From consolidation to physician ownership, here are five major trends ASCs are keeping tabs on:
While the healthcare industry as a whole is increasingly consolidating, the ASC industry remains fragmented. Seventy percent of freestanding ASCs are independently owned and operated, according to VMG Health's "Annual Healthcare M&A Report 2022." This number has remained relatively flat even throughout the COVID-19 pandemic.
However, independent physicians are quickly migrating towards employed models, and physician groups are being snapped up by private equity firms and hospitals. According to the same VMG report, there were approximately 461 physician group deals announced in the sector in 2021, a 145 percent increase from the 2020 volume. And as of the beginning of this year, 74 percent of physicians reported being employees – an increase from 69.3 percent in the beginning of 2021 and 62.2 percent in 2019, according to an April report from Avalere.
ASC chains are still growing. United Surgical Partners International, for example, acquired both SurgCenter Development for $1.1 billion and eight Compass Surgical Partners ASCs for $78.1 million in 2021. Most ASC companies have opted for rapid growth, which means acquiring smaller ASC chains to amass market share quickly.
2. Value-based care
As the healthcare industry moves towards value-based care, ASCs are eyeing bundled payments. ASCs could be in the perfect position to adopt value-based care models because of the cost-efficient procedures offered in the outpatient setting.
In the next five years, "health systems and national ASC management acquisition of existing ASCs will occur at a faster rate to meet value-based reimbursement requirements and a lower-cost delivery system," Liliana Lehmann, president of Fort Lauderdale, Fla.-based Axis HealthCare Partners, told Becker's July 26.
ASC chains are seeing opportunity in value-based care. In March, Optum, parent company of ASC chain SCA Health, acquired home healthcare business LHC Group for around $5.4 billion, aiming to strengthen Optum's ability to provide value-based care. In June, Optum Ventures, CVS Ventures, Anthem and HLM Venture Partners announced they are investing in CareBridge, a value-based healthcare company for patients receiving home and community-based services.
3. Staff shortages
Staff shortages are affecting ASCs nationwide as operation costs rise and healthcare workers are leaving the industry.
"Physician and nursing shortages are projected to exponentially get worse in the next coming years while our current physicians and nurses are already being asked to do more to compensate for the shortages," Jackie McLaughlin, RN, administrator of the Northwoods Surgery Center in Woodruff, Wis., told Becker's Sept. 19. "I fear industrywide burnout will create a snowball effect with the looming shortages."
ASCs spend $2.2 million on employee salary and wages on average, or about 21.3 percent of net revenue, according to VMG Health's "Multi-Specialty ASC Benchmarking Study." ASCs are struggling to compete with the deep pockets of hospitals and health systems, hoping to recruit employees with flexible hours and positive work environments.
4. Reimbursement declines
ASCs have long faced obstacles to securing reimbursements from payers. In some markets, ASCs have to face competition from larger hospitals and health systems to secure payer contracts. Additionally, as costs rise, many are not seeing a correlating increase in reimbursements.
"ASCs' reimbursement rates are notoriously and appallingly lower than hospital reimbursement rates," Ann Cook, RN, director of nursing at Best Surgery and Therapies in Cincinnati told Becker's Aug. 18.
Some are seeing a growing payer interest in the lower-cost ASC setting. In June 2021, UnitedHealth Group made a commitment to push more surgeries to ASCs. According to a company report, the group aims to have more than 55 percent of its members' outpatient surgeries and radiology services delivered at cost-efficient sites of care by 2030.
But other factors, like CMS' 2022 Hospital Outpatient Prospective Payment System and ASC Payment System, which removed 255 procedures from the ASC-payable list, are pointing to increasing obstacles to reimbursements.
5. Physician ownership
ASCs provide a unique opportunity for physicians to have a "stake in the game" as equity owners and shareholders in the surgery center they work for. Investment in an ASC is a long-term strategy for physicians, particularly those not employed by a hospital, to thrive financially and gain more control over their day-to-day workflow.
Self-employed physicians make 18 percent more than employed physicians, according to Medscape's "Physician Compensation Report 2022," and ASC ownership also offers ancillary revenue that hospital employment often lacks.
"Ancillary service revenue can reflect up to 50 to 60 percent of a private practicing physician's income which, unfortunately, short of gain-sharing opportunities or partial ASC ownership, is usually unavailable in a large healthcare system-employed practice situation," Jack Bert, MD, orthopedic surgeon at Woodbury (Minn.) Bone & Joint, told Becker's March 15.