The ASC industry is thriving with growth over the last several years, but faces financial and operational roadblocks as the healthcare ecosystem evolves.
Ten trends affecting ASC strategy today:
1. The ASC market is still primarily dominated by freestanding surgery centers with five large ASC chains capturing around 22 percent of the market. About 69 percent of ASCs were freestanding at the end of last year, according to VMG Health, and 9.1 percent were owned by other operators.
2. The top ASC chains by market share are:
- United Surgical Partners International: 7.3 percent
- SCA Health: 5.3 percent
- AmSurg: 4.3 percent
- HCA Healthcare: 2.5 percent
- Surgery Partners: 2.4 percent
3. ASC multiples have increased since the pandemic, according to VMG Health, and steadily increased over the last five years. In 2022, the median total invested capital to earnings before interest, taxes, depreciation and amortization was 7.9x; the 25th percentile was 7.4x and the 75th percentile was 8.0x.
4. The number of Medicare-certified ASCs in the U.S. is up year over year. There were 6,075 Medicare-certified ASCs in 2021, the most recent data available, up 2.7 percent from the year prior. Medicare spent around $5.7 billion on ASC services that year.
5. There were 222 ASCs that closed or merged in 2021, up from 199 in 2020 but down from 329 in 2016, according to MedPAC's report to Congress in March 2023.
6. Around 65 percent of all ASCs are single-specialty, primarily gastroenterology, ophthalmology and pain management centers.
7. ASCs have seen some staffing and labor pressures cool since the height of the pandemic. Surgery centers compete with hospitals and travel agencies for nursing talent, but are able to offer a flexible work schedule and small business culture. Some ASCs have created promotion tracks for nurses to retain early career nurses desiring growth.
8. Having a great anesthesia partner is increasingly important for surgery centers, especially for orthopedic cases. Anesthesia costs are increasing while reimbursement isn't keeping up. There is also a shortage of anesthesiologists in some markets, and ASCs are moving to either employ anesthesiologists or bring them on as partners.
9. Many predict additional consolidation in the ASC space as costs increase faster than reimbursement. ASCs are seeing inflation boost supply and labor costs while physicians eye expensive robotic technologies and digital transformation.
Some will turn to hospitals for acquisition while others see opportunity with private equity firms or large physician groups to retain a level of autonomy. Private equity accounted for 65 percent of physician practice deals from 2019 to 2023, according to Levin Associates, and UnitedHealth's Optum is the largest employer of physicians with 70,000 in its network.
10. CMS proposed a 2.8 percent pay bump for ASCs next year, but only plans to add 26 dental surgical codes to the ASC payable list. ASCA pitched 62 other codes, including total shoulder replacement, but CMS declined to add them. The inability to receive Medicare payments for some standard procedures in ASCs may stifle growth in the future.