ASCs got a regulatory boost in early July when President Joe Biden signed an executive order scrutinizing healthcare mergers, noncompete agreements and the secrecy surrounding costs for care.
The executive order promotes competition and asks the Justice Department and Federal Trade Commission to look more closely at hospital mergers to ensure they don't lead to rural hospital closures and price increases. Hospitals and health systems also are increasingly employing physicians and acquiring surgery centers, which could be under the spotlight next.
The executive order could prompt hospitals to pursue surgery centers more aggressively as an incentive to keep physicians within its network, or physicians may decide to leave hospitals in higher numbers to launch independent centers. According to the 2021 Medscape Physician Compensation Report, independent physicians reported $52,000 higher earnings on average than employed physicians.
"Hospital systems acquiring ambulatory centers will become more prominent as they will want to have control over the number of competitive entities that threaten their elective surgical volume," said Tracy Helmer, administrator of Seven Hills ASC in Henderson, Nev. "The ASC will always remain the cost-conscious, and in some cases, significantly safer alternative than the hospital setting. The only option that hospital systems have is to scoop up the competition, if possible."
Consolidated healthcare markets often have higher healthcare prices, according to multiple studies cited in the executive order. If the federal government plays a more active role in keeping regional healthcare competitive and low cost, independent ASCs can thrive.
Adam Bruggeman, MD, a spine surgeon with Texas Spine Care in San Antonio, has a different perspective. He said he believes the executive order won't prevent joint-venture centers, but he sees physicians increasingly deciding to develop ASCs independently. The pool of independent physicians could also grow if the federal government bans noncompete agreements, which keeps many physicians from leaving hospital employment.
"Concentrating the power in the hands of a few entities has proven to be bad for healthcare," Dr. Bruggeman said. "ASCs are a dynamic space that have multiple potential purchasers and operators. I don't think there will be a reduction in quality for ASCs, and the continued scrutiny will benefit ASC growth."
The executive order also encouraged the federal government to move forward with existing price transparency rules for hospitals, a move many in the ASC industry welcomed. Hospitals are required to post negotiated rates for select common procedures online, which could promote competition among providers as well.
"Price transparency is a hot topic that appears to be a potential win-win for ASCs," Mr. Helmer said. "Patients should have the ability to patronize facilities that provide the services they seek, for the price they are comfortable with."
Some ASCs already are putting price transparency at the forefront of their business model. Cedar Orthopaedic Surgery Center, for example, analyzes several complex factors about each patient's procedure to reach a final price offering that includes surgeon, anesthesia and surgical staffing fees as well as implant and hardware costs. It also takes into consideration the cost of consumables and disposables used during surgery, facility overhead, physical therapy and administrative services.
"In determining the actual pricing, we use a combination of the actual hard costs, weighed against the need to consider future price reimbursement as established by the commercial health insurance and our Medicare fee schedules," said Randy Delcore, MD, owner of Cedar Orthopaedic Surgery Center. "Facing all of these variables along with assuring a reasonable profit margin, we are able to get a reliable picture of what each procedure will cost and we deliver that pricing to our patients upfront, avoiding any billing surprises."