Here's what's threatening the future of ASCs

What's the biggest threat facing ASCs today? The short answer: "Reimbursements are not keeping pace with the rising administrative costs in ASCs," John Stewart, CEO and founder of Melbourne, Fla.-based Total Spine & Orthopedics, told Becker's.

When CEOs of surgery centers were asked this question, most agreed it is the inverse relationship between reimbursement and what it costs to keep up with the increasingly competitive ASC industry.

"Reimbursement from all sources — federal, local and private insurance — does not actually compensate for the cost on many cases, and there is certainly no profit to be made to continue to improve the physical plant or add service lines," Melissa Waibel, BSN, CEO of Tamuning-based Guam Surgicenter, told Becker's.

As the technological advancements of ASC equipment and devices continue to soar, so does the price paid to provide patients with the latest outpatient care. 

Supply costs at Guam Surgicenter increased by over 25 percent last year, and "There is evidence to show that may be true this year as well," said Ms. Waibel.

Once ASCs push through increased prices and shipping costs, products are often out of stock or arrive damaged. Additionally, utilizing implants and disposable devices appears to be becoming wasteful in terms of both inventory and money, Ms. Waibel pointed out.

"The cost to do business is increasing rapidly in the ASC environment, from payroll costs to medical supplies and equipment, while reimbursements remain stagnant and even declining in some specialties," Total Spine & Orthopedics's John Stewart told Becker's.

On top of low reimbursement within insurance contracts, new providers are battling with payers opting to not provide a contract because their "panel is closed," said Grant Cook, CEO of National Surgery Consultants, based in Scottsdale, Ariz.

While the commercial payers are "openly articulating the value of ASCs in the broader healthcare equation, there is also continued downward rate pressure from them on many core ASC procedures," Sean Rambo, president and co-founder of Compass Surgical Partners, based in Raleigh, N.C., told Becker's.

With most contracts offering reimbursement rates falling between 80 to 110 percent of the rates set by the Centers for Medicare and Medicaid Services, centers must be operating close to full volume for those rates to be sustainable, said Mr. Cook.

Ensuring surgery centers are operating at full capacity and functioning to the best of their abilities relies heavily on having adequate medical staff. However, employee demands for raises combined with the staffing shortage is making this task increasingly challenging.

"We all are aware of the need for more registered nurses, which is critical, but there is also a decline in surgical scrub technicians, central sterilization technicians, biomedical engineers, materials management," Ms. Waibel told Becker's

Furthermore, ASCs are feeling the heightened pressure to match salaries at hospitals, which have deeper pockets to offer higher wages and bonuses, in part from receiving government funding throughout the pandemic, said Melissa Rice, CEO of Ravine Way Surgery Center, based in Glenview, Ill.

ASCs can combat the factors that threaten their futures by establishing a more dominant presence in the healthcare industry. Making the shift toward performing more complex medical cases such as total joint surgeries and cardiovascular procedures will help ASCs compete with hospitals, Compass' Mr. Rambo told Becker's.

Adaptation and flexibility present opportunities for future growth in the ASC industry, increasing the likelihood of long-term viability. That said, traditional ASCs that fail to adapt or keep up with the evolving landscape of healthcare "will face an uncertain future," said Mr. Rambo.

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