Danilo D’Aprile, CASC, president-elect of the Arizona Ambulatory Surgery Center Association and vice president of business development at Merritt Healthcare, joined Becker’s to discuss the issues impacting ASCs in Arizona.
Editor’s note: Responses have been lightly edited for clarity and length.
Question: What factors are most impacting the financial sustainability of ASCs in Arizona?
Danilo D’Aprile: In Arizona, two key factors come to mind. First, operational costs are a significant financial challenge for ASCs, which is a national issue. Supply chain disruptions, such as the recent shortages of fluids due to hurricanes, have exacerbated this problem.
On a broader scale, costs associated with bulk purchasing of supplies and rising staffing expenses have increased significantly since the COVID-19 pandemic. Effective cost management through staffing, bulk purchasing and efficient scheduling remains critical. Additionally, the push for adopting new technologies — such as EMRs and robotics — places added financial pressure on ASCs. For example, many surgeons are now trained on robotic systems, and I’ve worked with surgery centers utilizing Mako robots for orthopedics and Da Vinci robots for general surgery. These advancements, while beneficial, require substantial investment.
Reimbursement rates are another major factor. There is a significant disparity between reimbursement rates for ASCs compared to hospitals and hospital outpatient departments. This financial strain often drives ASCs toward acquisition, either by hospitals looking to leverage better reimbursement rates or by those aiming to convert ASCs into HOPDs. These dynamics contribute to ongoing consolidation in the industry.
Q: How would you characterize the current market dynamics of ASCs in Arizona?
DD: Arizona is a highly competitive, non-certificate-of-need state, which fosters significant competition. I often refer to the current stage of ASCs as “ASC version 3.0,” where large hospital systems are actively developing ASC strategies. Hospitals are expanding their outpatient services, which increases competition with independent ASCs and drives hospital acquisitions of existing centers.
Additionally, there is a growing trend of consolidation and vertical integration, with hospitals acquiring physician practices and ASCs. When hospitals manage ASCs efficiently — as true surgery centers — these acquisitions can improve operations. In Arizona, most larger ASCs are affiliated with hospital systems or management companies, reflecting this trend.
From a regulatory perspective, Arizona offers a favorable environment for ASCs. Having worked in multiple states, I can confidently say Arizona’s regulations are more ASC-friendly than most. It’s crucial for ASC leaders, physician owners and stakeholders to stay informed about potential operational impacts by engaging with organizations like the Arizona Ambulatory Surgery Center Association.
Q: Are there any patient demographic factors in your state that impact ASC operations?
DD: Arizona’s aging population significantly impacts ASC operations. With an increasing number of elderly residents, there is heightened demand for surgical procedures commonly performed in ASCs, such as cataract surgeries and total joint replacements.
However, Arizona also faces a unique challenge with rural-to-urban disparities. ASCs are primarily concentrated in urban areas like Phoenix, Tucson and Flagstaff, which limits access for residents in rural communities. Expanding ASC presence in underserved regions would improve care accessibility and address this disparity.
