One year ago, many ASCs were closed or at limited case volume to divert resources to hospitals treating COVID-19 patients.
A year later, the pandemic has had some silver lining in driving more cases outpatient, but there are several challenges ahead. ASC owners and operators will have to navigate their organizations through a new healthcare ecosystem emerging in the next 12 to 24 months.
1. Boosting case volume. The COVID-19 pandemic, and other natural disasters last year, depressed ASC volume because centers temporarily shut their doors. While many ASCs have resumed operations, other factors are keeping them from reaching 100 percent capacity. Social distancing measures and lack of supplies force centers to lower their daily case volume. Unemployment in some areas will continue to challenge surgery centers, as patients don't have access to insurance or necessary funds to undergo elective surgery. ASCs will need to find new ways to boost case volume, through facility expansion, adding services, employer partnerships or accepting alternative payment plans.
2. Industry consolidation. Insurance companies are consolidating and creating narrow networks that exclude small groups and providers in some markets. ASCs have few options if they're left out of the networks, or offered low rates. ASC owners may then consider selling to a hospital, joining a national chain or entering into direct contracting with large employers to offer value-based services.
3. Negotiating with insurers. Over the next several months, many ASCs will face tougher conversations with payers than in the past. Commercial insurers are eager to move cases to ASCs, but that doesn't mean their rates will be favorable. Payers are anticipating an influx of members undergoing surgery and pursuing other medical services postponed during the pandemic; they will be more aggressive in future negotiations as a result.
4. Transparency mandates. The federal government requires hospitals to post negotiated payer rates online for hundreds of common services, and similar mandates could be applied to surgery centers in the future. MedPAC also recommended Congress collect ASC cost data earlier this year. The increased price transparency could be a boon for ASCs as the low-cost provider, but it will also depress prices among surgery centers in competitive markets.
5. Hospital competition. The pandemic drove more high-acuity cases toASCs, including joint replacements and spine surgeries, as an alternative to hospitals treating COVID-19 patients. These specialties are high-reimbursing for hospitals, and the continued migration of these procedures will trigger more competition between independent centers and hospital-based ASCs. Vip Nanavati, MD, of Humphrey Shoulder Clinic in Eagle, Idaho, foresees hospitals increasing lobbying efforts at the state and national level to increase regulations and barriers to entry for ASCs as a result.
6. Data-gathering costs. ASCs need to become more sophisticated with data-gathering and reporting, which will require purchasing new electronic records systems and upskilling staff, or hiring new team members. Centers need to have clinical data, payer data and cost data readily available as healthcare becomes more transparent.
7. PPE costs. The price of masks and gloves remain high after shortages in 2020 boosted prices to record levels. ASCs will continue to spend more on supplies to keep a larger stock on hand and acquire new personal protective equipment, like N95 masks, to be ready for emergencies. ASCs will have to make room in their budget for these supplies without seeing an increase in reimbursement levels.
8. Robotics costs. Orthopedic surgeons are training on robotic technology and other advanced systems at higher rates than in the past, and want to use them in the ASC. Even with a pricing structure designed for surgery centers, robotic systems are a large expense. However, administrators of orthopedic centers across the U.S. are trying to find room for them in the budget to attract more surgeons to the ASC and compete with local hospitals for those cases.
9. Growth costs. Surgery centers that went into stealth mode during the pandemic instead of moving ahead with growth plans may have a bigger bottom line now, but value in a potential sale is lower. A center's valuation depends on future potential, and ASCs without a clear growth pathway will have a lower price tag. ASCs that did move forward with committed investments in technology and infrastructure last year have a bigger debt load now, but will be more valuable in the future.
10. Staffing. Hiring great staff members will be a challenge going forward. Many nurses left the profession during the pandemic, and centers that laid off staff last year are having trouble filling those spaces. Some ASCs are also expanding their hours to later in the evening or weekends and finding it difficult to staff during the off times.