Hospital consolidation and payer mergers continue to reshape the healthcare landscape, presenting significant challenges for ASCs and smaller practices.
As hospitals and insurers expand their reach, ASCs face mounting pressures from restricted payer networks, reimbursement shifts and increased competition.
Hospital consolidation
Healthcare consolidation has accelerated, with ASCs feeling the impact through shifts in competitive dynamics and reimbursement rates. In the first half of 2024, Becker's reported on 16 hospital mergers and acquisitions.
As large healthcare entities expand, many smaller practices and ASCs choose to sell or merge to stay financially viable. The number of physician practices owned by hospitals, health systems and other corporate entities in 2024 jumped 46% from 2012, according to Physician Advocacy Institute data.
Market consolidation, particularly regarding restrictive insurance networks, is a massive concern for Vishal Mehta, MD, president and managing partner of Geneva, Ill.-based Fox Valley Orthopaedic Institute.
"As the systems around us grow, insurance plans that have a more narrowly defined network are cutting us out," Dr. Mehta said at Becker's 30th Annual Business and Operations of ASCs Meeting in Chicago. "That's a considerable risk for us that we have to keep fighting back against."
Other leaders worry about the consolidation-driven closures of ASCs and smaller practices.
"I think consolidation will continue to lead to more facilities being shuttered over time, especially in markets where there's too much overlap," Benjamin Stein, MD, an independent orthopedic surgeon who co-founded and is now chairman of ASC development group Capital Surgical Solutions, 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."
In some areas, the competitive and increasingly consolidated healthcare systems have strained relationships with ASCs.
"ASCs were nonexistent in the '60s and were barely around in the '70s. Now, there are more ASCs than hospitals. This tells you that they're here to stay," Shakeel Ahmed, MD, CEO of Atlas Surgical Group in St. Louis, told Becker's. "Nobody roots for Goliath. That rings true in this situation. That rings true in this situation. No matter how strong the opponents, the ASCs are good for healthcare."
Payer consolidation
Payer consolidation poses an even greater challenge. Major players like Blue Cross Blue Shield of North Carolina, UnitedHealth Group and Cigna Health Group dominate the North Carolina market, collectively holding 95.5% of market share, according to a recent report.
For Andrew Lovewell, CEO of Columbia (Mo.) Orthopedic Group, the consolidation is particularly concerning with regard to the Medicare Advantage plan.
"You're seeing some of the payers diversify their plans and also get rid of some of their other commercial service lines like Humana," Mr. Lovewell said at the meeting. "They went straight to Medicare Advantage, and that's not good for any of us when we look at those Medicare Advantage plans and how the consolidation happens there because we're all going to take a race to the bottom with those."
So far this year, Becker's has reported on 31 health systems dropping Medicare Advantage plans. Many hospitals, struggling under the weight of these plans, have chosen to discontinue participation.
"This has a huge negative community impact, a negative financial impact and a negative patient care impact," Katie Kucera, vice president and CFO of Carson Tahoe Health in Carson City, Nev., told Becker's.
While some insurers thrive in MA, many hospitals struggle to stay afloat, with a growing number of providers opting to end their participation in MA programs.
Having a nimble business model is critical amid this consolidation, Mr. Lovewell added. Either using direct-to-employer models or other partnerships with private practices are two strategies.
"Doing anything that you can to try to diversify your payer mix so you're not so consolidated on one payer is also super helpful," he said.