The ASC industry is in a mature phase of its business lifecycle, with most valuation trends in the market — such as greater consolidation and demand for transactions — changing little year over year.
However, there are three trends with the potential to change ASC valuation, Aaron Murski, managing director at VMG Health, and Colin Park, director of VMG Health, told attendees at Becker's ASC Review 24th Annual Meeting: The Business and Operations of ASCs in Chicago Oct. 27.
"As a low-cost provider, ASCs are always going to have a place at the table," Mr. Park said, adding there remains "an opportunity with growth for centers, cost-containment and higher acuity volume shifting to ASCs."
Here are three trends with the potential to disrupt ASC valuations.
1. Site of service shifting. The shift of high-acuity procedures from inpatient settings to lower-cost outpatient facilities will continue to influence ASC transactions and valuations. This is the most broadly accessible trend that could affect future ASC valuations, Mr. Murski said.
"We're seeing, in a more and more meaningful way each year, migration of cases that needed to be in the hospital environment for recovery, technology, being able to be done in the surgery environment," he said.
This trend is increasing the total available market for surgery centers, and can be a means to offset cost pressures, he noted. However, if ASCs are looking to move up the acuity spectrum, they need to ensure sufficient capacity, supplies and reimbursement for complex cases.
2. Twenty-three-hour stays. ASCs with a strategic trajectory aimed at a higher point on the acuity spectrum may have to consider 23-hour stays to keep skin in the game.
Mr. Murski noted the "biggest piece of advice you can give someone developing a surgery center is 'if you build it they will come' is not the right strategy." Rather, overbuilding is the "biggest killer" of ASCs embarking on a 23-hour stay strategy, he said.
In addition, Mr. Murski cautioned relationships with payers and contract terms are distinguishing factors of a 23-hour strategy.
"You might have all the elements of being able to do a 23-hour stay, but if you can't get reimbursement from payers for those types of cases," including implants, ASCs will not be financially viable, he said.
3. A question to consider: Will the physician-owned hospital ban be lifted? Mr. Murski said market to market, ASC leaders are going to have different opinions on what would happen if the ACA's ban on physician-owned hospitals were discontinued.
One feature of today's healthcare environment to consider when thinking about this question is the microhospital.
"We have a significant effort and success in the market with alternative and general acute care concepts" like microhospitals, he said. "What will be interesting is that if the ban ever gets lifted, will you see a microhospital concept be applied?"
Regardless of where people come down on the issue, Mr. Murski said a lift of the ACA's ban on physician-owned hospitals would be more of a competitive threat to hospitals than to surgery centers. He added a lift could create opportunities for ASCs and hospitals to work together.
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