100 things to know about ASCs | 2020

Here are 100 statistics, benchmarks and trends for ambulatory surgery centers in 2020 and beyond.

ASC landscape

The data in this section comes from the MedPAC 2020 Report to Congress, ASCA and VMG Health Intellimarker.

1. Number of ASCs in 2018: 5,717

2. The states with the most ASCs are:

• California: 813
• Florida: 454
• Texas: 429
• Maryland: 343
• New Jersey: 266

3. Independently owned centers: 72 percent of all ASCs

4. ASCs owned by multisite operators: 28 percent of all ASCs

5. Number of single specialty ASCs in 2018: 3,277 (65 percent of all ASCs)

6. Number of multispecialty ASCs: 1,802 (39 percent of ASCs)

7. Number of gastroenterology-driven ASCs: 1,071 (21 percent of ASCs)

8. Number of ophthalmology-driven ASCs: 1,046 (21 percent of ASCs)

9. Number of orthopedic ASCs: 33 (1 percent of ASCs)

10. Number of pain management, neurology and orthopedics multispecialty ASCs: 612 (12 percent of ASCs)

11. Most common ASC procedures:
• Cataract surgery with IOL insert, stage 1: 18.8 percent of all procedures
• Upper GI endoscopy, biopsy: 7.9 percent
• Colonoscopy and biopsy: 6.9 percent
• Lesion removal colonoscopy (snare technique): 6.2 percent
• Inject foramen epidural: lumbar, sacral: 4.6 percent
• After cataract laser surgery: 4.2 percent
• Inject paravertebral: lumbar, sacral: 3.4 percent
• Injection spine: lumbar, sacral (caudal): 2.7 percent
• Colorectal screen, high-risk individual: 2.1 percent
• Diagnostic colonoscopy: 1.7 percent

12. ASC specialty breakdown:

• Orthopedics: 2,104 centers (36 percent)
• Ophthalmology: 2,806 centers (36 percent)
• Pain: 1,959 centers (34 percent
• Endoscopy: 1,854 centers (32 percent)
• Plastic: 1,751 centers (30 percent)
• Podiatry: 1,694 (29 percent)
• ENT: 1,424 (25 percent)
• OB/GYN: 1,209 (21 percent)
• Dental: 492 (9 percent)

13. Single-specialty ASC breakdown:

• Endoscopy: 27 percent
• Ophthalmology: 25 percent
• Pain: 12 percent
• Plastic: 6 percent
• Orthopedics: 5 percent
• Podiatry: 4 percent
• ENT: 1 percent
• OB/GYN: 1 percent
• Other: 18 percent

Most expensive ASC procedures
Here is the Healthcare Common Procedure Coding System/Current Procedural Terminology code and average per-procedure charge for the 10 most expensive ASC procedures, ranked by average cost from Definitive Healthcare:

14. Breast reconstruction of a single breast with "stacked" deep inferior epigastric perforator flap(s) and/or gluteal artery perforator flap(s)
HCPCS/CPT code: S2067
Average charge per procedure: $133,356

15. Cardioverter-defibrillator, other than single or dual chamber (implantable)
HCPCS/CPT code: C1882
Average charge per procedure: $111,187

16. Autologous cultured chondrocytes, implant
HCPCS/CPT code: J7330
Average charge per procedure: $85,498

17. Eculizumab injection
HCPCS/CPT code: J1300
Average charge per procedure: $77,423

18. Cardioverter-defibrillator, single chamber (implantable)
HCPCS/CPT code: C1722
Average charge per procedure: $76,879

19. Sipuleucel-t, minimum of 50 million autologous cd54+ cells activated with pap-gm-csf, including leukapheresis and all other preparatory procedures, per infusion
HCPCS/CPT code: Q2043
Average charge per procedure: $76,471

20. Injection, alglucosidase alfa (lumizyme), 10 mg
HCPCS/CPT code: J0221
Average charge per procedure: $76,000

21. Non-ophthalmic fluorescent vascular angiography
HCPCS/CPT code: C9733
Average charge per procedure: $75,000

22. Under intersex surgery
HCPCS/CPT code: 55970
Average charge per procedure: $73,186

23. Breast reconstruction with deep inferior epigastric perforator flap or superficial inferior epigastric artery flap
HCPCS/CPT code: S2068
Average charge per procedure: $68,239

Factors influencing the growing number of Medicare-certified ASCs
In the MedPAC 2020 report to Congress, the authors outlined the following key trends driving the move from the inpatient hospital setting to the outpatient ASC setting.

24. Medicare beneficiaries' coinsurance is typically lower in ASCs than hospital outpatient departments.

25. healthcare technology allows more procedures in the outpatient setting, and Medicare now reimburses for total knee replacement in ASCs.

26. ASCs are more convenient for surgeons and can schedule cases faster than HOPDs.

27. Physicians also have more autonomy in ASCs to design customized surgical environments and hire specialized staff.

28. Physician investors in ASCs increase revenue by sharing in the ASC facility payments.

29. Physicians can perform more procedures in ASCs than HOPDs over the same time period due to the efficiency of surgery centers, so they can earn more revenue from professional fees.

30. Hospital systems, insurers and private equity are more interested in surgical center investment due to the emphasis on value-based care.

ASC M&A Report
The ASC market is continuing to grow and has room for further consolidation, according to the 2020 VMG Health Healthcare M&A Report.

31. Median EBITDA multiples grew from around 7.4x in 2018 to 7.7x in 2019 for individual ASCs. EBITDA at the 25th percentile was 6.5x and at the 75th percentile was 8.4x last year.

32. Outpatient total joint volume is expected to grow 77 percent through 2026 while inpatient volume is expected to be flat due to changes in CMS payment policy, according to the report.

33. ASCs are now pursuing bundled payment options more than before as surgery shifts from the inpatient and outpatient setting, which makes them acquisition targets, VMG noted in the report.

34. The ASC Index value (market cap) dropped 38.7 percent from Feb. 19 to May 1 for publicly traded healthcare companies amid the pandemic.

35. Valuation multiples with median total invested capital to trailing 12-month EBITDA multiples were about 7.4x in 2018, down from 7.7x in 2019.

36. ASCs that perform newly Medicare-reimbursed total joint and cardiac catheterization procedures will be acquisition targets with leverage to negotiate higher transaction multiples.

37. Involvement in bundled payment programs will also make ASCs acquisition targets.

ASC operations
The OR Manager 2020 Career & Salary Survey asked 57 ASC leaders about their annual operating budgets. This section also includes data from the VMG Health Intellimarker Survey.

Income and administrator salary

38. Operating income
• Less than $1 million: 5 percent (up from 4 percent in 2019)
• $1 million to $1.9 million: 9 percent (up from 5 percent in 2019)
• $2 million to $2.9 million: 5 percent (down from 7 percent in 2019)
• $3 million to $4.9 million: 11 percent (down from 12 percent in 2019)
• $5 million to $9.9 million: 12 percent (up from 10 percent in 2019)
• $10 million to $14.9 million: 12 percent (down from 18 percent in 2019)
• $15 million or more: 9 percent (up from 7 percent in 2019)
• Don't know: 37 percent

39. Administrator salary
• Less than $80,000: 11 percent
• $80,000-$89,999: 6 percent
• $90,000-$99,999: 9 percent
• $100,000-$119,999: 20 percent
• $120,000-$149,999: 33 percent
• $150,000-$174,999: 7 percent
• $175,000-$199,999: 6 percent
• More than $200,000: 7 percent

Net revenue per case

40. Orthopedics

• Atlantic: $2,977
• Midwest: $3,345
• Mountain: $3,324
• Northeast: $3,162
• Pacific: $3,498
• South: $3,783

41. Gastroenterology

• Atlantic: $832
• Midwest: $943
• Mountain: $975
• Northeast: $993
• Pacific: $921
• South: $1,131

42. ENT

• Atlantic: $1,985
• Midwest: $2,162
• Mountain: $2,170
• Northeast: $2,378
• Pacific: $2,189
• South: $2,845

43. Ophthalmology

• Atlantic: $1,321
• Midwest: $1,244
• Mountain: $1,438
• Northeast: $1,497
• Pacific: $1,463
• South: $1,524

44. Pain management

• Atlantic: $980
• Midwest: $1,242
• Mountain: $1,008
• Northeast: $1,179
• Pacific: $956
• South: $1,202

Staffing

45. Hours per case:

• Atlantic: 13
• Midwest: 13.5
• Mountain: 12.6
• Northeast: 12
• Pacific: 14.7
• South: 13.2

46. Nurse hours per case

• Atlantic: 6.2
• Midwest: 6.6
• Mountain: 6.4
• Northeast: 6.0
• Pacific: 5.9
• South: 6.3

47. Tech hours per case

• Atlantic: 2.6
• Midwest: 2.6
• Mountain: 2.6
• Northeast: 2.5
• Pacific: 3.3
• South: 3.1

48. Administrative hours per case

• Atlantic: 3.9
• Midwest: 3.9
• Mountain:4.4
• Northeast: 3.6
• Pacific: 4.8
• South: 4.0

49. EBITDA

• Atlantic: 1.4 million
• Midwest: $2 million
• Mountain: $1.4 million
• Northeast: $1.7 million
• Pacific: $1.2 million
• South: $2.8 million

 50. Management fees

• Atlantic: $308,000
• Midwest: $458,000
• Mountain: $439,000
• Northeast: $322,000
• Pacific: $419,000
• South: $434,000

 

ASC outlook post-pandemic

51. During the COVID-19 crisis, many ASCs applied for the Small Business Association loan and expanded telehealth services while others closed down their facilities. Some also drew down on lines of credit and applied for state and local grants. ASCs are typically reporting a 30 percent or more revenue drop, with many reporting more than 50 percent revenue decline.

52. As hospitals and ASCs report lower revenue due to the pandemic, payers have reported strong profits. During the first quarter of 2020, UnitedHealth Group posted $3.4 billion in profit and Optum reported $32.8 billion revenue. Payers could use their strong financial position to acquire physician practices or surgical centers in the future. That has already begun to some degree, as Blue Shield of California acquired the Oakland, Calif.-based Brown & Toland Physicians, which includes 2,700 physicians in April.

53. As surgery centers are resuming cases, the case acuity is the biggest factor in deciding which cases to pursue first. Administrators are also considering how local hospitals are able to ramp up elective procedures and previously established block time as they develop their post-pandemic schedules.

54. A large portion of ASCs are working extended hours or on weekends to cover the backlog of cases, and several are also considering a more robust telemedicine program. There are several centers that are expanding capacity or considering investing in a new center to increase capacity in the future.

55. A small portion of ASCs are considering adopting new technology to maximize case efficiency and/or hiring more physician assistants and nurse practitioners to handle the backlog of cases.

56. A majority of ASCs aim to move forward with plans they had before the pandemic, with a smaller percentage considering joining an ASC chain or bringing on a private equity partner.

57. ASCs are reporting 20 percent or fewer patients are self-selecting out of surgery as a result of the pandemic, although many do report that up to 50 percent of their patients have voice economic concerns related to their surgery. This could provide ample opportunity for ASCs to develop more robust financial planning capabilities for their patients.

58. ASC administrators report being cautiously optimistic about the future, but it could take three to six months to resume normal levels of case volume at the ASC. Some physicians, however, are concerned that there will be a backlog in payer approvals as elective surgeries ramp up again.

CMS 2021 proposed payment updates
In August, CMS released its proposed 2021 physician fee schedule and outpatient payment update. This section includes key points on both for ASCs to know.

Physician fee schedule proposed updates
59. The rule would drop the conversion factor by $3.83 to $32.26. The current conversion factor is $36.09.

60. General surgeons will see their Medicare reimbursement rates cut by 7 percent under the proposed rule.

61. The following specialties will see the biggest impacts to their reimbursement rates:

• Cardiovascular surgeons: 9 percent
• Thoracic surgeons: 8 percent
• Vascular surgeons: 7 percent
• Neurosurgeons: 7 percent
• Ophthalmologists: 6 percent

62. The American College of Surgeons and the Surgical Care Coalition are among the groups that objected to the proposed fee schedule. ACS Executive Director David Hoyt, MD, said: "Today's proposed rule from [CMS] is a big disappointment for patients and surgeons. … All we ask is that Congress protect America's surgeons so we can continue to do our jobs."

63. The Surgical Care Coalition is lobbying Congress to waive Medicare's budget neutrality requirements for these E/M adjustments and increase all 10- and 90-day global code values.

64. In a recent survey conducted by the SCC, private surgical practitioners said the proposed rule would likely force surgeons to take fewer Medicare patients.

65. The rule also solidified the COVID-19-related temporary changes made to increase access to telehealth. The proposed rule would make those temporary changes permanent.

Outpatient payment rule proposed updates

66. The inflation update factor is about 3 percent, which after the ACA's productivity reduction equals about 2.6 percent for both ASCs and hospital outpatient departments.

67. The proposed ASC conversion factor is $48.984 to the proposed hospital outpatient department conversion factor of $83.697.

68. CMS also seeks to add 11 codes to the ASC covered procedure list, notably including total hip replacement.

• 0266T (Implt/rpl crtd sns dev total)
• 0268T (Implt/rpl crtd sns dev gen)
• 0404T (Trnscrv uterin fibroid abltj)
• 21365 (Opn tx complx malar fx)
• 27130 (Total hip arthroplasty)
• 27412 (Autochondrocyte implant knee)
• 57282 (Colpopexy extraperitoneal)
• 57283 (Colpopexy intraperitoneal)
• 57425 (Laparoscopy surg colpopexy)
• C9764 (Revasc intravasc lithotripsy)
• C9766 (Revasc intra lithotrip-ather)

69. CMS also plans to transition codes off the inpatient-only list over the next three years, with a goal to eliminate the list completely by 2024.

70. Ambulatory Surgery Center Association President Bill Prentice chided certain aspects of the proposal. He said, "We remain concerned that, while this proposal explains the negative effect that the use of weight scaling has on ASC rates, it does not take the needed steps of addressing it."

Medicare savings
A new report from the Ambulatory Surgery Center Association shows performing surgery on Medicare patients in ASCs instead of hospital outpatient departments saved $4.2 billion in 2018, and the savings are expected to climb significantly in the next decade. KNG Health Consulting conducted an analysis of Medicare payment data from 2011 to 2018 on outpatient surgical procedures in ASCs and hospital outpatient departments. The analysis estimated historical and potential savings with a focus on total knee replacements.

71. Medicare saved $28.7 billion from 2011 to 2018 from surgeries performed in ASCs instead of hospital outpatient departments.

72. The report projects Medicare will save $73.4 billion from 2019 to 2028, with $12 billion saved in 2028 alone.

73. The percentage of total knee replacement and knee mosaicplasty is expected to grow from 13.4 percent of all procedures in ASCs in 2020 to 18 percent in 2028, a 3.7 percent annual growth. Based on that projection, ASC savings for Medicare total knee replacements would be $2.95 billion from 2020 to 2028.

74. Most of the savings in the last decade are attributed to high-volume procedures, including cataract surgeries and colonoscopies, but the report estimates procedures such as endocrine, cardiovascular and orthopedic surgery will drive most of the $73.4 billion savings through 2028.

75. The following five specialties are expected to save Medicare $1 billion per year by being performed in the ASC:

· Eye and ocular adnexa
· Cardiovascular
· Nervous system
· Digestive system surgery
· Musculoskeletal surgery

76. There are more than 5,800 Medicare-certified ASCs in the U.S., with the most common procedures today being cataract surgery, colonoscopy, upper GI endoscopies and pain management procedures.

Large ASC companies
The information here was gathered in June 2020 about United Surgical Partners International, Surgical Care Affiliates and AmSurg.

77. Number of ASCs

• USPI: 265 ASCs + 25 surgical hospitals
• AmSurg: 250+ facilities
• SCA: 230 surgical facilities

78. Affiliated physicians:

• USPI: 10,000-plus
• SCA: 8,000
• AmSurg: 2,000

79. Number of states with centers:

• SCA: 35
• AmSurg: 34
• USPI: 29

80. Number of employees

• USPI: 19,000-plus
• SCA: 8,500
• AmSurg: N/A

81. Headquarters

• SCA: Deerfield, Ill.
• USPI: Dallas
• AmSurg: Nashville, Tenn.

82. Year founded

• SCA: 1982
• AmSurg: 1992
• USPI: 1998

83. Core business

• SCA: A company partnering with physicians and health systems to own and operate ASCs. The company has ASCs with multiple specialties, with a focus on orthopedics and spine.
• USPI: The company partners with physicians and health systems to invest in surgical facilities primarily in musculoskeletal care (largely orthopedics), as well as other specialties including ophthalmology and gastroenterology.
• AmSurg: AmSurg is a surgery center chain that focuses on primarily gastroenterology and ophthalmology centers across the nation.

Company notes
84. Jeff Snodgrass will be the new president of AmSurg, one of the country's largest ASC operators and the ambulatory division of Nashville, Tenn.-based Envision Healthcare.

85. USPI entered into a joint venture with Saint Thomas/USP Surgery Center ans Tennessee Orthopaedic Alliance in Nashville to develop a $13.9 million surgery center. The parties sought approval for the center in June.

86. In August, Surgical Care Affiliates partnered with Texas Health Resources and physicians to develop a joint venture ASC in Denton County, Texas.

87. Surgical Care Affiliates and Danville, Pa.-based Geisinger completed a simultaneous recapitalization of Camp Hill, Pa.-based Grandview Surgery Center and Scranton, Pa.-based North East Surgery Center in August. SCA took stake in Grandview Surgery Center and Geisinger took majority ownership of Northeast Surgery Center. Both entities have some ownership stake in each center.

88. In December 2019, Surgical Care Affiliates and its partner company Optum signed an agreement with Minneapolis-based Allina Health to develop up to 12 ASCs over five years.

89. Surgery Partners sold some of its anesthesia services business to Anesthesia Consulting & Management in September. Surgery Partners' anesthesia business provides and manages third-party anesthesia services providers.

90. Covenant Physician Partners named Chad Baldwin executive vice president and chief development officer and Phyllis Smith, DNP, senior vice president and chief clinical officer, in early September.

91. Compass Surgical Partners named Sandy Stillman-Alvin executive administrator in July.

92. Surgery Partners took out $113 million from its revolving credit in March and then repaid it before taking another $120 million out in April. In July, the company announced it would take on $115 million more in debt, expected to mature in 2027.

93. Regent Surgical Partners' Bone and Joint Institute of Tennessee Surgery Center launched a total joint replacement program in August, six months after opening.

94. SurgCenter Development partnered with five Indiana surgeons to open Lake George Surgical Center in Fremont, Ind., in a building that formerly held a clothing store. The ASC is expected to open in October.

95. Twenty-eight USPI facilities and eight AmSurg ASCs received the 2020 Press Ganey Guardian of Excellence Award.

Consolidation trends
96. Provider consolidation into vertically integrated health systems increased "substantially" from 2016-18, while horizontal consolidation of hospitals and health systems "grew modestly," according to an August 2020 study published in Health Affairs.

97. The ASC space is ripe for facility-level consolidation, according to VMG Health. The ASC market didn't see any platform-level transactions in 2019, but consolidation continued in the fractured sector. About 71 percent of ASCs remain independent, leaving room for further facility-level consolidation.

"We are continuing to see themes from 2018 play out in 2019 and into 2020," VMG Health analysts concluded. "The expectation is that there would be further consolidation within the ASC market with a greater involvement by private equity companies. At the center level, higher acuity case volume will continue to shift from the inpatient setting, further cementing the ASC as the low-cost, efficient alternative to the hospital setting."

98. Richard Harris, MD, a Melrose Park, Ill.-based urology specialist and president of the Large Urology Group Practice Association, told Becker's ASC Review in April that the COVID-19 pandemic could have a significant influence on independent practice throughout the U.S.

"There is a real threat that hospitals may use government stimulus funds to buy out physician practices, increasing the upward trend of hospital consolidation," Dr. Harris said. "The acquisition of more physician practices by hospitals will not be a win for our patients; instead, it will only serve to further inflate the cost of medical care to patients. Additionally, hospital consolidation hinders access to care as it creates narrow networks that require patients to travel further to find in-network physicians."

99. LUGPA is one of many entities working to preserve physician autonomy. Former Cardinal Health CEO Parker Eales is leading the North Carolina Independent Dermatology Collaborative, a 23-provider organization intended to provide higher efficiencies at lower costs than hospital systems can offer.

100. Financial problems due to nonessential procedure standstills could lead to a spike in healthcare consolidation and less competition after the pandemic, according to Manatt Health Managing Director Jonah Frohlich.

"We're going to see a raft of acquisitions and mergers and integrations with independent clinicians who can't survive months of no revenue," he said in an interview with Stateline.

More articles on surgery centers:
12-OR ASC part of $295M Florida orthopedic hospital expansion
3 ASCs launching total joint programs
4 ASCs installing total joint robots

© Copyright ASC COMMUNICATIONS 2020. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.

 

Featured Webinars

Featured Whitepapers