ASCs battle the 'rising cost of everything'

For many ASC leaders, the biggest obstacle to care is skyrocketing costs driven by supply and labor shortages, as well as a 40-year inflation apex of 8.5 percent.

"The biggest enemy [to ASCs] right now is the rising cost of everything," Amy Noble, practice administrator for the Center for Pain Control in Wyomissing, Pa. "From equipment to supplies to staffing, expenses continue to rise while reimbursements are stagnant."

Ms. Noble told Becker's she is running into scenarios where a box of surgical dressings can run upward of $1,000, compared to normal pricing of $200. 

Other administrators are experiencing similar challenges in markets with larger providers with more leverage. Dianna Reed, administrator of Sani Eye Surgery Center in Templeton, Calif., told Becker's her biggest obstacle is not being able to purchase supplies at a competitive price. 

"It is very difficult to compete, especially during COVID-19, for personal protective equipment and supplies against large hospital surgery centers who have a larger buying power," she said.

Staffing costs are also soaring amid a tightening job market, with many employers setting aside an average of 3.9 percent of payroll this year for wage increases, according to The Wall Street Journal

ASCs have already been struggling with rising staffing costs. Surgery centers spend on average $2.2 million on employee salary and wages, about 21.3 percent of net revenue, according to the VMG Health's "Multi-Specialty ASC Benchmarking Study." Pay for ASC administrators is also going up, hitting $100,000 to $119,000 on average, according to OR Manager.

Some ASCs have started offering $5,000 sign-on bonuses for administrators, while others hope their flexible scheduling and culture will draw administrative and nursing candidates more than the big money offered by other employers.

While CMS raised ASC payment rates by 2 percent for 2022, many leaders don't expect the rate to cover the costs. 

"Although the 2 percent effective inflation rate update is appreciated, it falls far short of two important realities: First, it falls short of the latest inflation projections, which began to manifest in the first quarter and developed fully in the second quarter — time enough for CMS to have taken them into consideration," said Alfonso del Granado, administrator of Covenant High Plains Surgery Center in Lubbock, Texas.

"Second," Mr. del Granado continued, "the tight healthcare worker labor market, combined with COVID-related attrition and vaccine mandate-related early retirements are forcing us to make significant adjustments to our wage scales, a cost that we will have to absorb until industry pressure forces payers to make concomitant adjustments."

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