10 Key Trends for Surgery Centers in 2011

1. Continued decline in ASC volume. The decline in overall volume of ambulatory surgery center cases will not be as steep as in 2010, when volume fell by an estimated 5 percent, says Andrew Hayek, president and CEO of Surgical Care Affiliates. However, "case volume growth for the industry will likely remain negative," he says. "Modest improvements in unemployment, personal wealth and consumer confidence will overcome the continued dampening effect of rising deductibles. This will result in flat to very slight growth in overall consumption compared to the decreases we saw in 2010."

 

The 2010 trend of people putting off elective surgeries will probably continue in 2011, says Jason Ruchaber, CFA, ASA, a principal at valuation firm HealthCare Appraisers. "We are not yet seeing significant improvement in the economy," he says. "The unemployment rate is still high and people are still losing their jobs."


2. Slight increase in reimbursements. Medicare payments to ASCs in 2011 will rise 0.2 percent across the board and a number of new procedures have been added for Medicare coverage. Overall reimbursement rates will increase by about 2 percent in the final year of the phase-in of the new Medicare rate structure, but GI and eye centers will face more Medicare reimbursement reductions. "Though any increase in reimbursement is better than a reduction, this increase is likely not sufficient to cover the cost inflation in most surgery centers," Mr. Ruchaber says. GI centers may benefit from enhanced Medicare cost-sharing for preventative services, which include colonoscopies, if the new Medicare waiver of deductibles and coinsurance drives higher volumes.


3. Decline in profits. Profits will continue to decline in 2011 due to lower reimbursements, some decline in volume and more aggressive payor policies, particularly for out-of-network status, according to Jon Vick, president of ASCs Inc. He says independent centers, in particular, have seen a decline in profits. However, Mr. Vick says spine-based ASCs are doing better because reimbursements are high and bariatric procedures also command high reimbursements but volume is down due to the economy.


4. Greater use of quality measures. More ASCs are expected to use NQF-endorsed quality measures. "This will allow the industry to better articulate the outstanding clinical outcomes we provide," Mr. Hayek says. He hopes the industry can gather enough data to establish a valid measure of actual infection rates so that the safety of ASCs can be compared to that of HOPDs. "We hope there will be material progress in towards reaching the point where there is a valid measure of actual infection rates, such that the safety of ASCs can be compared to hospital outpatient departments," he says.


5. Move to management companies. Mr. Vick, who helps physicians trying to sell their centers, sees "a very strong movement" toward management companies." Clients typically are looking for more partners and want help with recruitment and contracting, he says. "National companies will come to the forefront because ASCs have problems accessing capital, and a lot of the management companies have plenty of money," says Fred W. Ortmann III, founder and CEO of Ortmann Healthcare Consultants. Mr. Hayek predicts the largest ASC companies will continue to add 10 or more ASCs each in 2011.


6. Hospitals continue to acquire ASCs. This trend, which was "growing exponentially" in 2010, will continue in 2011, says Joan G. Dentler, president of ASC Strategies, who helps hospitals buy ASC. Keith Metz, MD, medical director of Great Lakes Surgical Center in Southfield, Mich., and member of the board of the ASC Association, says the hospital-physician ASC will be favored by accountable care organizations and other arrangements under healthcare reform. Also, by partnering with a hospital, an ASC may have access to employed or integrated physicians and their associated procedures.


7. Payors becoming more aggressive. Payors are increasingly deeming some surgeries unnecessary and are refusing to pay for them, says Joe Flower, a healthcare futurist. If the peer-reviewed literature shows a non-surgical intervention or less complex surgery is just as effective, the insurer will be more likely not to pay, he says. But Mr. Flowers thinks ASCs will flourish in cases where there is no real medical alternative to surgery and patients cannot forego surgery.


8. Rise of accountable care organizations. ACOs are already starting with private payors and are due to begin for Medicare patients in 2012. In theory, ACOs should seek out surgery centers as the low-cost, high-quality alternative. But Saul Epstein, co-administrator of ParkCreek Surgery Center in Coconut Creek, Fla., predicts ASCs could turn out to be a cost center for ACOs. "When an ACO is paid a lump sum for a patient's care, surgery will be seen as a cost center," he says. Mr. Flower thinks ACOs require different mindset than ASCs are used to. While an ACO will be concerned about the entire continuum of care, the ASC is used to focusing on one single niche, he says.


9. Strong federal advocacy. In Oct. 2010, William Prentice, a seasoned healthcare lobbyist, took the helm of the ASC Association. "We are very optimistic regarding the leadership of Bill Prentice," says Mr. Hayek, who chairs the ASC advocacy committee. "We are hopeful more ASCs will join ASCA and begin to participate in the political process, engaging with lawmakers, making political contributions, and staying connected to the industry's work." In 2011, Mr. Prentice says the ASC Association will attempt to expand its capacity to reach key decision-makers on policies affecting ASCs. "I believe the ASC industry offers one of the most significant opportunities to be a leader in the changes that will occur with healthcare reform," he stated.


10. More Medicare inspections. The recent increase in Medicare inspections of ASCs is likely to continue in 2011. In general, ASCs will likely do well, but "the portion of ASCs with one or more deficiencies will draw significant negative press coverage and significant attention on Capitol Hill," Mr. Hayek predicts. "This coverage is particularly disappointing, given that it implies the risk of infection is higher in ASCs than in other settings. This is an implication that we believe to be false and misleading to healthcare consumers."

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