Here are three major trends that are worrying ASC leaders.
1. Staffing retention
ASCs have long competed with deep pockets of hospitals and health systems for available staff, and these issues were exacerbated by the COVID-19 pandemic. From front-desk staff to anesthesia providers, ASCs are being faced with huge obstacles to retain workers.
Staffing costs are a huge burden on many ASCs. Some centers spend one-fourth or more of their net operating revenue on employees to stay ahead of shortages, according to a report from VMG Health. Additionally, the field of candidates is rapidly shrinking; 145,213 healthcare providers left the workforce from 2021 to 2022, according to a report by Definitive Healthcare.
"I think the biggest threat towards ASCs in 2023 is staffing, especially qualified, experienced staffing in all areas of an ASC, including business office, pre-op, OR (both nursing and surgical technicians), post-anesthesia care unit and recovery nurses. In addition, sterile processing technicians," Michael Powers, administrator of Knoxville, Tenn.-based Children's West Surgery Center, told Becker's. "Each of these areas require a certain set of skills that are acquired and honed over time. There is increased competition, and in fact it is hard to compete with large health systems/hospitals. I am also finding that ASCs are competing in the same region against one another for the available staffing pool."
The ASC industry is historically fragmented. Around 70% of freestanding ASCs are independently owned and operated, according to a report from VMG Health. Some ASCs are looking at different deals and mergers to access economies of scale as healthcare increasingly consolidates.
From 2021 to 2022, the number of ASCs under partnership by a national operator increased from 1,752 to 1,804, according to the VMG Health report. Additionally, ASC chains are growing. The big players, United Surgical Partners International, SCA Health, AmSurg and Surgery Partners, have all experienced sharp growth in the last five years. Hospitals are also increasingly interested in ASCs — the majority of hospitals and health systems are accelerating their ASC investment strategies.
"Ownership is primary. The next-generation physicians have now seen the pros and cons of hospital employment," Joe Greene, MD, co-founder of Louisville (Ky.) Hip & Knee Institute, told Becker's. "Many see that the lack of control from an office and clinical setting negatively affects patient care. The ability to control their own protocols and office efficiency has driven many of the training physicians I work with to want to have their own practices. Paramount to the success of those private practices is ASC ownership. ASC ownership has financial gains in itself but also enables a much more productive and happy work experience."
ASCs have long faced issues securing reimbursements. And as inflation and costs of living rise, ASCs in many markets are finding that reimbursements are not keeping up, particularly when compared to the reimbursements to hospital outpatient departments.
ASCs are often smaller, freestanding facilities, making it more difficult for them to secure lucrative contracts from payers. Payers are, however, making moves to push procedures to outpatient settings. UnitedHealthcare’s 2023 site-of-service policy added codes that require pre-authorization to be performed at an HOPD. The law, which went into effect April 1, will likely push procedures to the ASC setting.
"Everything is more expensive. Even though reimbursement has technically gone up, so has the expense side. That puts a lot of strain on the profitability of ASCs," Aric Burke, president and CEO of Atlas Healthcare Partners, told Becker's. "You have to manage costs more effectively than before. You have to have a really strong financial plan that not only focuses on cost control, but also growth. Ultimately, you have to be able to have growth through strong physician recruiting, retention, having service lines and other strategies. Being affiliated with a big health system has been effective in driving growth."