Marshall Baker of Physician Advisory Services, Inc. discusses five predictions on the future of the ambulatory surgery center industry.
1. Single-specialty ASCs will expand to multi-specialty ASCs. Mr. Baker predicts some single-specialty ASCs will expand to multi-specialty facilities to deal with pressures on reimbursement and fewer available physicians. For example, each community only has a certain number of gastroenterologists who are able to bring cases to the ASC. If an ASC has already explored that market in full, it might be time to expand specialties to attract additional specialists. He says this change will require flexibility on the part of ASC owners. "I'm involved in an issue now where the center is talking about bringing in a non-physician proceduralist — a podiatrist — and everyone's trying to get their arms around that," he says. "They're saying, 'Will we let a podiatrist in even though that has not been [our] traditional business model?'"
2. Even reluctant physicians are choosing hospital employment. The increasing popularity of hospital employment will take a toll on ASCs, Mr. Baker predicts. As physicians choose hospital employment, they will likely be unable to bring cases to facilities that are not involved with the hospital. For freestanding ASCs, employment poses a problem for case volume and investor recruitment.
He says hospital employment is increasing for a number of reasons. The most pressing is probably economics: As reimbursement levels drop, physicians seek stability in a hospital compensation model based on Work Relative Value Units rather than unpredictable practice revenue. Hospitals are also more likely to enjoy leverage with payors. In addition, as older physicians retire and younger ones join the industry, physician lifestyle desires are changing. "Many physicians coming out of training today are interesting in working to live [rather than] living to work," he says. "They want to be paid fairly for what they do, but they want a lifestyle that allows them to do other things than practice medicine." Hospital employment, which often provides more of a "nine to five" job than private practice, may be the answer for these young physicians.
3. ASC developers may suffer. "We are certainly seeing a significant leveling of the growth slope of new centers being designed and built," Mr. Baker says. This may not affect existing ASCs, because the communities in which development has slowed are often oversaturated with centers in the first place. But Mr. Baker says development companies may suffer as fewer clients choose to build new ASCs. Mergers, takeovers and joint venture partnerships will almost certainly increase, but development has an uncertain future.
4. ASCs will have to be careful about choosing a "partner." More ASCs are considering partnerships to survive in a tough economic climate. This could mean partnering with a management company, hospital or another ASC. However, Mr. Baker warns ASCs that may be thinking about a "partnership" with a hospital. In many cases, he says hospitals are interested in taking over complete ownership of the ASC, meaning ASC leaders must be willing to surrender ownership in their center. "It's rare, at least in my experience, where hospitals have allowed an ASC to continue with physician ownership," he says.
5. The playing field must be leveled to improve care. ASC leaders have long been frustrated by the disparity in reimbursements for hospital outpatient departments and ASCs. Data supports the quality and low cost of ASC care, but payors seem oblivious or unwilling to respond. Mr. Baker predicts that "in time, the government will begin to recognize, 'Why are we paying this extra money [to the hospital] for the same patient (with the same physical status) being seen by the same type of specialist, for the same procedure?'"
Learn more about Physician Advisory Services, Inc.
Read more advice on surviving in 2011 and beyond:
-10 Ways to Maintain High Patient Satisfaction
-4 Advantages of Allowing Students to Train in Surgery Centers
1. Single-specialty ASCs will expand to multi-specialty ASCs. Mr. Baker predicts some single-specialty ASCs will expand to multi-specialty facilities to deal with pressures on reimbursement and fewer available physicians. For example, each community only has a certain number of gastroenterologists who are able to bring cases to the ASC. If an ASC has already explored that market in full, it might be time to expand specialties to attract additional specialists. He says this change will require flexibility on the part of ASC owners. "I'm involved in an issue now where the center is talking about bringing in a non-physician proceduralist — a podiatrist — and everyone's trying to get their arms around that," he says. "They're saying, 'Will we let a podiatrist in even though that has not been [our] traditional business model?'"
2. Even reluctant physicians are choosing hospital employment. The increasing popularity of hospital employment will take a toll on ASCs, Mr. Baker predicts. As physicians choose hospital employment, they will likely be unable to bring cases to facilities that are not involved with the hospital. For freestanding ASCs, employment poses a problem for case volume and investor recruitment.
He says hospital employment is increasing for a number of reasons. The most pressing is probably economics: As reimbursement levels drop, physicians seek stability in a hospital compensation model based on Work Relative Value Units rather than unpredictable practice revenue. Hospitals are also more likely to enjoy leverage with payors. In addition, as older physicians retire and younger ones join the industry, physician lifestyle desires are changing. "Many physicians coming out of training today are interesting in working to live [rather than] living to work," he says. "They want to be paid fairly for what they do, but they want a lifestyle that allows them to do other things than practice medicine." Hospital employment, which often provides more of a "nine to five" job than private practice, may be the answer for these young physicians.
3. ASC developers may suffer. "We are certainly seeing a significant leveling of the growth slope of new centers being designed and built," Mr. Baker says. This may not affect existing ASCs, because the communities in which development has slowed are often oversaturated with centers in the first place. But Mr. Baker says development companies may suffer as fewer clients choose to build new ASCs. Mergers, takeovers and joint venture partnerships will almost certainly increase, but development has an uncertain future.
4. ASCs will have to be careful about choosing a "partner." More ASCs are considering partnerships to survive in a tough economic climate. This could mean partnering with a management company, hospital or another ASC. However, Mr. Baker warns ASCs that may be thinking about a "partnership" with a hospital. In many cases, he says hospitals are interested in taking over complete ownership of the ASC, meaning ASC leaders must be willing to surrender ownership in their center. "It's rare, at least in my experience, where hospitals have allowed an ASC to continue with physician ownership," he says.
5. The playing field must be leveled to improve care. ASC leaders have long been frustrated by the disparity in reimbursements for hospital outpatient departments and ASCs. Data supports the quality and low cost of ASC care, but payors seem oblivious or unwilling to respond. Mr. Baker predicts that "in time, the government will begin to recognize, 'Why are we paying this extra money [to the hospital] for the same patient (with the same physical status) being seen by the same type of specialist, for the same procedure?'"
Learn more about Physician Advisory Services, Inc.
Read more advice on surviving in 2011 and beyond:
-10 Ways to Maintain High Patient Satisfaction
-4 Advantages of Allowing Students to Train in Surgery Centers