OR Manager - February 2020 - 26

AMBULATORY
SURGERY CENTERS
Continued from page 25
* Efficient operations. Based on data
from the consulting firm Surgical Directions,
high-functioning ASCs typically
have a case cancellation rate
of less than 1% and turnover times
that are approximately one-half to
one-third of those for similar cases
in a hospital.
* Lean labor costs. According to the
VMG review, the average ASC has
31 total staff, with 15 RNs, seven
surgical technologists, and nine administrative
personnel. The cost of
elective OR time is less than $15
per minute in an ASC versus $40 a
minute in a hospital OR.
* Optimal productivity. Based on
the annual case volume numbers
cited above, the average ASC performs
1,200 cases per OR and
1,650 cases per procedure room
every year. In comparison, average
hospital OR productivity is less than
1,000 cases per year. In the average
ASC, fewer than 10 physicians
perform 73% of procedures, according
to VMG data. In fact, most highvolume
ASC proceduralists are owners
who have a personal stake in
running a highly efficient facility.
In summary, the mainstream ASC
is relatively small compared with the
typical hospital OR but performs 50%
greater volume per room. In both single
and multispecialty ASCs, a small
number of surgeons/proceduralists perform
most of the cases, and the collaborative
nature of the healthcare team
drives productivity and efficiency. All
this adds up to profit margins that can
exceed 40% as well as high patient and
surgeon satisfaction.
Barriers to market expansion
Only about 20% of ASCs have hospital
ownership. At the same time, 60% of existing
ASCs remain unaffiliated and privately
held by physician owners-even
though the major ASC management
firms, investment banking firms, and
26
OR Manager | February 2020
Snapshot of the ASC market
Although the ambulatory surgery center
(ASC) market is in flux, high-level data
provide a useful view of the industry:
➤ Geography. More than 90% of
ASCs are located in urban areas.
In rural areas, community hospitals
continue to retain a large portion of
the ambulatory surgery market.
➤ Ownership. Several large companies
that specialize in ASC management
control about 20% of all facilities,
or about 1,500 ASCs. These companies
either own the ASC jointly with
proceduralists or, usually in larger
multispecialty facilities, manage operations
without an ownership stake.
➤ Specialty mix. About 60% of ASCs
are single-specialty facilities, mostly
gastroenterology and ophthalmology,
but multispecialty ASCs are
growing rapidly and command a
larger share of total market revenue.
ASCs currently enjoy several unique
advantages in this healthcare market:
Increasing reimbursement. The Centers
for Medicare & Medicaid Services
(CMS) is acting to shrink the reimbursement
disparity between ASCs and hospital
outpatient departments (HOPDs).
One strategy is simply increasing ASC
payment rates. In 2019, ASCs received
a 2.1% increase in CMS payment versus
a 1.35% increase for HOPDs.
Gainsharing opportunities. The
Stark Law permits profit sharing among
even health plans are aggressively moving
into outpatient surgery. What has
kept most hospitals and health systems
from entering the ASC market?
* a tradition of wariness
* different surgery cultures
* difficulty agreeing on a revenue split
* hospital payment advantage
* forest vs trees.
owners of an ASC. Accordingly, 94% of
ASCs are for profit, according to CMS. Interestingly,
this gainsharing " safe harbor "
is open to both surgeon-owned ASCs and
hospital/physician joint-venture ASCs.
Robust quality. Public reporting now
supports the long-held reputation for the
quality and efficiency of ASCs. All CMScertified
ASCs are required to track quality
metrics, and The Leapfrog Group is collecting
safety data from ASCs and HOPDs
through a new voluntary survey.
Despite the many advantages that ASCs
enjoy, evolving market conditions are creating
new hurdles:
Tightening margins. Reimbursement
rates for ASCs, similar to hospital rates,
are being squeezed by payers. At the same
time, increases in personnel costs, technology,
and supply expenses make it imperative
to carefully manage procedures,
productivity, and costs.
New competition. Office-based surgery
(OBS) is on the rise, with gynecology, ENT,
ophthalmology, and plastic surgery leading
the increase in OBS volume.
Political obstacles. More than half of
states require a certificate of need (CON)
before opening an ASC. Obtaining a CON
can be difficult, especially when potential
competitors are influencing this decision. As
expected, CON states have lower penetration
of ASCs compared with non-CON states.
A tradition of wariness. Hospitals
and physicians each have their agendas,
often very different and sometimes
contentious, and physician employment
has done little to build trust and collaboration.
Different
surgery cultures. Compared
with ASCs, hospital-based procedural
services are less surgeon- and
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