Play it safe or play the field?
Outpatient surgery centers continue to gain popularity as less expensive and faster options for surgeries. But within the ASC industry, is it safer to invest in a single specialty or multispecialty surgery center in order to achieve profitability?
Stuart Neiberg, director of the HealthCare Appraisers' Nashville office, didn't hesitate recommending the multispecialty model as the superior business strategy.
"I really find that there aren't a whole lot of risks with multispecialty that don't already exist in single specialty, other than buying more equipment," says Mr. Neiberg.
A multispecialty model allows an ASC to diversify risks. If one specialty takes a hit from reimbursements or a new non-surgical treatment, the surgery center could remain afloat with the strength of its other specialties.
"You have a volume of physicians that are doing the work, so it may be easier to spread the wealth," says Mr. Neiberg.
A single specialty model shouldn't be completely ruled out, though, according to Mr. Neiberg. Focusing on one service limits the amount of equipment needed, and "you know what you're getting yourself into, rather than spreading yourself too thin."
Although some ASCs thrive in single expertise, Mr. Neiberg nevertheless thinks most surgery centers would opt to expand, with more surgeons in-house and more cash flow.
Making the leap to multispecialty
No magic number exists regarding how many specialties create the perfect multispecialty ASC. The strength behind the administration reveals how much surgery centers can handle.
"We've seen centers with nine specialties that have done extremely well," says Mr. Neiberg. "There are management companies that are that good, that can schedule well and make the most out of surgeons' time."
If ASCs are considering expansion, Mr. Neiberg believes easing in is the best approach.
Although each surgery center is case-specific, Mr. Neiberg sees successful complements in orthopedics and pain specialties as well as general surgery and GI specialties.
"If you're dipping your toe in the water and not necessarily taking that giant leap, focus on cases where there would be less of an upfront investment," suggests Mr. Neiberg.
Based on the centers HealthCare Appraisers observes, orthopedics, neurology and cardiology are strong forces. Mr. Neiberg says orthopedic ASCs even operate like multispecialty centers, as the specialty is profitable and brings in complicated surgeries.
Major players in ASC specialties
Whether operating a single specialty or multispecialty ASC, the following specialties are worth considering based on impressive case volumes and revenue.
Ophthalmology, orthopedics, GI and pain management comprise the four powerhouse ASC specialties. Ophthalmology, GI and pain management add up to the greatest number of cases to ASCs by case volume, while orthopedics provides a great amount of revenue.
Ophthalmology is a leader in the ASC industry because it is mostly paid for by Medicare allowing it to survive commercial insurance market shifts. Ophthalmologists retain independence more easily, as hospitals are not aggressively hiring them. The demand for cataract surgery continues to grow, and most ophthalmology ASCs cases yield high volume and medium reimbursement.
Gastroenterology and endoscopy remains popular in ASCs due to Medicare paying for 35 percent to 40 percent of GI procedures and reimbursement of screening colonoscopies. With colon cancer becoming more common, gastroenterologists bring in many procedures in ASCs and hospitals don't want them. GI procedures are high volume with low to medium reimbursement.
Pain management has not experienced an easy ride in ASCs, as payers are strict about the number of procedures and Medicare is strict about the utilization. Many pain management physicians move procedures out of ASCs due to reimbursement. Still, complex procedures often stay in ASCs. The specialty is high volume with low reimbursement.
Orthopedics differs from the other three powerhouse ASC specialties, as it is affected more by commercial reimbursement. Although hospitals actively seek orthopedic physicians, many physicians have maintained their independence in ASCs. Orthopedics in ASCs yields a sizable volume and the highest average reimbursement.
Despite certain specialties dominating the ASC industry, no uniform recipe of specialties whips up a successful outpatient surgery center. But it may be wiser to mix in a couple specialties as opposed to a stand-alone service, for as Mr. Neiberg says, the multispecialty strategy is "really just a better business model."
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