Here are 10 key thoughts on the ASC industry today and where it's headed in the future based on a panel at the Becker's ASC 22nd Annual Meeting — The Business and Operations of ASCs moderated by Scott Becker, JD, CPA, publisher of Becker's Healthcare and partner at McGuireWoods.
1. There are payers beginning to take advantage of the ASC's benefits. "Generally, ASCs are underappreciated in the world of healthcare and the role they could play," said Luke Lambert, CEO of Ambulatory Surgical Centers of America. "However, there are certain payers taking advantage of the low cost, high quality setting and driving cases to the ASC. In many markets, the local hospital may be enormously dominant. In those situations, having an independent ASC can be a check on the dominance of power."
2. ASCs need A-team physicians to survive. There are several factors making ASC ownership and profitability more difficult today, from increased regulations to declining reimbursement. However, the heart and soul of the ASC — physicians — remains an important key to success. "You have to have the A-team physicians in your community, otherwise you don't have a future," says Tom Mallon, CEO of Regent Surgical Health. "You can do it with great physicians and an okay administrator."
3. ASCs are partnering with long term care facilities. As higher acuity cases move into the outpatient setting, including joint replacements and spine procedures, some surgery centers are partnering with longer term care facilities. "We've seen recently a trend toward ASCs partnering with acute care or skilled nursing facilities to provide longer term care if necessary," says F. Morgan Gasior, CEO of BankFinancial. "Then the ASC can bring in more complex procedures."
4. Deductibles play a big role in some markets, smaller role in others. Traditionally, ASCs experienced fewer procedures at the beginning of the year as people waited for elective surgery until after they met their deductibles. With larger deductibles in some markets, patients are waiting longer than usual for their surgeries. In other markets, health savings accounts give patients more flexibility about when their surgeries are performed. "People are funding the health savings accounts and spreading their care out for the entire year," says Mr. Mallon.
5. Bundled payments could positively impact ASCs. "Bundling and transparency provides what people are paying to benefit both sides," says Mr. Gasior. "Bundling will become a consumer preference and it will be a great driver to get healthcare, smooth out revenues and the payment cycle for everyone."
6. Out-of-network continues to wane, but new in-network contracts have some benefits. "We've had out-of-network disappearing, but we've been remarkably successful in getting attractive contracts in those markets," says Mr. Lambert. "We have a number of centers with great success with recruitment and case volumes are a priority. We are getting in-network cases that allow our physicians to bring a greater portion of their practices to our centers. We are in-network with everyone, so new physicians can bring more of their cases here."
7. Physicians are an effective resource for payer contract negotiations. "We have an independent center where leadership is getting physicians involved and on the phone with payers," says Mr. Mallon. "That's been very effective."
8. Watch out for new, poorly structured ASCs. "In a jurisdiction with a low barrier of entry, there might be a good facility already working there but if a poorly structured one comes in and makes a lot of promises but doesn't deliver, that could create a lot of problems for everyone in a short amount of time," says Mr. Gasior.
9. There is a re-investment in existing ASCs. The government and commercial payers are trying to keep costs down, so the ASC's efficiencies make them attractive. "ASCs have strong patient outcomes and quality of care, so there's a reason to be optimistic," says Mr. Gasior. "We've seen across the board a reinvestment in facilities. ASCs are upgrading the facility and equipment to elevate the patient experience. We're seeing greater utilization and ways to work credit, and cash flow for reconstructing the facility or adding operating rooms."
10. Hospitals are becoming insurers, and want to control costs. More hospitals around the country are self-insuring employees and trending toward becoming insurers as well; others are participating in shared savings programs and other measures to keep costs low. As a result, the hospitals are searching for ways to transition care to ASCs. "Hospitals have much bigger issues than us, and they are in a massive cost cutting and savings mode," says Mr. Mallon. "They need to set relationships with ASCs quickly. We used to take the first year to build an ASC with the hospital; now we are working in the first year to do the do the first of five ASCs for a health system."