ASCs in 5 years: Will there be more or fewer independent centers?

The ASC market has shifted in the last decade with consolidation between ASC chains and more surgery center development overall, but the percentage of independent surgery centers overall hasn't drastically shifted.

Around 70 percent of surgery centers are independent, according to VMG Health, which has decreased only a few percentage points in the last decade.

Healthcare overall is more consolidated with fewer independent hospitals and physician groups either joining together to form regional networks, selling to a hospital, or accepting private equity investment. But there is still ample opportunity for surgeons in some specialties to open and succeed with independent ASCs.

What will happen in the next five years?

"Overall, healthcare continues to see significant consolidation, but ASCs should be somewhat less impacted related to the ability of physicians to own their own facilities, up to 100 percent of a facility," said Adam Bruggeman, MD, CEO of Texas Spine Care Center in San Antonio. "Certificate of need states will see higher consolidation while states without certificate of need should see less consolidation when compared to the consolidation we see in the hospital market."

Todd Currier, administrator of Bend Surgery Center in Cody, Wyo., echoed Dr. Bruggeman's sentiment. He thinks consolidation will grow but not as rapidly as in the past.

"As more and more physicians are employed through a health system, I foresee independent ASCs continuing to join forces with health systems, management companies or both. Growth will come from both acquisition and development of new centers," said Mr. Currier.

Andrew Lovewell, CEO of Columbia (Mo.) Orthopaedic Group and The Surgical Center at Columbia Orthopaedic Group thinks independence will continue to reign supreme.

"As a bold prediction, I think we will see more independent ASCs stay the course and we could even see some ASCs break away from the management conglomerates," Mr. Lovewell said. "The big five — USPI, AmSurg, HCA, SCA, and Surgery Partners — will continue to consolidate through acquiring the smaller management companies in the space but it will stall past that. The reason for the stall is that the uptick to standardizing processes is so long. Coupling the breadth and depth of disparate systems in ASCs makes the consolidation process even harder."

Michael Patterson, president and CEO of Mississippi Valley Health, predicts an uptick in ASC consolidation as the industry matures and there is more emphasis placed on high quality, low cost care.

"As ASCs continue to align with their physician partners, it would be expected that alignment through formalized partnerships will continue to develop. It's an exciting time to be in the ASC space and we look forward to continuing the evolution of meeting the healthcare needs of our communities and doing so in an easily accessible and cost effective manner," Mr. Patterson said.

Health systems now more than ever need a robust outpatient strategy and are seeking guidance in a variety of sources. Some are partnering with national ASC chains to develop their networks, such as Minneapolis-based Allina Health's partnership with SCA Health or Regent Surgical Health's partnership with St. Louis-based Ascension, while other health systems are opening their own or joint venture centers with local physicians.

"Hospitals will continue to acquire ASCs as they attempt to hold on to total joint and spine cases that are migrating to that setting. In addition, labor shortages and tight margins will encourage consolidation to aid in staffing and administrative efficiencies. On top of this, we are likely to see continued vertical integration in healthcare with more players becoming interested in ownership of ASCs to better control the delivery and costs of healthcare," said Vishal Mehta, MD, president and managing partner of Fox Valley Orthopaedic Institute in Geneva, Ill.

Vivek Mohan, MD, a spine surgeon with Orthopaedic Spine Institute in Hoffman Estates, Ill., said he thinks the ASC industry will grow substantially in the next decade, especially with the interest of private equity companies.

"I predict venture capital and private equity money will help spur the rapid growth of ASCs in the next three to five years," he said. "Within 10 years, many surgery centers will likely be consolidated either regionally or nationally to maximize profitability and streamline delivery models for each pathway — joint replacements, spinal fusions, etcetera. Surgeons need to be vested in ASCs now to come out ahead at the end."

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