Pennsylvania ambulatory surgery centers are "thriving," with operating margins exceeding 20 percent and ranging up to 52 percent, according to a new report released by the Pennsylvania Health Care Cost Containment Council and reported in the Pittsburgh Business Times.
The Hospital and Healthsystem Association of Pennsylvania has criticized the surgery center business model following this report, saying the report raises questions about the ability of the uninsured and people on Medicare and Medicaid to get access to care. President and CEO Carol Scanlan pointed out that ASCs rarely treat Medicaid beneficiaries; the average net patient revenue from medical assistance patients at ASCs in 2010 was 3.82 percent.
"With ASCs treating healthier and usually better insured patients, the financial and clinical demands on acute care hospitals, which are a safety net for all Pennsylvanians, continue to grow," Ms. Scanlan said in a prepared statement. "The bottom line for our patients is access."
According to report, there are now 266 ambulatory surgery centers in the state, far exceeding the number of general acute-care hospitals at 165. "In general, ambulatory surgery centers in Pennsylvania are thriving," PHC4 executive director Joe Martin said in a prepared statement. "After a decade of considerable growth, the number of ASCs increased only marginally between FY09 and FY10."
Ambulatory surgery centers in the state have an average operating margin of 26.29 percent, with some facilities reporting operating margins around 45-55 percent. Eight facilities opened and four closed in 2010, and the number of outpatient surgery centers increased to 262 from 98 between fiscal years 2001 and 2009.
By comparison, the average hospital operating margin in fiscal 2010 in Pennsylvania was 4.36 percent, up from 3.53 in fiscal year 2009. More than half of all medical care is provided in the outpatient setting.
The ASC Association responded to criticism from the Hospital and Healthsystem Association of Pennsylvania by pointing out that statewide average margins for ASCs cannot be directly compared to the average margins of general acute care hospitals for several reasons. First, physician owners of ASCs may receive all or part of their compensation as a distribution of net income, not salaries or fees. Thus the distributions are not reported as an operating expense, and would reduce operating and total margins if they were. Physician compensation reported by general acute care hospitals, on the other hand, is included in operating and total margin figures.
Additionally, the ASC Association said the majority of surgery centers are limited liability partnerships or Sub-Chapter S corporations and are not subjected to income taxes. This means the total margins for most for-profit ASCs does not reflect income tax expenses, unlike total margins for for-profit general acute care hospitals.
Related Articles on Surgery Center Operations:
10 Signs Your Surgery Center Is in Trouble
Newspaper Report Lists Philadelphia's Most Profitable Surgery Centers
What Surgery Centers Can Learn From a Cash Flow Statement
The Hospital and Healthsystem Association of Pennsylvania has criticized the surgery center business model following this report, saying the report raises questions about the ability of the uninsured and people on Medicare and Medicaid to get access to care. President and CEO Carol Scanlan pointed out that ASCs rarely treat Medicaid beneficiaries; the average net patient revenue from medical assistance patients at ASCs in 2010 was 3.82 percent.
"With ASCs treating healthier and usually better insured patients, the financial and clinical demands on acute care hospitals, which are a safety net for all Pennsylvanians, continue to grow," Ms. Scanlan said in a prepared statement. "The bottom line for our patients is access."
According to report, there are now 266 ambulatory surgery centers in the state, far exceeding the number of general acute-care hospitals at 165. "In general, ambulatory surgery centers in Pennsylvania are thriving," PHC4 executive director Joe Martin said in a prepared statement. "After a decade of considerable growth, the number of ASCs increased only marginally between FY09 and FY10."
Ambulatory surgery centers in the state have an average operating margin of 26.29 percent, with some facilities reporting operating margins around 45-55 percent. Eight facilities opened and four closed in 2010, and the number of outpatient surgery centers increased to 262 from 98 between fiscal years 2001 and 2009.
By comparison, the average hospital operating margin in fiscal 2010 in Pennsylvania was 4.36 percent, up from 3.53 in fiscal year 2009. More than half of all medical care is provided in the outpatient setting.
The ASC Association responded to criticism from the Hospital and Healthsystem Association of Pennsylvania by pointing out that statewide average margins for ASCs cannot be directly compared to the average margins of general acute care hospitals for several reasons. First, physician owners of ASCs may receive all or part of their compensation as a distribution of net income, not salaries or fees. Thus the distributions are not reported as an operating expense, and would reduce operating and total margins if they were. Physician compensation reported by general acute care hospitals, on the other hand, is included in operating and total margin figures.
Additionally, the ASC Association said the majority of surgery centers are limited liability partnerships or Sub-Chapter S corporations and are not subjected to income taxes. This means the total margins for most for-profit ASCs does not reflect income tax expenses, unlike total margins for for-profit general acute care hospitals.
Related Articles on Surgery Center Operations:
10 Signs Your Surgery Center Is in Trouble
Newspaper Report Lists Philadelphia's Most Profitable Surgery Centers
What Surgery Centers Can Learn From a Cash Flow Statement