One of the biggest hindrances to ASC growth is certificate-of-need laws, which require healthcare providers and systems to get permission from the state before expanding facilities or building new ones.
“I think certificate-of-need laws reduce the positive impact ASCs could have on the healthcare system,” Michael Chwalek, senior financial analyst at Ambulatory Surgical Centers of America, told Becker’s. “They restrict the number of ASCs through rationing and creating a significant barrier to entry. The time and legal and consulting fees required to gain certificate-of-need approval significantly increase the risk of starting a center.”
Many states are amending these laws, opening the door for new ASC development. In May, Tennessee Gov. Bill Lee signed legislation that modifies the state’s certificate-of-need requirements. Beginning Dec. 31, 2027, ASCs will no longer be required to obtain a certificate, with additional regulatory requirements.
Sam Sarbacker, vice president of development at real estate developer Oman Gibson, told Becker’s that ASC development will soar in Tennessee when the requirement is eliminated.
“As state governments remove these laws, it creates a lot of demand,” he said. He added that obstacles remain, including practice costs exceeding reimbursements and staffing challenges.
“Availability of staff is a significant issue, creating hesitation in developing new facilities if they cannot be adequately staffed,” he said.
Mr. Sarbacker added that opening ASCs requires “extensive legwork.”
“We’re looking forward to potential growth in Tennessee due to the sunset of CON laws, which should be positive for development providers in the state,” he said.
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