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Looking to the future in a saturated market, what's next for ASCs?

The ASC market's future is crowded with surgery centers competing for patients and health systems acquiring practices, many centers are looking for ways to standout.

Becker's ASC Review spoke with two industry on what's next for ASCs in the competitive marketplace. Sean McSweeney, president of Apache Health, and Scott Jackson, Henry Schein Medical, Senior Director Ambulatory Surgery Centers, shared their insights.

Note: These responses were edited slightly for grammar and clarity.

Question: With the ASC market approaching saturation, what does the future hold for the industry?

Sean McSweeney:

There were [approximately] 86 new ASCs in 2016 [out of] a total of approximately 5,260 [ASCs in the nation]. This means there was an increase of only 1.6 percent [regarding new] centers last year. Market saturation has been achieved.

Combine this information with several other things including:

  • 56 percent of the payer mix being commercial, according to VMG Health's Multi-Specialty ASC Intellimarker 2017 Survey
  • A rise in awareness around surprise balance billing and legal attempts to curb this in many states
  • A rise in narrow networks
  • Patients becoming more educated and aware of the costs of healthcare and tools to calculate expected costs
  • Insurance companies making reimbursement at ASCs more difficult in the last few years, with increased documentation requirements and capped day rates, among other efforts.

Surgery centers are basically a capacity utilization game; the cost per procedure on a marginal cost basis is not great, but the fixed costs and overhead are very high. If centers can do a lot of volume, they are immensely profitable. If they cannot, they will fold.

We are increasingly seeing ASCs in the market polarizing to either very full or highly underutilized. Many that were full in past years have dropped as much as 90 percent in volume as the business shifted to other centers.

We expect more consolidation where doctors become part owners or participate financially in the ASC, or move their business elsewhere. We eventually expect some of the massive growth in the number of ASCs we saw a decade ago to reverse itself. There will be a contraction in the number of facilities with overall increased average utilization and profitability going up.

Scott Jackson:

ASC market saturation can be attributed to the diminished availability of surgeons, which, in part, is due to the acquisition of physician practices by hospitals.

Once a hospital acquires a physician practice, that physician/surgeon is more like to take his or her cases to the hospital, as opposed to the ASC. (Hospitals acquired 31,000 physician practices, a 50 percent increase, from 2012 to 2015, according to an analysis released by the Physicians Advocacy Institute last year).

On a more positive note, the number of procedures permitted in an ASC by CMS has grown exponentially.

Given these trends, ASCs should look outside of the traditional box, and consider the following to help attract surgeons.

  • How do you market your practice? Is your website current? Is your social media and search engine optimization plan in place?
  • Is your facility up to date, with newer/innovative tools for your surgeons to utilize?
  • Do your staff members help or hinder your ability to attract and retain surgeons at your center?
  • What new procedures have you brought on over the past two-to-three years, and what other procedures could you add?

These considerations, along with others, can help play a central role in growing ASCs' surgeon pool, and subsequent case volumes.

 

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