As physician practices and ASCs face rising costs and declining reimbursements, many are forced to shutter — Becker's has reported on five ASC closures so far in 2024.
Benjamin Stein, MD, an independent orthopedic surgeon who co-founded and is now chairman of ASC development group Capital Surgical Solutions, is worried that this trend could accelerate as consolidation continues.
"I think consolidation will continue to lead to more facilities being shuttered over time, especially in markets where there’s too much overlap," Dr. Stein told Becker's. "When you have too many facilities in a specific geography, it becomes hard for any of them to function well, and some will inevitably close."
While there are operational benefits to consolidation as reimbursements decline and practice costs rise, Dr. Stein said he's not sure how this "translates directly into value-based care outcomes."
Amid healthcare's ongoing shift toward value-based payment models, this could leave consolidated facilities unprepared.
Additionally, some large consolidators might not be equipped to run regional facilities that require local insight.
"Another con is whether these large aggregators are truly able to run these enterprises better, even from an economic perspective," he said. "Many examples show they don’t, because these facilities are regional and rely on local resourcing. When you're too large, it becomes hard to be malleable and adapt to local needs."
Outside of the ASC business, he also runs a private practice as a "large, independent entity." Deciding to remain independent has allowed the practice to "achieve scale while maintaining autonomy."
He predicts something similar could evolve with ASCs – an entity that balances independence and the resourcing that larger entities bring.
"We’ve gone from one extreme to the other, but I believe the long-term solution lies somewhere in the middle," he said. "Consolidation can bring some benefits, like access to resources that small facilities don’t have, but it’s about finding the right balance between autonomy and scale."
There are some efforts to build this middle ground in the ASC industry. Longtime ASC owner-operators Mark Quigley and John Webb, along with developer Woodrow Moore and analyst Arjun Gangakhedkar, created Ker Leader Medical earlier this year.
The new ASC operates under an ownership-focused model and was created to disrupt current corporate investment trends.
This is a pull factor for physician owners who, Mr. Moore told Becker's, "do not want to involve large intrusive institutional management, equity or health system partners" in the partnership phase and who may seek an exit strategy.