At the 18th Annual Ambulatory Surgery Centers Conference in Chicago on Oct. 28, Andrew Hayek, president and CEO of Surgical Care Affiliates, laid out how healthcare reform has changed in the past year and made six key observations on how things are transpiring within the ASC industry.
1. Economic growth is still very slow. Mr. Hayek discussed three main themes in the sluggish economy that are impacting ASCs: Unemployment is still far higher than expected, and as people lose jobs, they are less inclined to seek healthcare. High-deductible health plans are on the rise and have been over the past several years. Finally, physician employment by hospitals is still rising, primarily in primary care and cardiology, and this could be drawing physicians away from ASCs due to the guaranteed incomes hospitals can provide.
Overall, the stagnant economy is proving that healthcare may not always be "recession-proof," Mr. Hayek said. "Stagnation in the middle class and being under poverty puts a lot of pressure on healthcare consumption as we model out volumes going forward," he added.
2. Ninety percent of healthcare reform has yet to come. While it may seem like healthcare reform and President Barack Obama's Patient Protection and Affordable Care Act have been around for a while, 90 percent of healthcare still has yet to go into effect, Mr. Hayek said. Currently, the ASC industry — and healthcare in general — is in a transition period of slow growth, consolidation and a deteriorating payor mix. From 2014 to 2020, most of the reforms will go into effect, including complete insurance reform, more coverage expansion, governmental involvement, accountable care organizations, bundled payments and general transparency, he said.
3. Payors are becoming more innovative. As of late, health insurers have boosted their activity of being more integrated in the continuum of care. Cigna recently purchased HealthSpring, a Medicare Advantage plan, and UnitedHealth Group purchased part of California-based Monarch Healthcare, which includes roughly 2,300 physicians. As bundled payments make their way to the forefront of healthcare, payors are beginning to wonder who will control the distribution of dollars, and this is prompting them to integrate with several different factions of the industry. "If you're a payor, your world is changing dramatically," Mr. Hayek said. "As the role of payors becomes more questionable, payors are considering, 'How do we get seat at table in the future?'"
4. Outpatient care is expected to grow. Although ASCs witnessed a second straight year of a decline in outpatient surgeries, Mr. Hayek expects a 1 to 2 percent growth in Medicare outpatient surgeries for the foreseeable future. Inpatient care continues to shrink, and outpatient care facilities will be the beneficiaries. "ASCs are well-positioned as more healthcare will go into the community setting over time," Mr. Hayek said.
5. There is a risk of Medicare cuts in any given year in the immediate future. Cuts in Medicare reimbursements are rampant through healthcare organizations in the United States, and as the supercommittee tussles with the national deficit, Medicare providers could experience an additional 2 percent sequestration cut if a deal is not reached. ASCs will not be immune to these continued provider cuts, Mr. Hayek said.
6. ASCs are ramping up focus on quality. Quality reporting is receiving increased attention from several sectors of the healthcare industry, especially as the final rule on ACOs reduced the number of quality measures from 65 to 33. Mr. Hayek said ASCs are especially getting more involved in quality reporting, as well as surveys and accreditation, because it sends a "strong signal" about an ASC's outcomes. "There is a lot of movement underway to create standard measures and quality metrics, and ASCs are beginning to submit them voluntarily," Mr. Hayek said.
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1. Economic growth is still very slow. Mr. Hayek discussed three main themes in the sluggish economy that are impacting ASCs: Unemployment is still far higher than expected, and as people lose jobs, they are less inclined to seek healthcare. High-deductible health plans are on the rise and have been over the past several years. Finally, physician employment by hospitals is still rising, primarily in primary care and cardiology, and this could be drawing physicians away from ASCs due to the guaranteed incomes hospitals can provide.
Overall, the stagnant economy is proving that healthcare may not always be "recession-proof," Mr. Hayek said. "Stagnation in the middle class and being under poverty puts a lot of pressure on healthcare consumption as we model out volumes going forward," he added.
2. Ninety percent of healthcare reform has yet to come. While it may seem like healthcare reform and President Barack Obama's Patient Protection and Affordable Care Act have been around for a while, 90 percent of healthcare still has yet to go into effect, Mr. Hayek said. Currently, the ASC industry — and healthcare in general — is in a transition period of slow growth, consolidation and a deteriorating payor mix. From 2014 to 2020, most of the reforms will go into effect, including complete insurance reform, more coverage expansion, governmental involvement, accountable care organizations, bundled payments and general transparency, he said.
3. Payors are becoming more innovative. As of late, health insurers have boosted their activity of being more integrated in the continuum of care. Cigna recently purchased HealthSpring, a Medicare Advantage plan, and UnitedHealth Group purchased part of California-based Monarch Healthcare, which includes roughly 2,300 physicians. As bundled payments make their way to the forefront of healthcare, payors are beginning to wonder who will control the distribution of dollars, and this is prompting them to integrate with several different factions of the industry. "If you're a payor, your world is changing dramatically," Mr. Hayek said. "As the role of payors becomes more questionable, payors are considering, 'How do we get seat at table in the future?'"
4. Outpatient care is expected to grow. Although ASCs witnessed a second straight year of a decline in outpatient surgeries, Mr. Hayek expects a 1 to 2 percent growth in Medicare outpatient surgeries for the foreseeable future. Inpatient care continues to shrink, and outpatient care facilities will be the beneficiaries. "ASCs are well-positioned as more healthcare will go into the community setting over time," Mr. Hayek said.
5. There is a risk of Medicare cuts in any given year in the immediate future. Cuts in Medicare reimbursements are rampant through healthcare organizations in the United States, and as the supercommittee tussles with the national deficit, Medicare providers could experience an additional 2 percent sequestration cut if a deal is not reached. ASCs will not be immune to these continued provider cuts, Mr. Hayek said.
6. ASCs are ramping up focus on quality. Quality reporting is receiving increased attention from several sectors of the healthcare industry, especially as the final rule on ACOs reduced the number of quality measures from 65 to 33. Mr. Hayek said ASCs are especially getting more involved in quality reporting, as well as surveys and accreditation, because it sends a "strong signal" about an ASC's outcomes. "There is a lot of movement underway to create standard measures and quality metrics, and ASCs are beginning to submit them voluntarily," Mr. Hayek said.
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