Investment is pouring into ASCs as health systems shift outpatient development to a strategic priority.
Ascension closed its $3.9 billion acquisition of AmSurg in June, and Bon Secours Mercy Health agreed in October to take Surgery Partners private in a deal now valued at up to $6 billion.
Dan Tasset, CEO of Leawood, Kan.-based NueHealth, sees that consolidation wave running into a harder limit: how much the country is willing to spend on healthcare. When it does, he expects surgeons and the surgery centers they operate in to end up fighting over the same dollars.
Mr. Tasset founded NueHealth in 1997 and returned as its CEO in July. The biggest change he has seen in that time is consolidation, from health systems building or buying ASC companies to publicly traded and private equity-backed operators acquiring physician practices.
He pointed to Optum’s SCA Health, which has pursued orthopedic practice acquisitions “to make sure that they stabilize the case volume and revenue inside of their surgery centers.”
At the same time, he said, healthcare is on pace to exceed 20% of U.S. gross domestic product by 2034, and both CMS and employers are signaling they won’t keep paying for that growth.
“I think within the next few years, and certainly in the next five years, healthcare is no longer going to see this growth,” Mr. Tasset said. “It’s going to be a zero-sum game.”
That shift will land differently depending on who owns the center.
“I think if you’re an ASC owner, you’re generally going to fall into two categories. The first category is I’m partnering with a company that is either held by private equity, or it’s owned by a publicly traded company,” he said. The second category is independent ASCs.
For centers in the first group, the corporate partner has a clear mandate.
“Their job is to preserve the economics of the ASC,” Mr. Tasset said. The problem, in his view, comes when physician pay and facility pay are drawn from a pool that is no longer growing.
“So if it’s a zero-sum game, something’s got to give,” he said. “And I think you can already see this because of the cuts that you saw. The technical component got a lift, and the professional component got a cut.”
CMS’ new Ambulatory Specialty Model sharpens the conflict, he said. The model holds physicians accountable for the overall cost of care for patients with low back pain, including the facility side. Physicians whose costs come in lower than their peers’ get a payment bump the following year; those with higher costs get a cut. A surgeon working in a center run by a corporate operator has little control over that facility cost, Mr. Tasset said, and the operator is focused on protecting its own reimbursement.
“I’m a physician thinking, oh my gosh, I’m going to get squeezed down,” he said.
Independent centers face a different test. Without a corporate partner, they will have to compete directly on cost and quality, and prove both.
“Am I prepared to compete on quality and cost? And can I guarantee both? Do I have the technology to collect meaningful data that informs me in real time on what I need to be doing?” Mr. Tasset said.
That means tight control over employee benefits, malpractice and property insurance, implants, supplies and staffing. It also means facing competitors built around a single procedure. A multispecialty independent center, he said, has to ask whether it can match a center designed only for total joint replacement or only for spine surgery, which can deliver higher quality at a lower cost “because you’re doing the same thing over and over again.”
“This has got to be as efficient as you can possibly get,” he said.
For surgeons, Mr. Tasset sees one way out of the squeeze: more control over the bundle. Surgeons decide whether a procedure happens, where and when, and he argues their pay should reflect that influence over the full episode. He is pushing CMS to add a voluntary fourth track to its Transforming Episode Accountability Model that would let physicians convene Medicare total joint bundles.
“They influence the cost, quality, outcomes of the entire episode. And therefore, I think that they should be paid a larger part of the episodic bundle when a bundle exists, and I think directionally that’s where they need to go,” he said. “They need to be at the top of the food chain.”
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
