The medical community is anxiously waiting to see what changes will take hold in the healthcare industry. One trend, however, will hold true — the demand to lower cost and improve quality, posing a series of opportunities for the ASC market.
Here are 51 things to know about the ASC industry.
1. The average ASC is 15,262 square feet and has four operating rooms.1
2. There are presently 5,480 Medicare-certified ASCs. There are 5,564 registered hospitals in the United States, which includes federal hospitals, long-term care hospitals, psychiatric hospitals, institutions for the mentally disabled and alcohol and other chemical dependency rehabilitation hospitals.2
3. The 14 states with the highest number of Medicare-certified ASCs as of March 31, 2016, include:2
• Maryland — .057
• Georgia — .032
• Wyoming — .032
• New Jersey — .03
• Washington — .027
• Arizona — .025
• Mississippi — .024
• Nebraska — .024
• Colorado — .022
• Idaho — .022
• Nevada — .022
• Oregon — .022
• South Dakota — .022
• Tennessee — .022
4. The 14 states with the lowest number of Medicare-certified ASCs as of March 31, 2016, include:2
• Delaware — .01
• New Mexico — .01
• North Carolina — .01
• Oklahoma — .01
• Rhode Island — .01
• Illinois — .009
• Iowa — .008
• Massachusetts — .008
• Alabama — .007
• Kentucky — .007
• New York — .007
• Virginia — .006
• West Virginia — .005
• Vermont — .002
5. In 2014, outpatient surgeries constituted 65.9 percent of total surgeries. This figure is up from 63.6 percent in 2010. In 1990, outpatient surgeries comprised 50.5 percent of total surgeries. Both medical and technological advancements will continue to drive growth in the ASC arena.1
6. The Ambulatory Surgery Center Association is the national membership and advocacy group for ASCs. William Prentice is the executive director of ASCA. He previously served as the director of the Washington office for the American Dental Association.
Rebecca Craig, RN, is ASCA's president. She is also the CEO of Fort Collins, Colo.-based Harmony Surgery Center, a joint venture between University of Colorado Health and local physicians.
7. The following six ASC management companies operated the most centers at the end of the third quarter of 2016, making these companies the dominant chains in the market. Here are their total numbers of outpatient centers:
• USPI/Tenet: 450
• AmSurg: 260
• Surgical Care Affiliates: 205
• Hospital Corporation of America: 117
• SurgCenter Development: 107
• Surgery Partners: 96
8. AmSurg and Colorado-based Envision Healthcare Holdings signed a definitive merger agreement in June 2016, with the combined company having a pro forma market cap of nearly $10 billion.
Christopher A. Holden is AmSurg's president, CEO and director. Seasoned with more than two decades of healthcare experience, Mr. Holden joined the company in 2007. Phillip A. Clendenin is the company's president of ambulatory services.
9. In 2015, Tenet penned a deal with Welsh, Carson, Anderson & Stowe to purchase 50.1 percent of United Surgical Partners International with the intent of eventually acquiring the entire company. The combined company jointly owns ASCs as well as imaging centers. Trevor Fetter became Tenet's president in November 2002 and CEO in September 2003. He was appointed the company's chairman in May 2015.
10. In January 2017, SCA announced it was merging with Optum, a health services company and part of UnitedHealth Group. Andrew Hayek, SCA's chairman and CEO, and SCA executives will continue leading SCA and the Optum platform. Through the partnership, SCA will become a part of Optum's platform, which serves millions of U.S. customers via 20,000 affiliated physicians and hundreds of U.S. facilities.
Joel Gordon, Andrew Miller and Jack Massey founded SCA in 1982. Mr. Hayek began his tenure with the company in 2008.
11. Thomas Frist Sr., MD, Thomas Frist Jr., MD, and Jack Massey founded HCA in 1968, forming one of the first hospital companies in the nation. HCA named Gregary W. Beasley president of the company's ambulatory surgery division in 2004, a position he continues to hold.
HCA donated $21 million in cash to charitable organizations in 2015, with the company making community outreach and service a priority.
12. In June 2014, Surgery Partners acquired the Green Hills, Tenn.-based ASC company Symbion in a $792 million transaction. Michael Doyle is the CEO of Surgery Partners. He has more than 20 years of experience in outpatient leadership roles. Before joining Surgery Partners' team in 2004, Mr. Doyle was the senior vice president for Birmingham, Ala.-based HealthSouth, one of the nation's leading owners and operators of inpatient rehabilitative hospitals.
13. SurgCenter Development provided nearly 7,000 joint replacements at its surgery centers in 2016. Stacey Berner, MD, principal and CEO of SurgCenter Development, said, "We are going to continue to see the number of patients and procedures climb and to see joint replacement surgeries at ASCs become the norm in 2017."
14. Ambulatory Surgical Centers of America is one of the only ASC companies owned and managed by physicians. The management company has developed, acquired or turned around more than 70 ASCs since 1997. In 1984, Tom Bombardier, MD, Brent Lambert, MD, and George Violin, MD, founded ASCOA. Luke M. Lambert is the company's CEO and first joined ASCOA in 1997 as CFO.
15. Some of the other leading companies that manage or develop ASCs include Physicians Endoscopy, Regent Surgical Health, ASD Management, Merritt Healthcare, Nueterra Healthcare, Constitution Surgery Centers and Practice Partners in Healthcare.
16. In May 2016, Jamison, Pa.-based Physicians Endoscopy collaborated with The Joint Commission and CDC on an initiative focused on infection prevention in ambulatory healthcare settings. The initiative's goal was to create model infection control plans and expand the reach, uptake and adoption of these as well as other infection control materials in outpatient settings.
17. Robert Zasa and Joseph Zasa founded ASD Management in 1986. Since it was founded, the company has developed and managed more than 125 ASCs.
18. Private practice is dwindling with the entire healthcare industry undergoing massive consolidation. Between 2000 and 2013, the percentage of physicians in private practice fell from 57 percent to 37 percent. In 2016, estimates place this figure at 33 percent.2
19. Multisite practices operate nearly 26 percent of ASCs and the remaining 74 percent are independently owned.1
20. Wallace Reed, MD, and John Ford, MD, opened the first ASC in 1970 in Phoenix. Five surgeons performed cases at the center on the first day it opened, and four of those procedures required general anesthesia.3
21. CMS released the final 2017 ASC payment rule in November 2016, which increased ASC payments by 1.9 percent in 2017. The percentage increase is based on the 2.2 percent projected rate of inflation with 0.3 percentage point productivity adjustment, which the ACA requires. The increase is larger than the proposed 1.2 percent increase released earlier this year. Hospital outpatient departments will receive a 1.65 percent.
22. CMS approved 10 new spine codes for the ASC in 2017:
• Spine bone autograft local add-on (20936)
• Spine bone autograft morsel add-on (20937)
• Spine bone autograft struct add-on (20938)
• Additional neck spine fusion (22552)
• Insert spine fixation device (22840)
• Insert spine fixation device (22842)
• Insert spine fixation device (22845)
• Insj biomechanical device (22853)
• Insj biomechanical device (22853)
• Insj biomechanical device (22859)
23. The following 10 CPT codes rank as the highest percentage of total spending by Medicare on ASCs in 2015:1
• Cataract surgery w/ IOL insert: 28.1 percent
• Colonoscopy and biopsy: 4.6 percent
• Upper GI endoscopy, biopsy: 4.5 percent
• Lesion removal, colonoscopy: 3.0 percent
• Cataract surgery, complex: 2.4 percent
• Inj foramen epidural: 2.4 percent
• Inject spine 1/s (cd): 1.9 percent
• Diagnostic colonoscopy: 1.8 percent
• After cataract laser surgery: 1.7 percent
• Colorectal screening; high risk 1/sL 1.2 percent
24. The payer mix as a percent of ASC gross charges is as follows:1
• Commercial: 59 percent
• Medicare: 29 percent
• Worker's compensation: 9 percent
• Medicaid: 7 percent
• Other pay: 5 percent
• Self pay: 4 percent
25. A California jury ruled in favor of Aetna in a medical billing fraud case involving ASCs in Northern California in April 2016. Aetna claimed Bay Area Surgical Management cost the insurer $23 million for around 1,900 procedures in the past two years — $20 million more than it should have been charged. The jury awarded Aetna $37.4 million in damages after four years of litigation and a month-long trial.
26. Orthopedic procedures continue to be a profitable specialty with cases generating net revenue per case of $3,222. Here are 10 other profitable specialties for ASCs based on net revenue per case:1
• ENT: $2,492
• Urology: $2,394
• Podiatry: $2,339
• OB/GYN: $2,271
• General surgery: $2,051
• Plastic: $1,801
• Ophthalmology: $1,395
• Oral surgery: $1,355
• Pain management: $1,015
• Gastroenterology: $973
27. Case volume mix as a percentage of total cases for ASCs totaled:1
• Gastroenterology: 25 percent
• Ophthalmology: 20 percent
• Orthopedics: 16 percent
• Pain management: 16 percent
• ENT: 9 percent
• General surgery: 8 percent
• Oral surgery: 7 percent
• Plastic: 5 percent
• Urology: 5 percent
• OB/GYN: 4 percent
• Podiatry: 3 percent
28. The average time for ambulatory surgical visits for Medicare patients was between 25 percent and 39 percent lower than visits in HOPDs.4
29. Patient demographics between ASCs and HOPDs in 2014 varied:4
Medicaid status
Not Medicaid: 86.4 percent ASC; 77.2 percent HOPD
Medicaid: 13.6 percent ASC; 22.8 percent HOPD
Race/ethnicity
White: 87 percent ASC; 83.8 percent HOPD
African American: 6.9 percent ASC; 10 percent HOPD
Other: 6 percent ASC; 6.1 percent HOPD
Age
Under 65: 14.7 percent ASC; 21.9 percent HOPD
65 to 84: 78.9 percent ASC; 67.4 percent HOPD
85 or older: 6.4 percent ASC; 10.7 percent HOPD
Sex
Male: 42.8 percent ASC; 44.7 percent HOPD
Female: 57.2 percent ASC; 55.3 percent HOPD
30. Medicare spending on ASC services totaled $3.1 billion in 2014.4
31. The volume of services per beneficiary increased by an average annual rate of 1.3 percent for ASCs from 2009 through 2013.4
32. From 2009 through 2013, Medicare payments per fee-for-service beneficiary in ASCs rallied by 2.6 percent on average annually and by 3.1 percent in 2014. Volume deceased by 0.8 percent per beneficiary in 2014.4
33. Medicare pays ambulatory surgery centers 53 percent of HOPD rates.
34. Hospitals have ownership interest in 23 percent of all ASCs, and entirely own 2 percent of ASCs.3
35. In 2009, ASCs had a $90 billion nationwide economic impact, which included more than $5.8 billion in tax payments.3
36. The average ASC administrator's annual salary reached $104,721 in 2016, up from $102,051 in 2015.
37. On average, ASC administrators worked 48.2 hours each week last year.
38. Nursing staff at ASCs have an annual salary of $74,009, on average.
39. The EBITDA margin analysis for ASCs for 2016 is as follows:1
Mean
Less than $3 million: 14 percent
$3 million to $4.9 million: 21.6 percent
$5 million to $6.9 million: 27 percent
$7 million to $8.9 million: 26.4 percent
Greater than $9 million: 35.1 percent
25th percentile
Less than $3 million: 5 percent
$3 million to $4.9 million: 8.2 percent
$5 million to $6.9 million: 13.9 percent
$7 million to $8.9 million: 17.1 percent
Greater than $9 million: 25.4 percent
Median
Less than $3 million: 11 percent
$3 million to $4.9 million: 20.2 percent
$5 million to $6.9 million: 21.6 percent
$7 million to $8.9 million: 26.2 percent
Greater than $9 million: 34.8 percent
75th percentile
Less than $3 million: 28.7 percent
$3 million to $4.9 million: 36.5 percent
$5 million to $6.9 million: 44.3 percent
$7 million to $8.9 million: 31.8 percent
Greater than $9 million: 45.3 percent
90th percentile
Less than $3 million: 39.6 percent
$3 million to $4.9 million: 45.4 percent
$5 million to $6.9 million: 49.3 percent
$7 million to $8.9 million: 48 percent
Greater than $9 million: 54 percent
40. Throughout the United States, 37 states have certificate-of-need legislation in some capacity as of Aug. 25, 2016.
41. The Massachusetts Department of Public Health updated its state medical regulations on Jan. 11, 2017, allowing existing freestanding ASCs to apply for a determination of need without an acute care hospital affiliation. The DPH will continue to mandate applicants submitting plans to build a new ASC to affiliate with either a Health Policy Commission-certified ACO or existing independent community hospital.
42. The projected outpatient volume for joint replacement, including partial and total joint replacements, for the next nine years is as follows:
• 2016: 15 percent
• 2018: 25 percent
• 2020: 32 percent
• 2022: 37 percent
• 2024: 43 percent
• 2026: 51 percent
43. CMS currently doesn't reimburse for total joint replacement in ASCs, but the Advisory Panel on Hospital Outpatient Payment unanimously recommended CMS remove total knee replacement from the inpatient only list in 2016. The agency requested additional information on how feasible it would be to remove the procedure in the 2017 payment rule, indicating the agency could take steps toward reimbursement for outpatient total joints in the future.
44. CMS found the national average for patient falls was 0.095 in 2014, down from 0.156 in 2013. The top 10 states with the highest rate of patient falls in ASCs include:5
• Alaska: 0.315
• Alabama: 0.128
• Montana: 0.099
• Minnesota: 0.099
• Mississippi: 0.099
• North Carolina: 0.098
• New Jersey: 0.098
• Nebraska: 0.098
• North Dakota: 0.098
• New Mexico: 0.098
45. The national average for wrong site, side, patient, procedure and implant in ASCs was 0.028 in 2014, slightly down from the 2013 average of 0.039.5
The states with the highest rates include:
• Alaska: 0.158
• Wisconsin: 0.028
• West Virginia: 0.028
• Wyoming: 0.028
• Minnesota: 0.027
• Missouri: 0.027
• Mississippi: 0.026
• Montana: 0.026
• North Carolina: 0.026
• North Dakota: 0.026
• Washington: 0.026
• Vermont: 0.026
• Utah: 0.026
• Texas: 0.026
• Virginia: 0.026
Some of the U.S. regions with the lowest rates include:
• Arkansas: 0.013
• Delaware: 0.016
• California: 0.016
• Washington, D.C.: 0.017
• Connecticut: 0.017
• Colorado: 0.017
• Illinois: 0.021
• Arizona: 0.021
• Alabama: 0.021
• Massachusetts: 0.022
46. During the third quarter of 2016, 1,478 ASCs participated in the ASC Quality Collaboration Quality Report. The report found:
• Patient fall rate: 0.103 per 1,000 ASC admissions
• Patient burn rate: 0.015 per 1,000 ASC admissions
• Hospital transfers: 0.945 per 1,000 admissions
• Wrong site, side, patient, procedure, implant events: 0.022 per 1,000 admissions
• ASC admissions with antibiotics ordered who received antibiotics on time: 99 percent
• ASC admissions with appropriate surgical site hair removal: 98 percent
• Eligible ASC patients with normothermia: 98 percent
• ASC cataract surgery patients with unplanned anterior vitrectomy: 0.53 percent
• Toxic anterior segment syndrome rate: 0.3 per 1,000 anterior segment surgery patients
47. The Accreditation Association of Ambulatory Health Care is one of the main accrediting bodies for ASCs. Formed in 1979, the AAAHC currently accredits more than 6,000 organizations around the country, including ASCs, community health centers, medical and dental group practices, medical home practices, managed care organizations and Indian and student health centers.
48. Established in 1980, the American Association for Accreditation of Ambulatory Surgery Facilities is another leading accrediting body for ASCs. Theresa Griffin-Rossi is the executive director of the AAAASF.
49. Since 1951, The Joint Commission has served as a leading accrediting body for healthcare organizations, including ASCs. The Joint Commission accredits more than 21,000 facilities throughout the United States. In 2016, The Joint Commission released the 2016 Ambulatory Care National Patient Safety Goals, which included several patient safety goals including how to correctly identify patients and properly labeling medication.
50. U.S. District Judge Lynn Hughes awarded Aetna $51.4 million in a seven-year court battle against Humble (Texas) Surgical Hospital. In 2012, Aetna sued Humble Surgical Hospital for charging 10-times market rates on out-of-network procedures. The insurance company contended Humble Surgical Hospital offered discounts to out-of-network patients so their fees were similar to in-network patients, but billed Aetna higher rates as an out-of-network provider.
51. In May 2016, a group of Indiana surgery centers filed a suit against UnitedHealthcare for allegedly failing to pay for services the center's physicians rendered to patients, thereby violating state and federal law. In the suit, the surgery centers claim UnitedHealthcare deducted what the payer considered past overpayments from current patients' bills. The centers previously filed nearly two dozen suits against UnitedHealthcare, which were consolidated in April 2016 before a judge in the U.S. Court for the Southern District of Indiana. UnitedHealthcare maintained it complied with all the appropriate state and ERISA laws and regulations, and utilized "cooperative overpayment recoveries."
Learn more about the surgery center industry from the experts at the Becker's 15th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference + The Future of Spine event, June 22-24, 2017 in Chicago. To learn more and register for the event, click here.
References
1 VMG Health 2016 Intellimarker: Multi-Specialty ASC Study. Available at: http://vmghealth.com/publications/intellimarker/
2 Accenture: The Case of the Vanishing Independent Doctor. Available at: https://www.accenture.com/us-en/insight-clinical-care-independent-doctor-will-not-see-you-now
3 Ambulatory Surgery Center Association. Available at: http://www.ascassociation.org/AdvancingSurgicalCare/whatisanasc/historyofascs
4 MedPAC. Available at: http://www.medpac.gov/docs/default-source/reports/chapter-5-ambulatory-surgical-center-services-march-2016-report-.pdf?sfvrsn=0
5 CMS Ambulatory Surgical Center Quality Reporting Program. Available at: https://www.medicare.gov/hospitalcompare/asc-ambulatory-surgical-measures.html