From California’s Proposition 56 cuts threatening a $1.7 million annual operating deficit to hospital networks quietly rerouting referrals away from independent facilities, ASC leaders nationwide say financial pressure is closing in from every direction.
Three ASC leaders joined Becker’s to discuss the biggest threats to ASCs right now.
Editor’s note: Responses have been lightly edited for clarity and length.
Question: What’s the single biggest financial threat to your ASC right now?
Tara Good-Young, CEO of PDI Surgery Center (Windsor, Calif.): The single greatest financial threat to our ambulatory surgery center is the proposed elimination of Proposition 56 supplemental reimbursements for Medi‑Cal dental providers. If these cuts move forward, an estimated 50% of Denti‑Cal providers are expected to leave the program, dramatically reducing access to primary dental care across California. As community‑based dentists exit, children will present with more advanced disease, more pain, and more complex treatment needs — driving even greater demand for hospital‑level dental anesthesia services at ASCs like ours. Yet the same cuts that would increase clinical need would simultaneously destabilize the very centers equipped to treat these children safely.
For PDI Surgery Center, the impact is existential. The loss of Prop 56 funding would create a $1.7 million annual operating deficit, a gap that cannot be closed without eliminating staff and canceling contracted anesthesia and dental providers. But doing so would erase our ability to fulfill our mission and leave thousands of vulnerable children with nowhere to go for urgently needed surgical dental care. In short, these reimbursement cuts threaten not only the financial viability of our ASC, but the entire safety‑net system that ensures children in pain can receive timely, compassionate, and medically necessary treatment.
Ahmed Hasan, MD. President of Lehigh (Pa.) Gastroenterology Associates: The hospital networks are buying up the independent primary care practices. This affects any referrals to independently owned ASCs. There is a trend where the hospital networks are diverting any referrals out of their network and instructing the providers to keep the patients within the network. So the patients who have been seeing a subspecialist for years and getting EGD/Colonoscopies from that sub specialist are now diverted to an in network employed sub specialist of the network. So much for continuity of care!
This will slowly decrease the procedures done at independent ASCs and can impair their survival.
A lot of hospital networks are moving the colonoscopies to the hospital setting if they do not own an ASC in the area. The procedures are being performed by general surgeons rather than a trained gastroenterologist, if the network does not have any gastroenterologist in the area. This is despite the fact that there may be independent gastroenterologists in the area.
One of my physician friends who is employed by a hospital network had his EGD/colonoscopy at his network facility. They billed $17,800 to the insurance company and got paid $16,000. But wanted him to pay the $1,800 difference. He asked me how much my independent ASC charges and gets for a colonoscopy. We get up to $2,000 for the colonoscopy, which includes the facility fee as well as the physician reimbursement depending on the insurance. No wonder the insurance premiums are up. I called the commercial insurance company and told them that I can do the same procedure for much less cost to them. Their reply, “It is the price agreed with the network in their contract.”
Indran Indrakrishnan, MD, CEO of GDC Endoscopy Center (Lawrenceville, Ga.): The biggest threat is anesthesia economics. I can perform colonoscopies and EGDs efficiently, but I cannot operate without anesthesia coverage.
- Anesthesia provider shortages
- Rising anesthesiologist and CRNA compensation
- Flat or declining anesthesia reimbursement
- Growing anesthesia subsidy requirements
These are the most immediate threats to profitability and even day-to-day operations. There are many reasons why endoscopy centers like mine are particularly vulnerable.
- High volume
- Relatively short procedures
- Heavy dependence on propofol sedation
- Significant Medicare population
The reimbursement for the procedure itself often does not rise nearly as fast as staffing costs. If anesthesia costs increase by several hundred thousand dollars annually, that can consume a large portion of overhead of the endoscopy centers.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.