The ASC industry is going through big changes, with several exciting federal government and payer policy changes that could drive surgery center growth. But there are also big roadblocks that stymie progress for ASCs and could force surgeons to sell their centers in the short term.
Beyond the COVID-19 pandemic, here are 10 factors shaping the future of ASCs.
Five things that are going right:
1. The end of noncompete agreements preventing employed physicians from leaving hospital contracts and potentially joining local ASCs, could be near. President Joe Biden issued an executive order in July to severely limit or ban noncompete agreements, which can keep physicians at hospitals even if they grow unhappy with the arrangement.
2. Mr. Biden's executive order also shined a light on anticompetitive hospital mergers and acquisitions that increase costs and limit access to care. ASCs stand to benefit from markets with more competition if the Federal Trade Commission increases oversight. An Illinois ASC sued July 29 to prevent a hospital acquisition that would hurt it' referral base, citing Mr. Biden's order.
3. Insurers are changing policies to push clearly outpatient procedures into the ASC over hospital outpatient departments. For the last few years, UnitedHealthcare has published studies on saving millions of dollars by directing procedures to ASCs. Beginning in 2021 Empire BlueCross Blue Shield in New York required hundreds of procedures, including cataract surgery and colonoscopy, be performed in an ASC unless the physician has specific permission to perform them in a hospital outpatient department.
4. Surgeons and patients are more comfortable with complex surgeries in the outpatient setting, including total joint and spine procedures. Surgeons are beginning to bring multilevel spinal fusions and Medicare beneficiaries for total joint replacements, which adds to the potential patient volume for many surgery centers.
5. CMS aims to increase pay for surgery center procedures 2.3 percent in 2022 and may update its definition of device-intensive surgery status, which would increase pay for 440 surgeries. If the proposed rule is finalized, more than 60 device-intensive procedures would be added to the ASC setting.
Five things that are going wrong:
1. CMS making swift changes to the surgeries approved for ASCs, potentially removing 258 procedures added in January. The move could make ASCs skittish about performing newly covered procedures in the future since it takes considerable cost and time to add the services, only to have policies reversed.
2. Staffing shortages across the healthcare industry increased competition for nurses and administrative staff. Some hospitals offer six-figure signing bonuses to registered nurses, and ASCs struggle to keep up.
3. Many independent physicians and groups sold their practices during the pandemic because of financial constraints from temporarily halting operations and uncertainty about the future. Nearly 70 percent of physicians were employed by hospitals or corporations by the end of 2020, leaving fewer primary care physicians able to refer to ASCs, and fewer specialists to become potential partners.
4. Supply costs soared during the pandemic and remain unstable. ASC owners and operators are seeing big bills to purchase necessary supplies and have had to establish new channels to buy them. The strain on a surgery center's budget, coupled with the compulsion to have extra supplies on hand in case another shortage hits, means a higher percentage of an ASC's budget is devoted to the supply chain and away from growth initiatives.
5. Payers are requiring more prior authorizations than in the past, particularly for orthopedic and spine procedures. The prior authorizations take extra time for physicians to complete, and procedures may still be denied. Surgeons see the increased prior authorizations as a roadblock to performing surgeries that were previously allowed and shown effective for patients in the ASC.