Crozer-Keystone ASC acquisition boosts surgical volume 19%: Why hospitals & health systems want in on the ASC industry

Crozer-Keystone Health System, which includes five hospitals throughout Pennsylvania, has posted operating losses for the past several quarters. But, due to the strategic 2013 acquisition of the Surgery Center of Pennsylvania in Haverford, the health system reported a 19 percent increase in surgical volume, according to a report by The Inquirer.

Historically, ambulatory surgery centers have not been much more than a blip on the hospital industry's radar. But now, as the low-cost, high-quality equation for value takes healthcare by storm, ASCs are attracting more and more attention from hospitals and systems like Crozer-Keystone. Here are three reasons ASCs and outpatient care may become a cornerstone in hospital and health system strategy.

1. Inpatient decline. Inpatient admissions, the bread and butter of hospitals and health systems, are on the decline. A study from financial firm Kaufman Hall found that inpatient admissions are down across all age groups and nearly all service lines. Service lines with effective outpatient alternatives are suffering the greatest hit, and the trend isn't expected to change any time soon.

2. Physician partnerships. Issues such as integrated care and population health are coming to the fore. While hospitals and health systems may have the resources to pull off such sweeping strategies, it cannot be done without physicians. Whether through practice acquisitions, employment or partnership, hospitals and health systems are seeking to build long-lasting relationships with physicians.

ASC joint ventures are becoming more and more common, with appeal on both sides. Physicians may be interested in the security and improved reimbursement rates a larger partner can offer, while hospitals want access to case volume and physician relationships. While hospitals can buy into an existing center, some are seeking physician partners to create joint ventures from the ground up. For example, Raleigh, N.C.-based Rex Healthcare plans to recruit 20 to 30 surgeons for a joint venture ASC.

3. Forward-looking strategy. ASCs have established an industry that has been mastering the low-cost, high-quality care equation for years. As inpatient volumes continue to slip and hospitals struggle to meet the demands of price and quality, the ASC industry offers a logical, strategic place to turn.

Hospitals and health systems are even making an effort to block projects that would threaten their ambulatory strategy or lead to further declines in inpatient volume. Novant Health raised objections to the proposed Rex Healthcare ASC project, which would be built a mere 10 miles from its own surgery center. Catholic Health and several other neighboring hospitals objected to Kaleida Health's joint venture Orchard Park, N.Y., ASC project, a project that was ultimately denied a certificate of need. 

More articles on transactions and valuation issues:
5 hospital ASC plans & partnerships
SCA revenue climbs 10%: 5 2Q financial report highlights
Transaction tip of the day: Planning for sale

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