'Shoot to where the puck is going': Hospital CEO looks to ASCs to drive margins

Hospitals and health systems faced formidable margin declines in 2022 amid labor shortages, skyrocketing operating costs and declining inpatient volumes. 

Many hospitals are looking to ASCs and outpatient surgery to offset these losses and boost revenue, particularly as surgery is increasingly migrating to the ASC setting. 

Mike Slubowski, president and CEO of Livonia, Mich.-based Trinity Health, which comprises 88 hospitals across 26 states, told Becker's that ASCs are a huge growth opportunity for Trinity Health. 

"You have to shoot to where the puck is going, and ambulatory surgery is rapidly moving to freestanding ASCs, so we have partnerships with a number of physician groups to do freestanding ambulatory surgery," he said. "We're starting to open a lot more freestanding ASCs. Care is shifting away from hospital-based ambulatory surgery as well because patients and payers don't want to cover the additional cost of being hospital-based."

Following the puck for Mr. Slubowski means following the "proliferation" of ASCs being developed by investors or physician-owned groups and health systems. 

The ASC industry is historically physician-owned. Fifty-two percent of Medicare-certified ASCs in the U.S. are 100 percent physician-owned, according to the most recent data from Advancing Surgical Care. 

Twenty-one percent of ASCs are jointly owned by physicians and hospitals, while 15 percent are jointly owned by physicians and corporations. 

The shift of what used to be short inpatient stays to ambulatory settings is also changing the way inpatient care is provided, Mr. Slubowksi added. 

"There will always be a place for hospitals and inpatient care. I think complex care patients with multiple comorbidities and chronic conditions are still going to require inpatient care," he said. "... But I think it is shifting much more towards intensive care and general medical care for complex patients."

He is concerned, however, about the oversaturation of ASCs in some markets. Other leaders agree. 

"Over the course of the last five years we have seen massive shifts in cases from the hospital setting to the ASC," Andrew Lovewell, administrator of the Surgical Center at Columbia (Mo.) Orthopaedic Group, told Becker's in July. ''This has created competition amongst ASCs, as well as ASCs and hospitals in key markets. The key levers that have created such full scale shifts outside of COVID-19 are related to the Medicare inpatient-only list becoming more relaxed under the previous administration as well as the evolution of safe care in the outpatient setting."

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