ASC finances in 2021: 6 observations

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ASC owners and operators faced challenges last year when elective surgeries were limited across the U.S.

Pandemic-related challenges persist, but many see 2021 as a brighter year because case volume is resuming, and payers are steering more cases to outpatient settings.

Six observations on ASC finances:

1. ASCs are budgeting for higher overhead costs related to the pandemic. "I anticipate continued supply cost increases, particularly with personal protective equipment, as the disruption in the supply chain carries over to 2021," said Tina Piotrowski, BSN, RN, CASC, administrator of Copper Ridge Surgery Center in Traverse City, Mich. "In addition, labor costs remain higher as centers staff for COVID protocols. Expanded cyber liability is also being analyzed due to more remote working for some positions and the increase in cyberattacks on healthcare."

2. State and federal policy decisions are driving ASC industry growth and in some cases sending business to the ASC. CMS continues to expand its list of ASC-approved procedures, and in California there is pending legislation to update state rules allowing some CMS-approved cardiac procedures in the ASC.

"Overall, policymakers are focused on addressing healthcare affordability and increasing access to care, so we expect increasing recognition of the important role ASCs play in the healthcare system," said Elizabeth LaBouyer, RN, executive director of the California Ambulatory Surgery Association.

3. Commercial payers are also changing their policies to drive more cases to the ASC. "I believe that private payers are starting to address this by providing reimbursement incentives to physicians to move their care to an ASC," said Julie Nelson, RN, BSN, executive director of Elmhurst (Ill.) Outpatient Surgery Center. "Physicians have recently communicated that BCBS is implementing a 30 percent variance in reimbursement for specific procedures based on hospital versus ASC locations. Because patients are so reliant on their physician to determine location of care, I believe that physician reimbursement models will have more of an impact on location of care than price transparency."

4. Orthopedic, spine, bariatrics and cardiology vendors aren't always keeping up with the movement of traditionally hospital-based procedures to the ASC. "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 Mike Grant, administrator of Surgery Center of Amarillo (Texas). "Successful negotiation of appropriate price points for these implants will be key for our facility over the next 24 months."

5. ASCs will continue to make room in their budgets to purchase robotic technology this year as a tool for improved patient care and physician recruitment. Larry Parrish, administrator of Illinois Sports Medicine & Orthopedic Surgery Center in Morton Grove, said his centers evaluated robotic technology for total joints before the pandemic.

"We do intend to acquire a surgical robot for these cases in the first or second quarter of 2021, but not all of our total joint replacement surgeons intend to use it," he said. "However, we do believe that having robotic technology will be an asset in recruiting new joint replacement surgeons who trained with this capability, which will enhance the growth of our already well-established program."

6. ASC owners are selling real estate and seeing big returns. For example, Phoenix-based OrthoArizona sold its medical office building and ASC real estate in a $23.6 million deal to a private equity group in February. In January, a medical services company purchased a 15,000-square-foot medical office building with an ASC in San Diego for $4.6 million.

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