Where is inflation hitting ASCs the hardest?

Inflation continues to be a pain point for ASCs, causing a rise in supply and energy costs making operations all the more difficult. 

Three healthcare leaders weighed in to discuss where inflation is hitting ASCs the hardest this year compared to last.

Note: Responses have been lightly edited for length and clarity.

David Dobrzykowski, PhD. Director of Walton College Healthcare Initiatives (Fayetteville, Ark.): Off contract purchases are a key area to watch for inflation for ASCs in 2023. In most industries, product substitutions mean lower unit costs, but not so in healthcare where ASCs purchase substantial volumes of their products on Group Purchasing Organization contracts. When a provider purchases off a GPO contract, they pay substantially more for what is deemed to be a comparable product. This is generally viewed as a lose-lose proposition by providers. They don't get exactly what they want, and they pay more for it. One chief supply chain officer from an integrated delivery system in the Midwest shared with us, "The cost of a backorder is much greater than the cost of the widget." Substitutions are a major risk facing ASCs because a large portion of their supply costs are rooted in a smaller number of high-cost items (i.e., devices). If a disruption/substation occurs in a key category for an ASC, they will likely feel the impact more than an acute care hospital that has a broader supply mix.

Jacqueline McLaughlin, RN. Administrator at Northwoods Surgery Center (Woodruff, Wis.): Inflation is hitting us in both fixed and variable expenses. Energy costs have been a large increase in our expenses, as well as distributor shipping fees. Supplies and pharmaceuticals have steadily increased since supply chain interruptions beginning in 2020. There really is not an area where inflation has not hit this industry. 

Peter Whang, MD. Associate Professor in the Department of Orthopaedics and Rehabilitation at Yale University School of Medicine (New Haven, Conn.): Inflation certainly has been an issue for everyone over the last couple of years and ASCs are no different, having been affected by a wide range of increasing costs whether it is surgical implants, staffing, or even just keeping the lights on. However, what is probably more concerning in 2023 is the ongoing inflation in conjunction with the prospect of Medicare cuts. While the reduction may not have been as painful as initially anticipated, even a single digit cut in reimbursement threatens the viability of ASCs given the ever decreasing margins we face year after year. It may sound like a broken record, but the healthcare system needs an overhaul in order to find longer-term solutions to address the inherent inefficiencies that plague us all — physicians, patients and society as a whole.

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