How ASCs Have Changed in the Last Year: 10 Business Findings From VMG Health's 2011 Intellimarker

Despite a maturation over the last 10 years, the surgery center industry continues to change in interesting ways from year to year. Here are 10 findings from VMG Health's Multi-Specialty ASC Intellimarker 2011, when compared with similar data from 2010.

1. Percentage of GI/endoscopy grew in 2011, while most other specialties remained stagnant. GI/endoscopy was the only specialty to undergo significant growth in 2011, increasing as a percentage of total case volume from 24 to 29 percent. This may be due to a measure through healthcare reform that waives out-of-pocket charges for screening colonoscopies, a provision that may encourage patients to seek GI care in surgery centers.

2. Average case volume increased last year. Case volume increased on average in surgery centers in 2011, growing from an average of 4,698 cases per year to an average of 4,714 cases annually. This is good news for surgery center leaders, many of whom believed that increasing physician employment and market saturation would limit physician recruitment and lead to a decline in case volume. The increase may also come as a consequence of decreased reimbursements; especially for specialties like GI and ophthalmology, increasing volume is a surefire way to make up for profit lost through rate cuts. Interestingly, surgical cases increased from 705 to 765, while non-surgical cases dropped from 1,169 to 1,144.

3. Net revenue per case increased for every specialty.
In 2011, surgery centers saw increased revenue per case for every specialty across the board. The specialties with the highest increase in average net revenue per case were podiatry, urology, OB/GYN and orthopedics, with podiatry topping the list at an increase of $207 per case.

4. Salaries increased — particularly for administrators. ASC administrators made more in 2011 than they did in 2010, reporting an average annual salary of $109,184 in 2011 compared to $106,794 the previous year. Each percentile of administrators — from the 25th, at $97,416, to the 90th, at $137,495 — saw an increase over last year. This may signal increased competition for qualified administrators, as surgery centers pay more to attract the best candidates from hospital and ASC competitors. Hourly pay for nurses, techs and administrative staff members also increased in 2011, with nurses enjoying the biggest jump from $31.57 to $32.12. While this may be good news for employees, it puts a heavier strain on ASC budgets.

5. Surgery centers staffed more FTEs last year. Not only are hourly wages increasing, but the number of employees is as well. According to the Intellimarker, the number of total FTEs increased dramatically from 21.0 in 2010 to 27.6 in 2011. This increase could be attributable to increased regulatory burdens, which require ASCs to allocate more time to documentation and re-training; increased case volume, which requires more staff to assist with procedures; or the introduction of electronic medical records, which slows processes initially and may require additional staff.

6. Lack of growth in outpatient surgery suggests a maturation of the industry. The percentage of surgical cases performed in an outpatient setting has stayed constant at around 63 percent since 2000, indicating a maturation of the ASC industry. This is contrasted with an increase in surgical procedures from the 1980s until the 2000s, driven by the rise in surgery centers as well as technology and innovation that made procedures more suitable for the outpatient setting.

7. Operating expenses were highest in the Southeast in 2011 — the area with the lowest expenses in 2010. Operating expenses for surgery centers were higher in the Southeast than in any other region of the country in 2011, totaling an average of $5,991,000 compared to the next highest, the Midwest at $5,515,000. Operating expenses were lowest in the Northeast, at an average of $3,776,000 per year. This represents a change from last year, when operating expenses were highest in the Midwest at $5,155,000. Interestingly, the lowest operating expenses in 2010 were reported in the Southeast, at $4,560,000.

8. Case volume has decreased for orthopedic-driven surgery centers. The average number of annual cases for orthopedic-driven surgery centers decreased from 2010 to 2011, dropping from an average of 3,484 per year to 3,161 per year. In 2011, orthopedic-driven surgery centers also saw a greater reliance on their top two physicians, with the two highest-performing surgeons bringing 41 percent of the case volume compared to 34 percent in 2010.

Both these statistics may signal a decrease in the ability of orthopedic surgery centers to recruit physicians, as the specialty becomes more and more saturated in ASC markets. A few years ago, orthopedics was a newer specialty, so orthopedic physicians were easier to identify by ASC recruiters. With physician hospital employment increasing and orthopedics moving into more and more surgery centers, ASC leaders may be seeing a paucity of orthopedic physicians in the same manner that has affected other specialties.

9. Overall operating expenses have increased.
Average operating expenses for all surgery centers increased from $4,881,000 to $5,222,000 in the last year. The biggest portion of those expenses was employee salary and wages and medical and surgical costs, which clocked in at $1,552,000 and $1,530,000, respectively. The only expense to decrease in 2011 compared to 2010 was the cost of insurance, which dropped from an average of $54,000 to $53,000. All other costs increased from 2010.

10. Discrepancy between ASC and HOPD payments continued to grow in 2011. According to the VMG Health report, the gap between ASC payments and hospital outpatient department payments continued to grow in 2011, with ASC reimbursement reaching 56 percent of HOPD reimbursement compared to 58 percent the previous year. This gap has widened sharply since 2003, when ASC payments represented 87 percent of HOPD payments. According to the report, the discrepancy exists because CMS uses different factors to update ASC and HOPD rates annually, as well as a process called "secondary rescaling," which ensures that changes to APC relative weights used to determine HOPD rates do not result in an aggregate increase or decrease in ASC payments.

CMS will continue to use the Consumer Price Index for Urban Consumers to update surgery center payments in 2012, despite lobbying efforts from the ASC industry. The CMS final rule, released Nov. 1, will increase ASC payment rates by 1.6 percent in 2012.

Learn more about VMG Health.

Related Articles on ASC Operations:
Determining Medical Director Compensation: Q&A With Ben Ulrich of VMG Health
ASC Specialty to Watch: Gynecology in 2012
10 ASC Best Practices From the Most-Read November 2011 Articles

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