases to expand their services to remain competitive and attract patients. The future of the CMS rulings on venue of care will dictate many of the directions of innovation, but product lines such as ophthalmology, spine, robotics, and orthopedic joint replacements, if completed in ASCs, will become a hot ticket for those looking to optimize profitability.
Thomas P. Barnett, MD, FACS. Surgeon, EdenHill Medical Center (Dover, Del.): I see doctors at independent ASCs monetizing their investment by partnering with hospital systems and national companies in many three-way ventures. Some hospital systems realize the value of solidifying a financial relationship with local doctors. In addition, some ASCs have found after partnering with others despite owning 49 percent, within a couple of years their dividends are often close or at where they were a couple of years before. Suggest an investment banker or adviser be part of your due diligence as they can often incorporate future EBITDA into an ASC's value.
Michael Patterson, FACHE. President and Chief Executive Officer, Mississippi Valley Health (Davenport, Iowa): I believe we will see an uptick in ASC consolidation over the next few years. Hospitals and health systems have been doing it for decades and as the ASC community continues to mature and grow, it only seems reasonable that ASCs will look for similar savings through merger and acquisition activity. ASCs have matured and the technology and leadership needs to run a complex healthcare organization will need to be met.
We will see leadership assets executing deliverables over multiple sites of care and as such having a larger footprint makes that economically feasible. ASCs exist to provide a high quality, lower cost, easily accessible pathway to surgical and non-surgical services. As ASCs continue to align with their physician partners, it would be expected that alignment through formalized partnerships will continue to develop. It’s an exciting time to be in the ASC space and we look forward to continuing the evolution of meeting the healthcare needs of our communities and doing so in an easily accessible and cost effective manner.
Kayla Schneeweiss-Keene, BSN, RN, CASC. ASC Administrator, Mann Cataract Surgery Center (Houston): It is hard to say really, I like seeing independent companies stay independent but there are pros as well as cons with consolidation. Consolidation companies may have better group purchasing leverage but there are also GPOs that have the same leveraging power for the independent companies. It also depends on the owners of the independent companies and where their future goals and visions lie.
Brian Cole, MD. Managing Partner, Associate Chair, Professor, Department of Orthopedics, Rush Oak Park Hospital (Chicago): Similar to physician practice challenges, ASCs will likely face several headwinds offsetting the migration of inpatient surgery to the ambulatory setting. Specifically, redundant or excess capacity in a setting where the cost of human resources, supplies, and implants continue to rise matched against stable or declining facility fees will likely create opportunities to consolidate ASCs in certain regions. I would anticipate that consolidation will occur first in non-CON states simply because of a disconnect between capacity and utilization. Nonetheless, the ASC continues to provide a safe, efficient and cost-effective option to deliver the highest quality care for our orthopedic patients.
Thomas Moshiri, MD. Chief Business Officer, Arizona Pain Relief (Scottsdale, Ariz.): The insurance reimbursement and payer platform is constantly changing. To remain competitive and profitable ASCs need to remain flexible and be able to pivot quickly as needed. Consolidation of single specialty ASCs where only certain common surgical procedures are performed can result in better GPO contracts, more efficient supply management and improved revenues. Add to that the efficiency that is derived from a patient safety and personnel standpoint of doing the same type of case over and over again. This is one direction in which ASC consolidation may move in the future.
Erika Wilcox, RN, BSN. Administrator, Surgery Center of Boerne (Austin, Texas): The evolution of the ASC, as we've seen over the last several years, is remarkable. Total joint replacements, spine, and the growth of cardiovascular procedures in ASCs indicate the ASC's limitless capabilities with the right patient. Insurance companies will continue to push patients who meet the criteria for outpatient surgery outside of the hospital. Hospitals will eventually be forced to respond — if they have not to this point — by partnering or building their own ASC to recover this lost revenue to their system. ASC management companies will continue to thrive as the push for safe and affordable surgical care remains the focus of the collective.
Neal Kaushal, MD, MBA. Chief of Gastrology; Chairman, Department of Medicine, Adventist Health (Sonora, Calif.): I see consolidation in the ASC industry headed in two directions over the next five years — large health system integration and private equity backed mergers and acquisitions.
The ASC market is increasingly being leveraged to shunt high care delivery costs from the acute care setting to the ambulatory setting. This is especially true regarding elective surgeries, oftentimes even complex cases which previously may have been performed in the hospital operating room setting. As such, large health systems are going to be looking to defray increased operational costs of acute care by increasing ASC operations.
Similarly, ASCs are often known for their efficiency and exceptional patient experience when managed effectively. With the increasing presence of private equity backing for-profit medical groups, ASCs are going to be at the forefront of these ventures.
Vishal Mehta, MD. President and Managing Partner, Fox Valley Orthopaedic Institute (Geneva, Ill.): I believe we will see accelerating consolidation within the ASC industry. Hospitals will continue to acquire ASCs as they attempt to hold on to total joint and spine cases that are migrating to that setting. In addition, labor shortages and tight margins will encourage consolidation to aid in staffing and administrative efficiencies. On top of this, we are likely to see continued vertical integration in healthcare with more players becoming interested in ownership of ASCs to better control the delivery and costs of healthcare.
Alicia Gipson, MSN, RN. ASC Administrator, PSA Killeen Surgery Center (Texas): In the next five years, consolidation will occur as more physicians align together with the common goal to provide quality patient care and excellent customer service. I see more centralization of processes to support efficiency within the ASC setting. I also see more consolidation of the surgical cases approved in an ASC setting, as opposed to only allowing the completion of said cases in an inpatient or outpatient hospital setting. Lastly, consolidation is on the horizon related to the cost of goods for services rendered to allow optimization of supply management, additional resources, as well as obtaining maximum reimbursement of the care and services provided in an ASC setting.
Alyson Engle, MD. Pain Medicine Physician, Northwestern Medical Group (Chicago): Over the next five years, ambulatory surgery center consolidation is likely to accelerate with private equity firms continuing to add onto existing platforms, while academic institutions and large healthcare systems move further into the space.
Consolidation can be beneficial in improving efficiency of management and reducing overall cost of care. However, if consolidation goes too far, it could lead to reduced competition and more costly care. Specialties with lower reimbursements could fall victim to consolidations, leading to decreased access to care in some areas. Consolidation could also add downward pressure on physician incomes if they are squeezed out of ownership positions and into employment relationships with large consolidators.
Andre Blom. Chief Executive Officer, Illinois Bone & Joint Institute (Des Plaines, Ill.): Sustainable consolidation will be driven by equilibrium in ASC equity, along with stability and efficiencies in daily operations. With more risk- and value-based models being shifted to the ASC market, an increased emphasis will be placed on hitting on all factors of success, not just isolated and short term gains.
Well-managed blocktime, stable staffing — especially anesthesia services — materials management and contractual strength will all be important.
Majid Ghazi, MD. Pain Medicine Specialist, Center for Pain Medicine (Fargo, N.D.): ASCs are becoming extremely attractive for acquisition and consolidation, particularly by local hospitals, due to increased cost and limited OR access for elective procedures, in inpatient settings. In recent years, I have seen rapid growth in the number of minimally invasive procedures performed in ambulatory surgery centers. This trend has also prompted hospitals to expand their market shares by acquiring ambulatory surgery centers. ASC acquisition and consolidation is also becoming a hot target for management companies due to the future growth and high profitability of the industry.
Richard White, MD. Orthopaedic Surgeon, Fitzgibbons Hospital (Marshall, Mo.): The ASC consolidation will continue in the next five years. This is based on factors that include changes in reimbursement policies and the need to achieve economies of scale, negotiate better payer contracts and increase market share. In the meantime, providers will continue to adapt to the changing landscape.
Vivek Mohan, MD, MS, FAAOS. Spine Surgeon, Orthopaedic Spine Institute (Hoffman Estates, Ill.): I see the ASC industry grow substantially over the next decade. Both hospitals as well as physician groups will open ASCs to expand their sites of care and increase efficiency and productivity. However, similarly with physician practices, I predict venture capital and private equity money will help spur the rapid growth of ASCs in the next three to five years. Within 10 years, many surgery centers will likely be consolidated either regionally or nationally to maximize profitability and streamline delivery models for each pathway — joint replacements, spinal fusions, etcetera. Surgeons need to be vested in ASCs now to come out ahead at the end.
Alfonso del Granado, MBA-HC, CASC. Administrator and Chief Executive Officer, Covenant High Plains Surgery Center (Lubbock, Texas): I’m starting to think that the curve is going to flatten for the large ASC operators. We’ve seen reports from several over the past couple of years that they have cut back on their five-year projections. I’ve also had the opportunity to speak to frontline leaders at several of the large groups, and all have expressed some level of frustration that the corporate infrastructure is behind the times and unable to keep up with current demands, which makes me wonder whether continued rapid growth is reasonably sustainable.
Excluding founders seeking to cash out, the main selling points of chain operators are: access to cash for growth, better management, better contracts, and volume discounts on supplies and employee benefits packages.
Access to cash is not always a clear-cut proposition. Well-run centers should have little trouble attracting advantageous financing terms to fuel their growth strategies, whether new equipment, new service lines, or physical expansion. Our own centers have been able to invest heavily in the last couple of years with an effective negative interest rate, for example. There is also something to the argument that if nobody will lend you the money, it’s probably not a good investment to begin with, and ASC groups would be foolish to throw money down a well. And, because investors expect a return, which amounts to a tax on profits, there is a chance that a failure to meet performance targets will result in cutbacks in other areas that ASC founders may find less desirable.
The second proposition may still hold water for small independent ASCs, but advances in technology and education are making professional management accessible to many more ASCs. If my concerns about corporate growing pains are valid, management services may not be as compelling an argument as it once was.
With regards to contracts, over a decade with a small ASC group in Chicago, half a dozen merger and acquisition offers from large players faltered because their contracts were not as good as what we had already. Today I’m impressed by the way Optum has built their network, which I think they can leverage to better effect than some of the competitors have. Beyond that, hospital joint ventures hold significant promise for improved reimbursements — if the physician partners and hospital leaders can reach mutually beneficial and respectful agreements, and I expect that to become a larger share of the consolidation activity in the next few years.
Finally, large groups do continue to offer value propositions in the area of cost controls for supplies and benefits, relying on their larger purchasing power for both. These are especially relevant today and I believe hold the greatest benefit to attract ASCs.
In short, the ASC acquisition frenzy has shown signs of slowing already, and I expect that trend to continue. The larger, more successful — and more attractive — ASCs may not see a tremendous benefit in being acquired, and will likely remain independent. Smaller centers may still see a reason to join, but may not be as attractive for acquisition. By contrast, most of the consolidation activity I’m expecting is horizontal, between operators and health systems, which feature many of the benefits listed above plus access to system-owned physician groups. I believe the most troubling development for independent ASCs in the last few years has been the increase in hospital employment of physicians, and I’ve seen several instances of ASCs shrinking because their feeder sources have been cut off.
A three-way partnership among physicians, a hospital system, and an ASC operator is a model that, done right, holds all of the benefits above with few of the risks. Our own joint venture is a successful example of this model, so perhaps I’m biased, but our management company National Cardiovascular Partners offers the ASC management expertise we need, our managing partner Covenant Health System provides access to payer contracts and purchasing power, and our physician partners continue to enjoy autonomy and self-direction. Although I cannot comment with inside knowledge, I was pleased to see a recent notice that USPI is partnering with Providence — a parent of CHS — in California and Washington.
The bottom line is that there will still be consolidation, but a growing percentage of the activity will likely be small-to-large ASC operators acquiring or merging with each other, or partnering with health systems, while the growth rate of straight ASC acquisitions will continue to soften. The question of where PE fits into all of this is a topic for another day.
Over the next five years in the ASC industry, I expect facility consolidation to experience a slight increase.
Joseph D'Agostino, MBA. Administrator, Advanced Surgery Center Perimeter and Gwinnett Advanced Surgery Center (Snellville, Ga.): All facilities will achieve this through changes in their ownership model to add new investors/owners beyond their current distribution — whether joint venture, wholly owned by a healthcare system, or increased additional physician ownership — the merging of struggling facilities, the relocation of facilities into newer medical office buildings, de novo and new center development projects, etcetera.
Several factors play a key role in this trend, such as dynamic market challenges include, but are not limited to, declining reimbursement for both providers and facilities, increased cost of staffing and supply shortages. The inevitable shift to higher acuity cases from an HOPD to a freestanding ASC will also continue. In addition, the possibility of the elimination of noncompete agreements could drive greater utilization and the opening of new facilities overtime.
Fawn Esser-Lipp, MBA, BSN, CNOR, CASC. Executive Director, The Surgery Center LLC (Franklin, Wis.): I am starting to hear more about private equity and MSO trends for ASCs. I believe this may be a good alternative to partnering with large health care systems. In some areas, private ASCs seem to be booming, however in my area, private ASCs are struggling to survive competing against big health care systems. Short answer is that the consolidation trend will be dependent on the area. I do expect to see more ASCs combining their resources and forming their own MSO.
Andrew H. Lovewell, MHA, MSHI, FACHE. Chief Executive Officer, Columbia Orthopaedic Group and The Surgical Center at Columbia Orthopaedic Group (Mo.): As a bold prediction, I think we will see more independent ASCs stay the course and we could even see some ASCs break away from the management conglomerates. The big five — USPI, AmSurg, HCA, SCA, and Surgery Partners — will continue to consolidate through acquiring the smaller management companies in the space but it will stall past that. The reason for the stall is that the uptick to standardizing processes is so long. Coupling the breadth and depth of disparate systems in ASCs makes the consolidation process even harder.
Benita Tapia, RN, CASC. Administrator, 90210 Surgery Medical Center, Linden Surgery Center, Precision Ambulatory Surgery Center, Spalding Triangle Surgery Center (Beverly Hills, Calif.): The ASC industry I foresee will continue to consolidate and merge with joint venture partners and private equity companies. As the ASC industry goes forward, taking on higher acuity cases and the demands on ASCs to provide value-based quality care. Purchasing power can only be established by being part of a larger group. Negotiating power with insurance carriers for better reimbursements. Demands to show quality care and outcomes require labor and sometimes specialized trained staff such as infection control trained nurses. This kind of costly specialized staff can be shared between centers if part of a larger group entity.
Deena Edwards. Administrator, The Surgery Center of Southwest Ohio (Moraine, Ohio): Hospitals are being pressured to drive down medical costs. For them, consolidation makes perfect sense, as partnering with an ASC allows them to deliver quality care in specialized centers rather than duplicating services. For physician investors, consolidation allows them to save money on salaries but still have access to support in areas such as contracting, legal matters and human resources. Whether the partnership is positive or negative depends on the operating agreement between the parties involved and their agreement to work together toward the common mission and vision of the facility.
Sheila Thompson, RN, BS. Practice Administrator, Twin Cities Pain Clinic (Edina, Minn.): The action of combining several things into a single more effective whole is what the ASC industry has done and continues to do. More and more specialty physician groups are building ASCs adjacent to their clinics. They can see their patient in the clinic and then walk across the hall to the ASC to perform their cases. Keeping everything under one roof provides easy access and a time saver for both the patient and physician. Over the next five years I predict we will see more of this type of growth.
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Marietha Silvers, RN, BS, CASC. Administrator, The Surgery Center of Cleveland, LLC: As payers reward patients and employers for choosing the lowest cost option for outpatient procedures, more and more hospital management companies will look to expand their portfolios to include ASCs. Hospitals know that the volume is being pushed to the lowest cost of service providers. They realize that ASCs are here to stay and they can either join in or be left behind. ASCs that were not part of a larger management group can benefit from this partnership by having their new partners negotiate new and better managed care rates.
Mark Mayo, CASC. Administrator, Associated Surgical Center (Arlington Heights, Ill.): Data suggests growth in the number of ASCs and an increase in case volume over the next five years as healthcare recovers and learns from the effects of COVID-19 when the value of independent ASCs showed their value. Many patients have expressed reluctance to use their hospital for routine outpatient services such as elective surgery. Hospitals are committed to establishing their own surgery centers — with or without traditional joint ventures with ASC management companies — and we expect more such projects to be announced and funded by the hospital.
The changes in our economy and increased costs of financing may result in a slowing of new independent surgery center development. Financial concerns may cause some independent ASCs to seek financial and management support from the ASC management companies. These companies need to show flexibility and not just cookie cutter approaches to attract into their orbit the more independent-minded physician leaders.
Nyleen Flores, CPMSM, CPCS. Administrator, Total Surgery Center (Naples, Fla.): I see the ASC industry heading towards continued growth in multispecialty offerings to allow for a 'one-stop shop' for patients. The scope of outpatient procedure offerings, such as the increase in total joint procedures, will allow for continued growth, greater access to healthcare, as well as a more affordable alternative option for patients needing and seeking elective procedures.
Scott Leggett. Chief Executive Officer, Surgery One, LLC (Carlsbad, Calif.): Just like how George Bailey in "It’s a Wonderful Life" figured out how to slow down the bank run on Bailey Brothers Building & Loan, our banking system is figuring out what to do in a more complicated market. The big question is how they figure it out. If the banking system consolidates, it could become more difficult for small businesses and independent ASCs to obtain loans. Small businesses and independent ASCs have, for the most part, depended on the regional relationship with banks for their needs. If things settle down and good competition among the banks remain intact, then the small businesses and independent ASCs could have a better chance of thriving and growing. Inflation of course is the big wildcard no one has really figured out and it could play a factor in consolidations as well.
Charles DeCook, MD. Orthopedic Surgeon, Advanced Center for Joint Surgery (Cumming, Ga.): Disruption in health care, just like all other industries, will occur from 'below.' Institutions that can offer the same service as the status quo, but can do it simpler, better, and for less money will ultimately win. This consolidation started with the move from hospitals to ASCs but will continue as we move from multi-specialty and single-specialty ASCs to single-subspeciality ASCs.
We refer to this as the 'super-specialization' of ASCs. When ASCs were in their infancy, surgical case volumes were low, and combining many surgical specialties in the same facility was financially necessary. These volume and financial constraints lead to limitations of what ASCs could offer to their surgeons and patients as they struggled to offer many different procedure types. As the volume of procedure continues to expand exponentially in the ASC, the move to more specialization is now financially possible. These 'super-specialized' ASCs will offer better trained staff and support to the surgeon as well as more focused care, outcomes and satisfaction to the patient. ASC specialization mirrors the specialization that has already occurred with surgeons.
As the number of surgeons increased, there was more of an opportunity to increase focus on a particular specialty. This focus led to higher volumes, repetition and mastery which lead to consistency and better outcomes for patients. Surgeon specialization led to improvements in technique, efficiency and patient outcomes. The same will occur with facility specialization. Facility specialization has lagged surgical specialization. Facilities have traditionally offered a wide array of different surgical procedures, instrumentation, technologies, and staff that were versatile with a number of different specialties.
Specialized surgeons have been forced to operate at these general facilities that lacked the focus and expertise of their particular specialty and procedures. This meant that surgeons that repeatedly did the same procedure over and over were paired with surgical staff that lack their specialization and focus. An orthopedic surgeon was often paired with surgical techs and circulating nurses that normally assisted in ophthalmology. Gynecologists were operating with staff that rarely did gynecology cases. These facilities may offer a particular technology that could be used across many specialties but lacked specificity to one. Recovery room nurses would have to care for gallbladder cases in one bay, and a cataract in the next bay. This mismatch in specialization between surgeon, technology, staff and facilities has led to significant reductions in efficiency, outcomes, value and care.
Symbiosis between specialized surgeons and specialized ASCs is a winning formula for overall healthcare value and patient outcomes and will be the backbone of future ASC consolidation. This symbiosis will produce a product that is simpler, better, and cheaper than facilities that offer a broader range of services and procedures. Surgeons will naturally migrate to facilities that are specialized in their discipline offering significant advantages in patient care and efficiency. When staff and surgeons are all aligned doing the same thing over and over, improvement naturally occurs.
Surgical efficiency will be the natural result of the symbiosis of specialized surgeons and facilities. Repetition and volume will lead to better outcomes and lowering of cost. Enabling technologies that facilitate efficiency in the operating room and along the patient journey will be fundamental to improving overall value in the ASC.
Innovative technologies that allow us to do more and more complicated procedures in lower cost facilities will lead to the biggest consolidation in the ASC. Doing primary joint replacements in an ASC is exciting today. Tomorrow, we will be doing complex joint revisions in the ASC. Improvements in technique, technology and innovation will be required to improve our ability to do more complex things in a lower cost venue. Higher implant costs, vendor trays, surgical instruments, blood loss and mobility constraints after revision surgery will need to be addressed. Hospitals have already been disrupted, but ASCs, you are next! The disruption will come in the form of specialization, complexity and efficiency. The symbiosis between the specialized surgeon and specialized ASC will lead to efficiency, lower cost and overall improvement in healthcare value.
Jayen Patel, MD. Consulting Physician, SEVA Med Care (Lewisville, Texas): Insurance-based purchases of physician groups and Optum-like expansion of ASCs, the emergence of small group managment systems and management services organizations, and device manufacturing partnerships in brick and mortar as interest rates remain high and barriers to entry.
Mark Hood. Chief Executive Officer, Spine Team Texas (Rockwall): I believe we will see more ASC consolidation over the next five years. It is increasingly difficult for free standing ASCs to navigate the regulatory environment as well as secure competitive rates through contracts with managed care companies. ASC valuations continue to increase, and many owners will take advantage of this through consolidation with large players in the industry.
Heather Colon. Senior Business Office Manager, Orthopedic Surgery Center of Palm Beach County (Boynton Beach, Fla.): As ASCs continue to evolve with increased emphasis on value-based care, the potential for ongoing cost reduction, and improving efficiency points, strategic partnerships represent the forefront of a rapidly maturing market. Historically, a majority of facilities were independent, but let's not forget the new generation of physicians with a vastly different work ideology and a new set of circumstances: millennials. The autonomy of owning their own facility is inviting, doing it alone, not so much.
With a formal strategy in place, consolidation provides new ideas, insight, and growth. The biggest challenges: CMS expansion of outpatient service lines, and payer cooperation.
Brian Gantwerker, MD. Spine Surgeon, Neurosurgeon, The Craniospinal Center of Los Angeles: I anticipate more private equity and hospital systems involved in the ASC industry. Each will have its own particular take. With private equity, the organizations will come in, create as lean an operation as possible, likely hire all CRNAs and employ inexperienced nursing staff to cut costs and try to eke out every cent possible before selling the ASC to either the next firm, wind it down, or sell to a hospital system.
The hospital systems want to control the flow of patients completely. From the hospital, to the ambulatory setting, to the outpatient centers, they want to own every piece of care possible. Their reasoning is obvious.
What will be lost is the competitive marketplace and quality patient care. In truth, the tremendous gravitational pull toward fewer players in the marketplace will not do anything to engender competition and increases in quality. Patients will have less choice, less say in how they get care. This is a trend I have been seeing more and more in the last five years. I think the next five years will be more of the same. The industry needs to understand the insatiable gobbling of independent ASCs is going to be bad for them as reimbursements will go down, and they can only cut so much out of their overhead costs before bad things start happening.
My hope is in the next five years, we can have a major course correction, reinvigorate majority physician owned ASCs where their leadership will help control cost, keep patients safe, and service their communities’ health needs. For that to happen, we have to take control of the healthcare system out of the hands of the payers and big corporations. How that happens, is anyone’s guess.
Alexander P. Sudarshan, MD. Ophthalmologist, The Eye Experts (Brownsville, Texas): I believe in the next five years, we will see consolidation and ownership of ambulatory surgery centers. This will be similar to what is occurring in practice purchases, by private equity. The difference is I expect ASC purchases to be done by large insurance companies, such as United.
Omar Khokhar, MD, CPE. Partner, Illinois GastroHealth (Bloomington, Ill.): The ASC space going forward is a double-edged sword. Rising staffing costs and declining reimbursements will tighten margins across the margin. That said, ASCs still represent value for patients and payers, and they should continue to shift surgical cases from hospitals which represent lower value for service. That last word is key — ASCs need to meet the patient where they are and be flexible with regards to timings and availability which further distinguishes them from hospital-based services.
Andy Paulson. Executive Director, Central Illinois Endoscopy Center (Peoria, Ill.): I believe that consolidation will continue and increase as owners of independent ASCs continue to offers from larger entities that offer support from revenue (contracting) and expense (purchasing power) that independent centers do not have. As physician owners near retirement, the financial incentive to sell to an outside organization will continue to be strong and hard to ignore.
Alex Portillo, RN, BSN. Administrator, Manhattan Surgery Center (New York City): As far as where I see consolidation in the next five years, I can see the trend continuing to move upward as more and more cases are being pushed out of hospitals and into ASCs. This, along with acquiring better reimbursement from insurances, will infuse a tremendous amount of well-deserved vitality to the industry. ASC companies would no doubt follow suit with aggressive growth strategies to bring more ASCs under their umbrella.
John Peloza, MD. Orthopedic Spine Surgeon, Midwest Orthopedic and Spine Specialists (St. Louis): There are several considerations. An increasing number of spine cases can be done in an ASC, including almost all elective cases in the cervical and lumbar spine. This includes single and multilevel disc arthroplasty, minimally invasive fusions, instrumentation, discectomies, and decompressions as well as spinal cord and peripheral nerve stimulators. I include all anterior, oblique and lateral approaches to the spine. The limiting factors are the health of the patient, personnel, equipment, anesthesia and pain control.
Because of declining reimbursement, single practitioners and small group practices will not survive. Therefore, medical groups are consolidating, joining, or contracting with hospital systems in order to optimize contracts and reduce overhead. Private equity is another option to capitalize growth for large groups that dominate a geographic area, service line or wish to expand into other geographic areas or service lines. Health systems are also consolidating to leverage their size and economies of scale to maximize their competitive position and manage costs. Bigger is truly better as long as you can manage all the competing interests in a medical organization.
The large ASC companies are organized and effectively managed with national and regional contracts as well as national and regional market knowledge and experience. They can contract with health systems to run their ASC business and gain better payer contracts as well as equipment, supply and implant pricing or go without a health system depending on the market. They can also attract premium providers and staff with competitive compensation and benefits. They are attractive to surgeons and groups because they provide equity positions and an excellent return on investment. I think small ASC companies will not do well because they have no access to insurance contracts or hospital systems. They are unlikely to survive as individual centers in any market and lose all the advantages of large ASC companies.
The trend to same day or overnight spine surgery in an ASC has been driven by surgical technique and technology, especially intraoperative navigation, and is getting stronger. The large ASC companies with or without health system partners are in a very strong position to grow in this environment. Regardless of any political or economic disruption, this trend is likely to continue because it is the most efficient, efficacious, and cost effective and provides an excellent patient experience.