Experts share leading trends of a rising segment in the U.S. healthcare sector.
December 2024 – The Journal of Healthcare Contracting
Ambulatory surgery centers provide a much-needed service for both patients and healthcare facilities – a cost-effective, convenient alternative for surgical care and procedures that do not require a hospital stay. At the recent IDN West meeting, Jason Harris, executive director, corporate healthcare development and ambulatory surgery centers for Allergan Aesthetics, hosted an ASC discussion panel with Rena Courtay, MBA, BSN, RN, CASC, vice president of ambulatory surgery at Trinity Health, and Trevin Hunt, MB, RNA, senior consultant for Avanza Healthcare Strategies, where they discussed the current ASC market and what it may look like in the future.
Jason Harris: Can you give us your impressions of what the ASC market looks like today?
Trevin Hunt: Primarily, it’s being driven by the payers. I would say Medicare is the biggest driver of the development of ASCs. When you talk about health systems, if they don’t already have an ASC, odds are they’re going to be either buying a local ASC or developing an ASC with a physician partnership.
One of the other main drivers, if you’re talking about health systems, is if they have employed physicians with the foundation. That’s an incentive that they have to recruit physicians, if they can bring them in and give them ownership of those ASCs.
Another driver when it comes to health systems is a lot of the smaller ASCs in communities are struggling a little bit, and by bringing on a health system partner, then they get some advantages by partnering with them when it comes to supplies, just economies of scale for the ASC.
Rena Courtay: ASCs have the fastest growth predicted in the healthcare sector. Over the next five years, ASCs are set to grow 22%, which is higher than any other vertical in healthcare. Everybody wants to be a part of this, and that’s what I see.
When COVID happened, ASCs were still open after a certain point and hospitals had to keep closing. All of a sudden, those total joints could be done as outpatient surgeries. Before that, people were saying, “Oh, we can’t send those people.” Yes, you can! It really accelerated moving some of those big procedures into ASCs, especially for physician groups that were slow to adopt this migration.
Harris: Can you talk about how the ownership model drives behavior, as far as types of cases accepted, contracting, and product decisions?
Hunt: It is going to depend I think more than anything else on the community, because the payer contracting in one community can be way different than another community. A lot of it depends on what’s driving that partnership.
One of the big things that I’ve seen is, if you have a community that has existing ASCs that have been there for years and they don’t have great payer contracts with commercial payers, it really makes that whole community a challenge for even a hospital to partner with it and substantially change it. Whereas if you have a community that doesn’t have a lot of ASCs, the payers and Medicare want to see an ASC in that space, and you can usually get pretty good contracts. The case mix is also something that’s going to really drive it.
Courtay: With physician-owned ASCs, they’re going to bring commercial cases there. They’re going to take some of their government payers to the hospital, especially Medicaid. They’ll take it to the hospital, because we don’t make money on implant heavy cases with government payers. Depending on what it is for Medicare, they may not bring anything. They primarily want to bring profitable cases when it’s a physician-owned surgery center.
Harris: Can you tell if there are any service line impairments you see when shifting from the hospital to the ASC setting?
Courtay: The biggest one is total joints and that’s going to continue. I mean, when you look at a graph of total joints in 2014, outpatient total joints were way down. Right now, it’s way up and it’s expected that 60-70% of all total joints over the next 5-10 years will be outpatient. It’s very easy to do these as outpatients.
The other specialty that we keep hearing about is that all the cardiovascular is moving out. It’s moved out a little bit, but there are a few factors why that hasn’t really been the big move that everyone thought. Most cardiovascular and cardiologists are employed, so health systems do not want to move – that’s their highest margin business. They don’t want to open an ASC for their employee cardiologists and EP surgeons, so that’s one reason. The second reason is because of the regulatory environment, many states won’t allow interventional cardiology at an ASC.
Hunt: I did a due diligence project where we were looking at cardiology, and the thing that I found when I interviewed the physicians is that they’re really hesitant to move to an ASC. In addition to what you already said, there’s also resistance on the part of the surgeons. With the total joints, it’s just crazy how fast they’re moving out of the hospital OR. I think in most situations, if possible, you’re going to see a hospital partnering with those physicians, because they just lost a huge chunk of revenue out of the hospital. Getting 51% of it is better than getting none.
Editor’s note: The Journal of Healthcare Contracting would like to thank Allergan Aesthetics for sponsoring the recent IDN West meeting.