Are ASCs the key to saving hospital finances?

Hospitals and health systems are increasingly looking to ASCs for growth — forming partnerships and joint ventures for ASC development as procedures continue to migrate to outpatient settings. 

Two California health systems recently announced plans to build ASCs in Visalia to suture financial losses, The Sun Gazette reported May 14. Visalia, Calif.-based Kaweah Health has plans to build an ASC in partnership with private physicians. The health system already has a partnership with surgeon-owned Sequoia Surgery Center, also in Visalia, which operates a four-suite ASC that performed roughly 5,600 surgeries and procedures in 2023. 

While the group had previously decided to not expand their center, according to the report, there is now another larger health system, Roseville, Calif.-based Adventist Health, looking to build an ASC in the same market. 

"We are aware that Adventist Health has also hired a consultant to evaluate the feasibility of developing a competing ambulatory surgery center in Visalia," a Kaweah staff report said, according to the Gazette. "It is our understanding that Adventist Health has historically not allowed physicians to be owners in their facilities but with respect to this proposed ASC they are considering allowing physicians to own up to 49% of the joint venture."

Health systems and hospitals across the country are following a similar strategy. 

A January survey of health system executives by VMG Health found that 60% of leaders were considering pursuing outpatient surgery joint ventures in 2024 — the highest area of interest of any potential specialty partnerships. In 2023, Becker's reported on 55 hospitals and health systems opening ASCs.

And health systems are seeing the benefit of expanding their ASC strategy. According to a case study by Merritt Healthcare, New York City-based Mount Sinai was able to lower care costs with a $10 million investment to open an ASC. Mount Sinai successfully migrated 7,000 annual cases from the hospital to the ASC setting. 

Northwell Health, in New Hyde Park, N.Y., sees more care transitioning outpatient and has prepared for business increasingly outside of the hospital.

"Our biggest growth is in outpatient care. Some think we are only a hospital system, but only about 46 percent of our business is from our hospital sector today," Northwell President and CEO Michael Dowling told Becker's last year. "The more you expand ambulatory and grow in the right locations, the more you increase market share, which brings more of the necessary inpatient care back to your hospitals."

Other large health systems, including Coral Gables, Fla.-based Baptist Health, Salt Lake City-based Intermountain Health and Phoenix-based Banner Health have made moves to open ASCs in recent months. 

Health systems have also looked to partnering with ASC companies to build centers. Compass Surgical Partners inked deals with several health systems, including Baptist Health and Marriottsville, Md.-based Bon Secours, in the last year. Additionally, ASC chain Surgery Partners teamed with health systems such as Intermountain Health and Fort Wayne, Ind.-based Parkview Health to build ASCs. 

Dallas-based Tenet Healthcare, the parent organization of United Surgical Partners International, has seen tremendous growth within the last five years, driven largely by the company's ASC strategy. The company is investing $450 million into growing its ambulatory business in 2024 and has acquired 45 ASCs across the nation in the first quarter of 2024 while shedding nine hospitals for proceeds of $4 billion. Nashville, Tenn.-based HCA Healthcare is also one of the largest operators of surgery centers through its ASC business Surgery Ventures. 

"You have to shoot to where the puck is going, and ambulatory surgery is rapidly moving to freestanding ASCs, so we have partnerships with a number of physician groups to do freestanding ambulatory surgery," Mike Slubowski, president and CEO of Livonia, Mich.-based Trinity Health, told Becker's last year. "We're starting to open a lot more freestanding ASCs. Care is shifting away from hospital-based ambulatory surgery as well because patients and payers don't want to cover the additional cost of being hospital-based."

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