4 ASC leaders on industry growth

During an Oct. 14 panel led by Scott Becker at the Becker's ASC Virtual Event, industry experts gathered to discuss where they see the potential for growth in ambulatory surgery center chains.

The panel included:

Lew Little, president and CEO of Covenant Surgical Partners

David Young, president and CEO of Physicians Endoscopy

Anthony Romeo, MD, executive vice president of DuPage Medical Group

Nader Samii, CEO of National Medical Billing Services 

Below is an excerpt from the discussion. Click here to access the recording on demand.

Note: This article is lightly edited for clarity and length. 

Question: Where do you see growth for ASC chains?

Lew Little: I certainly do not want to make light of this terrible pandemic, but for the ASC industry, it'll be a little bit like passing a kidney stone. Very painful, but we'll get over it and get through it. I think the industry will come out stronger after it comes out. We've learned so much and [have] become so resilient over the last six months, but I do think growth will occur for a couple of reasons. Number one, I think that people who have been independent who had to weather the storm by themselves will begin to think being associated with David [Young] is not that bad an idea. It really might be something that you'd want to do. We do see more openness to partnering.

Second, for us, I think we've focused on GI and ophthalmology. My guess is that we would continue to look at a third specialty, that would be whether it be orthopedic, pain, cardiology, something where we could use our expertise on the surgery center side to bring benefit to partners in one of those specialties. Then third really, I think that as we mentioned earlier on payer strategies, things like [recruiting] physicians. We've also stood up a physician recruiting function within our company, and not to mention private equity. For us, we finally have the resources with the backing of our private equity partner, KKR, to really create the organization that we want so we can better support our patients. 

David Young: I do believe that there will be alignment with payers and health systems on working with doctors to have three-way joint venture partnerships to allow de novos to be built or acquisitions to take place on the ASC side. I do believe that will be a stronger opportunity going forward as it meets the needs of the health systems, so they meet the need of their payer requirements as well, and there's a good alignment of a model there. On top of that, as you think about some of the ASCs that have not chosen to be part of a corporate relationship, go back to Lew's point, the COVID experience has been a challenging experience in many ways for many operational financial reasons.

It really does emphasize the value potentially of what a corporate partner can bring in a true partnership model, and I do believe that many of the ASCs, the owners who have not gone through a partnership discussion, will now think about it, but on top of that, many of them may have had a very strong practice and ASC-aligned model. The role in the movement of the ASC organizations into the practices now opens up a different dialogue that maybe was not an open dialogue before, because you're talking about a complete service solution working with the doctors from everything from practice, anesthesia, and fusion, pathology, ASC management, investment.

Dr. Anthony Romeo: The payers are now basically bringing the pressure of value-based care, saying we want the right patient in the right environment with the right doctor to do this for the best cost and still have good outcomes. Our ambulatory surgery center is part of a global model of value-based care to make sure that we can deliver the very best care. As it turns out again with regards to the growth of the change, yes, they're definitely going to grow because what we learned from the pandemic is that if you're a single-specialty center, there are things that can happen that create a tremendous risk or liability, and having the ability to have that spread out over more specialties gives you a little bit better opportunity to weather any storm.

I think the single-specialty programs, like just orthopedics, have a high risk, and so people are going to look to partner with the right partners, and those partners have to have very talented information technologies and data analytics because we have to deal with our payers in a way to make sure that we're following all the guidelines for our value-based care, and that's where I think the collaboration is going to come into play. We're going to see the growth in these chains, but we're also going to see the growth in the collaboration between the physicians, the hospitals, the ambulatory surgery centers, and then some of these third parties that have expertise in delivering the best care.

Nader Samii: Cardiology has been very hot. ... In cardiology you now have angioplasties, stents and obviously you've had pacemakers, [which are] some very big ticket items. Through the emergence of technology and bringing those great protocols over from the hospital to [hospital outpatient departments] to the surgery center, [ASCs can] really move the needle. If you're a multispecialty center or you're a single specialty and you're doing, for argument's sake, 300 cases a month at $2,000 per case and making $600,000, and let's say you have a 20 percent EBITDA margin, you're looking at a million and a half dollars of EBITDA.

If you add 30 cases or 10 percent of your volume with these big-ticket items that maybe are going to generate $10,000 of cash per case at a likely 50-plus percent margin, with that 10 percent increase in volume, you increase your revenue by 50 percent. You increase your EBITDA by about 150 percent. Significant value creation increases your top line, increases your bottom line and of course, ultimately increases your equity value at that point. Those are some areas that we think are certainly moving fast and have been done very effectively by a lot of folks. 

More articles on surgery centers:
ASC leaders on top priorities during COVID-19 pandemic
How to stay competitive in an evolving market — 5 insights for ASC leaders
Getting ahead of outpatient trends: 5 best practices for migrating spine, total joints to your ASC

 

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