We all recognize or should that the booming growth years of surgery centers are over. Many believe that the eventual demise of surgery centers is beginning. This article discusses six reasons to be optimistic regarding ambulatory surgery centers.
1. ASC core specialties retain independence. The core specialties that drive ASCs are not moving to hospital employment very quickly. Throughout the country, there is a growing sense among gastroenterologists, ophthalmologists and orthopedic surgeons that they can remain independent. Currently, 77 percent of orthopedic surgeons are in private practice, while 9 percent receive their salary from a hospital or medical center, according to the AAOS 2012 Orthopaedic Surgeon Census. Without some stability in the independence of these core specialties, there isn't really any long term hope for independent ASCs. "The jury is still out on whether physician employment will be the route of the future. Certainly many providers will choose that path, however, there will be others who choose to be independent and ASCs will be an integral part of their practice," says Joe Zasa, founding and managing partner of ASD Management.
2. ASCs will be an attractive option for physicians facing a reimbursement decline. Whether through the Sustainable Growth Rate, or another point of pressure, physician reimbursement is going to face a pinch. "Physician ownership of ASCs is going to take on even more importance for physicians to try to maintain a standard of living," says Barry Tanner, CEO of Physicians Endoscopy.
3. ASCs are still a low-cost, high-quality option. As consumers become more concerned regarding their copayments and deductibles, ASCs become a much better choice than hospitals for commercial patients. There are variations on this depending upon in-network or out-of-network, but all in all ASCs are a lot less expensive for patients, while proving to be high-quality. Patients who will now share in more of their healthcare spend have more and more reason to watch the costs of their services. "We are still the 'better mousetrap.' ASCs are low-cost, high-patient satisfaction providers that have proven more efficient," says Mr. Zasa.
4. Full impact of health exchanges remains to be seen. Patient copayments may be waived or subsidized for health insurance exchange patients. This is a murky issue, but Kathleen Sebelius holds that the prohibition on giving Medicare and Medicaid patients copay assistance doesn't apply to healthcare exchange patients; as such insurance isn't a federal health care program. See "New Math on Rx Copays."1 Here, the pharmaceutical companies often provide copay assistance. The pharmacy benefit managers dislike the subsidies and believe these make the use of copayments to reduce costs less effective. Surgery centers still must be wary of state and managed care contract prohibitions on waiving copayments.
Notwithstanding concerns with healthcare exchanges and lower reimbursement, it appears that the migration to healthcare exchanges will not be nearly as significant in the early years as anticipated.
5. The field of competition is changing. Hospitals are struggling financially. This can make hospitals less effective competitors for physicians, market share and in a variety of other manners.
6. There is room for strong ASCs. ASCs that can be dominant in a particular niche or have a very cost-conscious operation, or both, can still find means to profit.
1 Rockoff, Jonathan D. and Loftus, Peter. "New Math on Rx Copays." The Wall Street Journal. November 2013.
1. ASC core specialties retain independence. The core specialties that drive ASCs are not moving to hospital employment very quickly. Throughout the country, there is a growing sense among gastroenterologists, ophthalmologists and orthopedic surgeons that they can remain independent. Currently, 77 percent of orthopedic surgeons are in private practice, while 9 percent receive their salary from a hospital or medical center, according to the AAOS 2012 Orthopaedic Surgeon Census. Without some stability in the independence of these core specialties, there isn't really any long term hope for independent ASCs. "The jury is still out on whether physician employment will be the route of the future. Certainly many providers will choose that path, however, there will be others who choose to be independent and ASCs will be an integral part of their practice," says Joe Zasa, founding and managing partner of ASD Management.
2. ASCs will be an attractive option for physicians facing a reimbursement decline. Whether through the Sustainable Growth Rate, or another point of pressure, physician reimbursement is going to face a pinch. "Physician ownership of ASCs is going to take on even more importance for physicians to try to maintain a standard of living," says Barry Tanner, CEO of Physicians Endoscopy.
3. ASCs are still a low-cost, high-quality option. As consumers become more concerned regarding their copayments and deductibles, ASCs become a much better choice than hospitals for commercial patients. There are variations on this depending upon in-network or out-of-network, but all in all ASCs are a lot less expensive for patients, while proving to be high-quality. Patients who will now share in more of their healthcare spend have more and more reason to watch the costs of their services. "We are still the 'better mousetrap.' ASCs are low-cost, high-patient satisfaction providers that have proven more efficient," says Mr. Zasa.
4. Full impact of health exchanges remains to be seen. Patient copayments may be waived or subsidized for health insurance exchange patients. This is a murky issue, but Kathleen Sebelius holds that the prohibition on giving Medicare and Medicaid patients copay assistance doesn't apply to healthcare exchange patients; as such insurance isn't a federal health care program. See "New Math on Rx Copays."1 Here, the pharmaceutical companies often provide copay assistance. The pharmacy benefit managers dislike the subsidies and believe these make the use of copayments to reduce costs less effective. Surgery centers still must be wary of state and managed care contract prohibitions on waiving copayments.
Notwithstanding concerns with healthcare exchanges and lower reimbursement, it appears that the migration to healthcare exchanges will not be nearly as significant in the early years as anticipated.
5. The field of competition is changing. Hospitals are struggling financially. This can make hospitals less effective competitors for physicians, market share and in a variety of other manners.
6. There is room for strong ASCs. ASCs that can be dominant in a particular niche or have a very cost-conscious operation, or both, can still find means to profit.
1 Rockoff, Jonathan D. and Loftus, Peter. "New Math on Rx Copays." The Wall Street Journal. November 2013.