2010: A Better Year Than Expected; 8 Key Issues
2010 has been a year of more stability for surgery centers than anticipated. Here are eight issues facing ASCs.
1. National companies again start to acquire surgery centers. We have seen a return of acquisition activity by national companies. This is after a very soft 2009 in terms of acquisitions.
2. Hospitals acquire surgery centers to convert them to HOPDs. This increase has been largely driven by the huge difference in reimbursement between hospitals and surgery centers for the same services. Surgery centers get paid at about 56 percent of the amount paid to hospitals for the same service. This means that for every dollar a hospital earns from an ASC procedure, a surgery center earns $0.56. This gives the hospital a lot of incentive to try and buy a surgery center, convert it to an HOPD and pay the physicians for management or other services.
3. ASC profits remain reasonably stable. Given all the different issues circulating around healthcare and all the different economic pressures facing the country, it is remarkable how intelligently the ASC community has handled the changes and withstood the onslaught of different issues. ASC profits remain stable in many areas.
4. Great growth in employment by hospitals is not directly attacking key ASC specialties. The key specialties that drive ASCs — orthopedics and spine, gastroenterology and ophthalmology — are not at the heart of acquisition activity by hospitals. While these are not unaffected, the amount of activity pales in comparison to that focused on cardiology and certain other specialties.
5. Reimbursement remains a challenge; out-of-network is getting worse. Surgery centers that relied on out-of-network reimbursement are finding the life span of such reimbursement is quickly coming to a close. Further, ASCs have been very disappointed in how their rates were set as compared to Medicare payments for hospitals for the same procedures.
6. Administrators are getting smarter. Administrators are trained executives who must have great business savvy and also clinical smarts. Overall, it is an increasing gifted group of administrators who run the nation’s surgery centers.
7. Physicians lured by co-managements and other agreements. Notwithstanding the fact that orthopedic and spine physicians, gastroenterologists and ophthalmologists are not at the heart of employment raids by hospitals, they are being aggressively lured by co-management and other types of arrangements.
8. ACOs and healthcare reform provide uncertainty. There remains tremendous uncertainty over the future and the implications of healthcare reform and accountable care organizations on ASCs.
We hope you find this issue of the ASC Review informative and interesting. Should you have questions, please feel free to contact myself at (312) 750-6016 or at sbecker@mcguirewoods.com.
Very truly yours,
2010 has been a year of more stability for surgery centers than anticipated. Here are eight issues facing ASCs.
2. Hospitals acquire surgery centers to convert them to HOPDs. This increase has been largely driven by the huge difference in reimbursement between hospitals and surgery centers for the same services. Surgery centers get paid at about 56 percent of the amount paid to hospitals for the same service. This means that for every dollar a hospital earns from an ASC procedure, a surgery center earns $0.56. This gives the hospital a lot of incentive to try and buy a surgery center, convert it to an HOPD and pay the physicians for management or other services.
3. ASC profits remain reasonably stable. Given all the different issues circulating around healthcare and all the different economic pressures facing the country, it is remarkable how intelligently the ASC community has handled the changes and withstood the onslaught of different issues. ASC profits remain stable in many areas.
4. Great growth in employment by hospitals is not directly attacking key ASC specialties. The key specialties that drive ASCs — orthopedics and spine, gastroenterology and ophthalmology — are not at the heart of acquisition activity by hospitals. While these are not unaffected, the amount of activity pales in comparison to that focused on cardiology and certain other specialties.
5. Reimbursement remains a challenge; out-of-network is getting worse. Surgery centers that relied on out-of-network reimbursement are finding the life span of such reimbursement is quickly coming to a close. Further, ASCs have been very disappointed in how their rates were set as compared to Medicare payments for hospitals for the same procedures.
6. Administrators are getting smarter. Administrators are trained executives who must have great business savvy and also clinical smarts. Overall, it is an increasing gifted group of administrators who run the nation’s surgery centers.
7. Physicians lured by co-managements and other agreements. Notwithstanding the fact that orthopedic and spine physicians, gastroenterologists and ophthalmologists are not at the heart of employment raids by hospitals, they are being aggressively lured by co-management and other types of arrangements.
8. ACOs and healthcare reform provide uncertainty. There remains tremendous uncertainty over the future and the implications of healthcare reform and accountable care organizations on ASCs.
***
We hope you find this issue of the ASC Review informative and interesting. Should you have questions, please feel free to contact myself at (312) 750-6016 or at sbecker@mcguirewoods.com.
Very truly yours,