Jitander Dudee, MD, an ophthalmologist at Lexington, Ky.-based Medical Vision Institute, joined Becker's to discuss 12 factors that are raising concerns for future ASC growth.
Editor's note: This response was edited lightly for clarity and length.
Question: What scares you for the future of ASCs? Why?
Dr. Jitander Dudee: Several factors raise concerns about the future success of ASCs in the U.S. While ASCs remain an important component of the U.S. healthcare system, multiple external pressures — financial, regulatory, operational and competitive — are likely to shape their future success. ASCs will need to adapt by leveraging efficiencies, improving patient outcomes, and aligning with the evolving landscape of value-based care to remain competitive in the coming years.
1. Reimbursement challenges
- Declining reimbursement rates: One of the primary concerns for ASCs is the potential for decreasing reimbursement rates from both Medicare and private payers. Changes to the Medicare fee schedule and reductions in reimbursement for certain procedures (e.g., cataract surgeries, which are common in ophthalmic ASCs) could impact profitability.
- Bundled payments and value-based care: The shift toward value-based care models and bundled payments places pressure on ASCs to manage costs while maintaining quality. ASCs need to invest in systems and processes to monitor outcomes and reduce unnecessary expenses, which may strain smaller centers.
2. Regulatory and compliance issues
- State and federal regulations: Increased regulatory requirements at both the federal and state levels, including infection control, reporting obligations and accreditation standards, can impose operational and financial burdens on ASCs.
- Certificate-of-need laws: In states with CON laws, the expansion or establishment of new ASCs is often limited by regulatory approval, which can restrict growth opportunities and hinder competition.
3. Staffing shortages
- Nurse and anesthesiologist shortages: ASCs, like many healthcare facilities, are experiencing workforce shortages, particularly in nursing and anesthesia providers. These shortages can increase labor costs and make it difficult to meet the demand for surgeries.
- Competition for talent: ASCs compete with hospitals and other healthcare settings for skilled staff. Hospitals may offer higher wages or better benefits, making it harder for ASCs to attract and retain qualified personnel.
4. Increased operating costs
- Rising supply and equipment costs: Inflationary pressures, supply chain disruptions, and increased costs for surgical equipment and medical supplies (such as disposables) can negatively impact ASC margins.
- Technology investment: ASCs must invest in new technology, including electronic health records (EHRs), surgical robotics and equipment upgrades. These capital investments can be challenging for smaller centers with limited resources. Fortunately, some of the new technology in ophthalmology focuses on elective "premium" services such as refractive intraocular lens and dropless surgery, which can be passed on to those patients who have disposable income.
5. Shifts in procedure mix
- Procedural shifts: As more complex procedures move from inpatient to outpatient settings, ASCs may need to adapt by offering these higher-acuity surgeries. This often requires significant investment in infrastructure, specialized equipment and staff training, all of which can strain resources.
- Competition from hospitals: Hospitals are increasingly establishing their own outpatient surgery centers or acquiring ASCs. This increases competition and may make it harder for independent ASCs to maintain market share.
6. Payer consolidation
- Private payer dominance: Consolidation among private insurance companies can give payers more leverage in negotiating contracts and reimbursement rates with ASCs, potentially leading to lower payments.
- Narrow networks: Insurers may favor hospital-affiliated ASCs or develop narrow networks that exclude independent centers, which can limit patient access and revenue opportunities for ASCs.
7. Market saturation
- Competition among ASCs: In some regions, the number of ASCs has grown significantly, leading to market saturation. This can reduce patient volumes, increase competition and drive down prices, negatively affecting the financial sustainability of ASCs.
8. Shifts in patient demographics
- Aging Population: While the aging population creates demand for surgeries (e.g., cataract surgery), older patients may also have more comorbidities, leading to increased risk and the need for more complex perioperative care. ASCs may struggle to accommodate this shift if they are not equipped for higher-risk cases.
- Patient preferences: Patients are increasingly seeking convenience and lower costs, but they also demand high-quality care. ASCs must balance these expectations with financial constraints, particularly in a highly competitive environment.
9. Impact of technology and innovation
- Telemedicine and remote monitoring: The rise of telemedicine and digital health innovations could disrupt traditional surgery models. Although ASCs typically focus on procedures that require in-person care, shifts in pre-operative or post-operative care could change patient management dynamics, potentially affecting ASC utilization rates.
- Emerging surgical techniques: Advances in minimally invasive procedures, laser technology and robotics may require ongoing investment in specialized equipment, further stretching ASC budgets.
10. Potential changes in healthcare policy
- Medicare policy changes: Any significant policy changes to Medicare or other government programs (e.g., changes to outpatient procedure reimbursement rules) could directly affect ASC revenues.
- Health insurance reform: Potential changes to the Affordable Care Act or other healthcare reform initiatives could impact coverage, patient volumes and payment structures.
11. Economic pressures and inflation
- Economic downturns: In periods of economic recession, patients may delay elective procedures, leading to a reduction in ASC volumes and revenue.
- Inflation: Rising inflation can increase operational costs, from staffing to supplies, while reimbursement rates may not keep pace.
12. Competition from hospital outpatient departments
- Payment discrepancies: HOPDs often receive higher reimbursement rates than independent ASCs for the same procedures, creating a competitive disadvantage for ASCs.
- Hospital acquisitions: As hospitals increasingly acquire or partner with ASCs, they may steer patients away from independent ASCs, leading to decreased patient volume.