Culture has become king: 12 observations on the ASC industry

From Medicare's regulatory changes to staff shortages and emerging trends among commercial payers and employers, here are 12 observations on the ASC industry in 2021:

1. COVID-19 surges across the country are threatening ASC operations. ASCs are continuing expensive protocols for extra PPE and infection control as a result, and school closures further exacerbate staff shortages as team members must take temporary leave to stay home with their children. Hospitals are also postponing nonurgent surgeries as COVID-19 surges have the potential to reach record highs this winter.

2. Medicare finalized the Outpatient Prospective Payment System and ASC Payment System final rule for 2022. Three details ASCs should know:

  • ASC payment rates will be updated by 2 percent for centers that meet applicable quality reporting requirements.
  • CMS is halting its proposal to eliminate the inpatient-only list.
  • The agency is removing 255 procedures from the ASC covered-procedures list. 

3. Independent ASCs are battling to recruit and retain talent. Historically, surgery centers have always competed against local hospital and health systems, which are further swinging the pendulum in their favor through the use of lucrative signing bonuses and other aggressive recruitment strategies.

4. Despite medical debt, many younger surgeons are interested in more than just money as they graduate from residency and fellowship programs. What the ASC is doing for the community, as well as its values, culture and diversity come more into play for millennial surgeons. "If you can provide a great culture and a pathway to success, you will be able to recruit," according to Nitin Khanna, MD, of Munster, Ind.-based Spine Care Specialists.

5. Commercial payers are looking to partner with or employ physician groups to keep them independent of hospitals. Supporting more independent practices is a paradigm shift for insurers, whose traditional business primarily focused on complex contracts with hospitals.

6. More ASC owners are tempted to sell as the value of surgery centers increases along with operational costs. Hospitals, private equity firms and insurers are all hunting for ASC deals and willing to pay top dollar.

7. ASCs shouldn't expect insurers to pay them more just because they are saving money by moving cases to outpatient centers. Now more than ever, administrators must back up arguments as to why they should be reimbursed more with solid data and outcomes. Investing in technology to collect that data will become critical to running efficient operations.

8. Partnering with larger organizations could be the best path to sustainability for many independent ASCs as consolidation picks up steam amid outpatient migration. But ASC leaders considering joint ventures should avoid merely transactional relationships by ensuring potential partners are both clinically and culturally aligned.

9. Profitable ASC specialties expected to see considerable growth in the coming years include spine, total joints, bariatrics, cardiovascular, GYN and ENT.

10. Employers are increasingly interested in direct contracting with ASCs through regional and national contracts, which have the potential to boost surgery center volume.

11. ASC administrators are spending great energy on staff retention, but it only takes one toxic person — regardless of talent — to bring down an entire team. In the "Great Resignation," the need to address underperforming employees has never been greater.

12. One big draw for ASC employees is more predictability in daily schedules compared to the hospital environment. However, burnout continues to be a challenge. Employees want more flexible schedules, but staffing shortages make this difficult to accommodate. 

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