The changing ambulatory surgery center marketplace

Outpatient care has become a large part of the United States health care system. Patient services and procedures are being increasingly rendered in physician offices, hospital outpatient departments (HOPDs) and ASCs. The number of Medicare-certified ASCs in the US now exceeds 6500. Their revenue has been climbing and the ASC market is anticipated to grow from $84 billion in 2020 to ​​$131 billion by 2031.  

Our review suggests that ASCs, in general, offer safe, convenient and efficient lower-cost care. Lower cost is the major reason payers and patients prefer ASCs. In a recent study, HOPD Medicare reimbursement was 1.2 to 8.6 times higher for the same service than that performed in an ASC or physician office and 1.1 to 13.4 times higher for commercial insurance. Patient satisfaction is higher than in HOPDs because of easier scheduling, shorter wait times, convenient locations and lower cost sharing. The quality of care in ASCs is generally equal to or better than that in HOPDs.  

Surgeons prefer greater professional autonomy, predictable scheduling, efficiencies and in many cases, the ability to invest in ASCs. With continued downward reimbursement for clinical services, the ability to share technical fees affords a crucial financial buffer for surgeons.  

In 2013, two-thirds of ASCs were owned by independent physicians. That appears to have now decreased to 52%, although almost 90% of physicians have some equity in an ASC. Reasons are multifactorial, but a significant reason is that hospitals had been content to receive facility fees in their HOPDs, which are considered part of the hospital, whereas ASCs did not.  

Some important changes are worth watching. First, CMS's second of three-year phase-out of Medicare's inpatient-only procedure list ending in 2028 began shifting inpatient procedures to outpatient facilities. Some higher-acuity procedures have already shifted to ASCs and more are likely to follow. 

Second, this shift is projected to result in significant growth of 15% to 46% in outpatient volumes for specialties such as orthopedics, spine, vascular surgery and cardiology by 2028. At the same time, the growth of inpatient volumes in hospitals is stagnating. 

Finally, the specter of site-neutral payments (SNPs) (equal reimbursement for the same services at ASCs and HOPDs) may become a reality. There is fierce lobbying against it in Congress. Since facility reimbursement for services in HOPDs contributed significantly to the compensation of hospital-employed physicians, hospitals have been forced to re-evaluate their strategy and invest more in ASCs.  

For these reasons, hospitals now have sole ownership or, more likely, a joint venture (JV) with physicians in ASCs in increasing numbers. Hospitals offer organizational and policy skills, established supply chains, human resources and staffing models. Rising costs, workforce shortages and reimbursement cuts all pose challenges for ASCs.  

Several states have recently either enacted or proposed legislation and regulations to impose an additional tax and stricter oversight with more reporting and financial disclosure for ASC operators, a change from a previously relatively light regulatory environment. 

The good news is that although a few vascular services have already moved to ASCs, more are likely to migrate, given the continuing depletion of the inpatient list. Furthermore, even though Congress has failed to act on broader SNP policies, it did move forward with payments for some outpatient drug administration and imaging services.  

To succeed in a competitive environment, ASC owners will have to closely observe consumer choices, payer incentives and incorporate advanced technologies. Costs per service or procedure rather than revenue are more important. While some cardiology procedures, such as electrophysiologic ablation, have been approved for ASCs, costs may warrant monitoring. This is also true for peripheral vascular interventions, where costs can escalate with the use of multiple catheters, devices and probes. 

The trend is continued growth in joint ownership of ASCs and collaboration between hospitals and physicians. Mergers and acquisitions are also happening in ASCs. Physicians are similarly building their own access points. Whether or not these steps are successful remains to be seen. Given the shift of patient care and services to the outpatient area, medical education programs may also gradually shift towards outpatient facilities. ASC ownership has its rewards but comes with many challenges. A joint venture or partnership with any entity will require a broad understanding of the local market and thorough knowledge of the valuation process.

My thanks to coauthors, Anil Hingorani, Krishna Jain, Jessica Bailey and Todd Zigrang, for the publication listed.  

The Current State of Ambulatory Surgery Centers and Future Trends. https://www.sciencedirect.com/science/article/abs/pii/S089050962600467X