2008 vs. 2020: ASC leaders on how the recessions compare

The COVID-19 pandemic triggered a historic global economic downturn, and although there might be no directly comparable events from recent years, another crisis triggered a global recession in 2008.

Becker's spoke with ASC leaders across the country on what the 2008 recession was like for them and how it compares to today's economic malaise.

Editor's note: Responses were edited lightly for clarity and brevity.

Alejandro Badia, MD. Founder and Chief Medical Officer at OrthoNow Immediate Orthopaedic Care (Doral, Fla.). Due to the clinical demands and the need for our specialty, the 2008 recession at that time caused minimal impact, although the market forces to pay ASCs much less than the hospital system were unfortunately in full swing.

In 2008, we had a major real estate devaluation and I recall purchasing commercial real estate as a shell that was essentially overpriced in 2006. This has barely recovered even now. The current impending recession, however, is partially characterized by a major surge in real estate prices, even though Americans have much less buying power. However, strangely, the demand seems to remain and if supply can increase, despite the huge increase in supply chain and construction costs, then we will have many more ASCs in the market to provide care. I believe this is a testament to the great advantages afforded by independent ASCs. The future is perhaps even brighter now.

Dr. Sukdeb Datta. Medical Director of Datta Endoscopic Back Surgery & Pain Center (New York City). Briefly, in 2008, I was the pain management director at Vanderbilt University, and we had our own pain management center. At that time, there was a big impact as there was the collapse of big financial institutions, but the situation was not as dire, with not as much patient impact. Fast forward to today: I am now the owner of Saddlebrook Endoscopic and Orthopedic Surgery Center in Bergen County, N.J., and owner of a big management practice with over 12 locations in the New Jersey area. The impact has been tremendous.

The artificial flow of government stimulus and its preferential flow to the big hospitals is a situation that was nonexistent in 2008 but has created real challenges this time around. For example, with the inflation, employee costs have risen significantly. It is very difficult to staff the cases, as hospitals have been able to use the COVID funds successfully to drain away all available employees, especially employees in small ASCs. 

The supply chain difficulties have impacted the cost as well as the inventory issues very badly this time versus 2008, where the supply chain was not impacted.

So to summarize, this time around the situation has been much more dire. To get out of this situation, ASCs have to be nimble and maybe move to a different reimbursement model.

Dr. Jayesh Dayal. Anesthesiologist at White Flint Surgery (Rockville, Md.). While any recession, by definition, brings pain and disruption, as did the 2008 one, with massive job losses, health insurance dislocation and general malaise, the present one really takes the cake and hits new lows that are unheard of. 

The government handouts were a true lifeline in impossible times but now seem to be fueling the "Great Resignation." Now we can't find any willing employees as the inflation rages on. The supply lines have been disrupted internationally and we routinely shut down for lack of essential meds, supplies, and parts for equipment repairs etc. Employees keep succumbing to COVID and the office is a juggling act every morning. 

This COVID recession has set new normals that are shocking the system thoroughly. Hopefully, we all have the strength and humility to adapt to these new frontiers and muddle our way through this blizzard. 

David Demangone, MD. Pain Specialist at Cleveland Medical Institute. The 2008 recession did not seem to affect my ASC business much. As compared to the recent recession, the 2008 recession seemed to be more of an "on paper," "investment" type of recession, affecting investments, business and private, as well as real estate. I don't remember much effect on labor availability or supply costs.

Greg Horner, MD. Managing Partner at HealthPoint Ambulatory Surgery Co. (Pleasanton, Calif.). In 2008, we were enjoying great growth in the ambulatory surgery centers under our management. Valuations were soaring as fast as distributions. To this day, my fellow physician investors talk about that time as the "heydays." The industry was fairly nascent then, and we were full of ideas as our company was born. We benefited from great exits as the large chains, fueled by cheap money, were buying everything in sight. 

Fast forward to 2020 and many things have changed. The biggest difference we have recognized is that the inefficiencies that were accepted from the "heydays" gave rise to structural problems in staff productivity, anesthesia provision and supply costs. I actually anticipated and spoke about the staffing issue at a Becker's conference a few years back. We have pivoted our focus to technology in order to drive efficiency and restore high margins in our newest centers. 

De novo projects have been hit particularly hard, facing the "Great Resignation," supply chain disasters, payer pendulums swinging backwards and importantly, anesthesia shortages. Where this is most profound is in underserved communities. I find it disappointing that the promise of higher quality and lower cost, the ASC industry's mantra, has largely failed to improve care in the communities that need it most. 

As ASC managers adopt [banking, retail and other] technologies, we anticipate another great era. It is my hope that the ASC industry, the payers and we in the investment community help those who need it the most share in the next "heydays" quality and efficiency from ASCs.

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