ASCs have faced multiple challenges since the pandemic began in March 2020, from limited elective procedures and temporary center closures to staff furloughs and high personal protective equipment costs.
Physician owners and operators are looking ahead to future growth and see that a few big threats to independence remain, based on conversations with more than 25 surgery center leaders in the last 60 days.
1. COVID-19 surges and new variants making their way across the U.S. threaten ASC operations. The World Health Organization classified a new COVID-19 variant, mu, as a variant of concern Aug. 30, and administrators have taken notice. Surgery centers are continuing expensive protocols for extra PPE and infection control as a result, and school closures due to COVID-19 outbreaks are further exacerbating staffing shortages because vital team members must take temporary leave to stay with their children.
2. Early retirements for founding physicians leave a gap in ASC ownership that isn't easily filled by new investors. There are fewer early-career physicians with the ability to invest in ASCs today than in the past, especially at the level required to replace a busy and successful veteran surgeon. ASCs are at risk of losing revenue-drivers if longtime owners opt to retire early instead of weathering the long-term effects of COVID-19 on their practice and business.
3. As the value of ASCs increases along with operational costs, more surgery center owners are tempted to sell. Hospitals, private equity firms and insurers are all hunting for ASC deals and willing to pay top dollar. Consolidation in healthcare raises prices and often means owners lose autonomy to make decisions about their centers. The shrinking market also makes it tougher for independent centers to compete with large local organizations for referrals and payer contracts, despite being high-quality, low-cost providers.
Nearly 70 percent of physicians reported being employed by hospitals or corporations at the end of 2020, according to a June 29 Avalere report, including 11,300 physicians who became employed by corporate entities in the last six months of the year.
4. Inconsistent payer policies mean physicians and ASCs have to spend more resources on the revenue cycle process. Surgeons and centers are reporting:
- More prior authorization requirements for surgery
- Increased denials on previously covered services
- Procedures, such as lumbar spinal fusions, covered by some payers but not others
CMS also has ASCs on edge after announcing plans in July to remove 258 procedures from the ASC payable list in 2022. Surgery center owners are now wary of spending the resources to add newly covered procedures if CMS reverses their decision after one year.
5. ASCs don't have an answer to the staffing shortage plaguing healthcare organizations after nurses and staff exited in large numbers last year. Health systems can offer large bonuses to sign new nurses and administrative staff, while ASCs still rely on consistent, weekday-only scheduling and positive culture as the hook to draw in new talent. Surgery centers also do not have the same ability to offer professional growth as larger organizations do, leaving ambitious talent on the table.