10 factors that can make or break an ASC in the next 2 years

The pandemic affected ASC case volume and operations in several ways in the last year, with some centers adapting while others are struggling to stay afloat.

Here are the factors that could make or break an ASC within the next two years, according to seven administrators and physicians.

1. Case volume. ASCs base desired payer rates and budget projections on expected volume, which drives the surgery center's revenue. If case volume falls short of expectations, the center will miss financial goals. LuAnne Jordan, administrator of Savannah (Ga.) F&A ASC, said her center will depend on boosting case volume to succeed in the next 24 months.

"We are a single-specialty surgery center and just limited as to what procedures we can do," she said. "We need to recruit more physicians so we can increase our volume."

Shawn Menke, administrator of Genstler Eye Center in Topeka, Kan., said a consistent demand for cataract surgery will be an important factor to ongoing operations at his ophthalmology-driven ASC.

"Ophthalmology was one of, if not the hardest-hit specialties" affected by the pandemic, he said. "The demand for cataract surgery seems to be coming back, but it has been a slow climb."

2. Physician engagement. ASCs need physicians excited and motivated to bring cases to the surgery center, whether they are owners or not.

"If the surgeon is not made to feel welcome nor respected," that surgeon "will take their cases to the nearest outpatient surgery center," said Robert Lerma, administrator of Blue Springs Surgery Center in Orange City, Fla. "The center must accommodate the surgeon within its means."

3. Direct contracting with employers. Employers are increasingly interested in direct contracting with surgery centers through regional and national contracts, said Mike Grant, administrator of Surgery Center of Amarillo (Texas). The additional contracts will boost ASC volume.

"As the cost of healthcare benefits for employees continues to rise, we are seeing continued requests for contracts that allow employers to provide high quality care services to their employees at a significant cost savings to the employer," he said.

4. COVID-19-related limitations and expenses. The policies and guidelines for operating surgical facilities during the pandemic rapidly changed at the national and state level in the last year. It has been a challenge for ASCs to adapt to a limited case volume and increased personal protective equipment expenses.

"Elective surgical work under our new normal has several requirements, such as coronavirus testing methodology for patients, screenings for staff, wearing PPE and comprehensive cleaning protocols," said Seth Silver, MD, medical director of Ambulatory Care Center in Vineland, N.J. "The economic impact of the coronavirus has been significant on our facility. We need to return to our previous caseload. What will break our facility is additional expenses in the face of decreased surgical numbers."

5. Payer behavior. Commercial payers' policies affect the survival of independent ASCs across the U.S., including North Pines Surgery Center. Administrator Tammy Stanfield, BSN, RN, CCRN, said an increase in the number of pending authorizations from insurance companies or more frequent denials could break the center.

Success also depends on how fast the center receives reimbursement.

"Turnaround for payment from insurance companies, including Tricare, is slower than ever right now," said Ms. Jordan of Savannah F&A ASC. "The insurance companies find so many ways either to delay payment or not pay at all."

6. Contract negotiations. Adequate preparation for payer negotiations will lead to more aggressive and lucrative payer contracts, which are vital for the center's existence.

"I spend a lot of time in preparation for contract negotiations to know my costs and the Medicare fee for the CPT codes used for my local ZIP code as a percent of reimbursement that will be derived from the Medicare fee schedule," said Mr. Lerma of Blue Springs Surgery Center.

7. Cost containment. ASC costs must remain low to meet budget expectations for net income. The center can't spend more than it's taking in. Melissa Hermanson, MSN, RN, CASC, administrator of Ambulatory Care Center in New Jersey, said financial recovery from the months when the center was closed last year and efficient resource use will make or break the center.

"Our administrative teams will need to continue to be creative in allocating resources, financial and human, to maximize efficiencies," she said.

8. Supply availability. Matthew Ewasko, administrator of Physicians Alliance Surgery Center in Cape Girardeau, Mo., said the supply chain is a huge challenge for his center.

"We are in constant communication with our suppliers who are working to get us the items we need, but we have heard that price increases will be coming," he said. "While we haven't had to delay any surgical cases due to lack of supplies, we have seen a large increase in our supply costs due to these price increases."

When the supply chain normalizes, Mr. Ewasko said the center will be able to return to business operations as they were before the pandemic. But the longer price increases and back orders continue, the more he will need to reduce spending in other areas to account for the extra supply expenses.

9. Transition of cases from the inpatient to the outpatient setting.

"The key factor that will influence our growth over the next 24 months will be the continued movement of procedures from the inpatient setting to the ASC by Medicare and commercial payers," said Mr. Grant of Surgery Center of Amarillo. "As more acute procedures continue to be approved for outpatient services, we will continue to develop our service lines to meet the opportunities for our patients in bariatrics, cardiology and orthopedic services."

He also said commercial payers are implementing price structures that provide appropriate reimbursement for several procedures to moveto ASCs. The overall move of these procedures is positive, but he is concerned about high implant costs since vendors are accustomed to negotiating with hospitals, which receive higher reimbursement.

"The price point for many of the implants associated with these procedures has not been adjusted by the vendors to account for the opportunity for these cases being done in the ASC setting with reduced reimbursement," said Mr. Grant. "Successful negotiation of appropriate price points for these implants will be key for our facility over the next 24 months."

10. Staff engagement. The staff culture and engagement affect patient and physician experience at an ASC. Having the best equipment and modern decor are meaningless if the staff isn't taken care of, said Mr. Lerma. "The staff will treat the customer, patients and surgeons, by how well they are treated by the management. In my 20 years of surgery center management, I have seen a number of centers succeed and fail from this axiom."

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