ASCs are being challenged by mounting financial pressures endangering their sustainability.
Here are five major headwinds facing ASCs:
1. Stagnating reimbursement rates
Reimbursement rates have not kept pace with inflation and rising operational costs, straining ASCs financially. While CMS slightly boosted ASC reimbursement rates for 2024, many leaders argue that the boost is insufficient to offset soaring labor, supply and facility costs.
“CMS is not afraid to increase our costs by requiring reporting on patient satisfaction through only their chosen vendors. Our costs rose significantly for this,” Tina Heinrich, administrator of Placerville, Calif.-based El Dorado Surgery Center, told Becker’s. “Too bad they are so slow in increasing reimbursement amounts.”
The payment disparity between ASCs and hospital outpatient departments remains a contentious issue. Medicare ASC payments have seen only modest increases compared to more substantial hospital reimbursements.
“Payers may offer higher headline rates, but those gains can be offset by arbitrary reimbursement policies and administrative processes, such as increased denials, complex billing requirements and extended payment cycles,” Sean Hayes, president of the American Pain Consortium, told Becker’s.
To counteract these challenges, ASC leaders emphasize the importance of strong revenue cycle management, contract negotiations and efficient billing practices.
2. Rising operating costs
From supply chain expenses to staffing and rent, rising costs are squeezing ASCs. Inflation has driven up the prices of surgical supplies, facility maintenance and staff wages.
Between 2013 and 2022, median medical and surgical supply costs per full-time employee in physician-owned multispecialty practices rose by 82%, according to a Medical Group Management Association report.
“Overall costs have risen — and sometimes doubled in certain areas — since 2020, post-COVID-19,” Will Brancamp, ASC administrator at Infirmary Health System, said. “This includes material and supply costs. Additionally, staffing growth in clinical positions has created a supply-and-demand situation with salaries.”
Many ASCs miss opportunities to lower costs by not utilizing specialty-specific group purchasing organizations.
“Many specialty GPO members achieve savings of 12% to 18% over prior contract pricing,” said Robert Nelson, PA-C, former executive director of Island Eye Surgicenter, adding that effective supply chain management is critical to profitability.
3. Workforce shortages and retention challenges
The healthcare workforce shortage has hit ASCs hard, especially in nursing and anesthesia roles. Rising wage demands and competition from hospitals offering better pay and benefits exacerbate the issue.
“Staffing shortages remain a significant challenge across the healthcare continuum,” Danilo D’Aprile, president-elect of the Arizona Ambulatory Surgery Center Association and vice president of business development at Merritt Healthcare, told Becker’s. “ASCs are no exception. The demand for qualified nurses and anesthesiologists is especially pressing.”
The declining number of experienced OR nurses and a limited pipeline of anesthesiologists further strain ASCs. To remain competitive, ASCs must offer attractive compensation packages and regularly assess salaries in response to market conditions.
4. Regulatory and legislative barriers
Regulatory hurdles such as certificate-of-need laws, Stark law restrictions and site-neutral payment disparities create barriers to ASC expansion and sustainability, Shakeel Ahmed, MD, CEO of Atlas Surgical Group in St. Louis, told Becker’s.
Dr. Ahmed called CON laws “outdated relics” that allow hospitals to block new ASC developments. He also pointed out the disadvantage of site-neutral payment disparities: “Medicare continues to reimburse hospitals at significantly higher rates than ASCs — currently almost 80% more for the same procedures.”
Simon Schwartz, associate director of the Colorado Ambulatory Surgery Center Association and COO of Englewood-based Strategic Resources Group Colorado, is blunt about his opposition to these laws and how they are shaping the future of ASC development.
“CON is not a good thing,” he told Becker’s. “This is my personal belief, not necessarily the association’s stance, but overregulation doesn’t lead to efficiency. Certificates of need — without a very clear understanding of what they are — is a very difficult thing to embrace.”
Mr. Schwartz noted that in many states, the process of obtaining a certificate of need is often influenced by political connections rather than a standardized, transparent system.
“It becomes more about who you know,” he said. “… In states without that structure, it becomes incredibly difficult — you have to know the right politicians and the right people. That doesn’t work toward progress or help patients gain access to quality care at a more affordable price. Instead, it makes care more expensive, requires more time and utilizes more resources. In my view, that’s wasted effort.”
5. The anesthesia conundrum
Declining anesthesia reimbursements and a shortage of providers are creating financial strain for ASCs. Many ASCs are now being asked to pay stipends to anesthesia groups — previously an uncommon expense — to ensure fair compensation and group profitability.
Smaller ASCs in particular are hobbled by these challenges.
Kristi Manutai, RN, regional administrator for Redding, Calif.-based North State Surgery Center, spoke to Becker’s about the difficulties in securing anesthesia coverage, particularly for smaller ASCs.
“With anesthesia, it all comes down to what you’re willing to pay,” she said. “Small ASCs like ours are competing against large entities that can afford to pay providers much higher rates. Hospitals get reimbursed at three times the rate an ASC does, but anesthesiologists still expect to be paid the same. That puts a huge strain on our finances.”
