Now, for the first time in several years, the surgery center industry faces several different challenges, including changes in reimbursement, reductions in the number of independent physicians available to engage in surgery center ventures, and changes in rules relating to how to work with managed care payors.
This article discusses six different items. First it reviews which areas are providing cash flow to surgery centers today, essentially reviewing today’s bread winners and cash cows. Second, it looks at the types of surgery centers that are likely to be bread winners tomorrow, where surgery centers may excel in the next few years. Third, it examines problematic situations for surgery centers, essentially which areas are difficult and challenging for surgery centers. Fourth, it looks at areas that are potentially positive for the next few years. Fifth, it discusses situations where we expect there to be growth in the surgery center business. Finally, sixth, this article examines certain weaknesses and challenges that the surgery center industry is facing. Here, it also touches on problem centers and issues that are symptomatic of such centers.
I. Today’s Bread Winners and Cash Cows. The current areas that can be categorized as cash cows and today’s bread winners are detailed below. Here, each individual venture is unique. Thus, even though an area may generally be a cash cow, it still needs to be well planned with the right physicians to be successful. Also, it often has to be in right market to be successful. 0
- Orthopedic Driven Centers. These centers continue to enjoy very solid reimbursement. Further, the fact that they serve higher acuity patients generally means that orthopedic services will remain in surgery centers for a long time to come. In essence, generally, procedures are not at risk of moving to offices. Further, the frequency of need for orthopedic procedures – demand is forecasted to rise 25%, relative to 2001, by 2020 – coupled with solid reimbursement makes them a sweet spot for surgery centers.
- Well Planned and Managed Physician-Hospital Joint Ventures. There has been a significant increase in physician-hospital joint ventures over the last several years. According to the most recent data, these joint ventures account for approximately 27% of all ASCs, up 4% from 2004. A well planned physician-hospital joint venture often includes better opportunities for reimbursement, less conflict with the hospital over issues such as privileges, and a halo effect for recruiting other physicians.
- Gastroenterology Centers. Gastroenterology centers have been very successful over the last few years. More gastroenterology procedures are performed in surgery centers than any other procedures. This is due in part to the fact that Medicare reimburses for screening colonoscopies. Thus, while reimbursement is not overly high for
