What's on the horizon for ASC joint ventures? Avanza Healthcare Strategies CEO Joan Dentler weighs in

Profitability, consumer trends and physician relationships are some of the top reasons hospitals own ASCs, according to Avanza Healthcare Strategies' 2019 ASC joint venture survey.

Joan Dentler, president and CEO of Avanza, shared her insights on the survey with Becker's ASC Review.

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

Question: You mention that a decrease in equity-based partnerships is a sign
of a maturing marketplace. Are there any other trends on the horizon
you see coming as part of that maturation?

Joan Dentler: I expect that we will see the continued consolidation of ASCs as well as surgery center management and development companies. With the critical role of ASCs firmly cemented within healthcare, I anticipate that there will be a proliferation of vendors specializing in serving ASCs in areas including revenue cycle management, information technology, recruitment and staffing, infection prevention, financing and education and training.

Finally, I expect that we will continue to see payers embracing the ASC model and exploring ways to direct care, when appropriate, out of the inpatient setting and into the outpatient setting. Look for expanded coverage of complex procedures and growth of value-based payment models, like bundles.

Q: How will acquisitions affect ASC/hospital joint ventures?

JD: When an ASC is acquired by a hospital or health system, it puts pressure on the other providers in the market to respond. Larger organizations tend to wield greater market power, influence and negotiating strength with payers, providers and suppliers.

For other hospitals and health systems in the market, this response may include pursuing an ASC acquisition of their own or exploring whether to build a de-novo surgery center. ASCs in the market with specialties overlapping the acquired surgery center may consider approaching a local hospital or health system about a partnership. An ASC may even consider merging with another surgery center as a way to achieve greater size, scope and purchasing power. To remain competitive, smaller organizations will need to grow or they risk being ignored by partners critical to their short- and long-term success.

Q: What do you think the main takeaway from the survey is?

JD: I think there are two top takeaways: The continuing interest in ASCs by hospitals and the fact that, in the ASC joint venture model, the use of outside management is declining. I don't believe the reason for this trend is that the hospitals are "managing" the ASCs as physicians would not tolerate this. Rather, hospitals are working with physician partners to determine ways to successfully operate the ASCs without the additional expense of traditional third-party management.

Q: Do you have any predictions as to what next year's survey will find?

JD: Healthcare is often quite unpredictable, so making confident predictions is rarely simple. With that said, I think we will see interest in the ASC joint-venture model at least sustained, if not growing. The number of hospitals and health systems owning ASCs and owning multiple ASCs will likely rise a bit as hospitals and health systems feel payer and consumer pressures to become more involved with outpatient surgery. I believe we may also see an increase in hospitals and health systems permitting employed physicians to invest in ASCs. Physicians are clamoring for more independence (once again), so allowing such investing is a way for hospitals and health systems to support this independence "itch" while maintaining alignment and engagement.

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