What Does 2019 Hold for ASCs?
10 Trends to Consider

Ambulatory investment, including investment in ambulatory surgery centers (“ASCs”), continues to be viewed as a critical strategic move among healthcare organizations, especially large health systems, H2C research shows. Last year, Tenet Healthcare Corp. increased its investment in an ASC chain even as it divested other assets. Meanwhile, a recent poll shows 48 percent of hospitals and health systems plan to make additional ASC investments.

 

But operating an ASC not without challenges. Some independent ASCs face increased difficulty recruiting physicians at a time when hospitals employ 44 percent of physicians. Lower profit margins mean ASCs must be highly efficient, perform well on quality, and provide an excellent patient experience, all while keeping costs low. They also must be skilled in using data analysis to determine which services best meet the needs of the market.

 

What is the outlook for ASCs in 2019 and beyond, and how can operators gain the most from their investment? Here are 10 things to consider.

 

Hospitals and health systems are making big bets on ASCs. The number of ASCs owned by or affiliated with hospitals and health systems more than doubled from 2007 (16 percent) to 2017 (41 percent), according to The Advisory Board Company.

 

Some health systems have begun to prioritize ambulatory investments over traditional brick and mortar. For example, last year, Ascension publicly announced an “advanced strategic direction” and hinted at plans to scale back hospital operations in favor of expanding its outpatient footprint.

 

The ASC market is growing. One recent study shows health plans, employers, and consumers could save billions by choosing to have outpatient surgeries performed in ASCs rather than hospital outpatient departments. It’s no surprise, then, that the ASC market is expected to reach $40 billion by 2020. Some predict outpatient procedure volumes will increase 16 percent from 2016 to 2026.​

 

ASCs are strategically moving into the physician practice management (“PPM”) space. During McDermott Will & Emery’s 2018 Health Care Services Private Equity Symposium, panelists pointed to a move away from “pure-play ASCs,” with some ASCs pivoting into PPMs. ASCs also are exploring new types of strategic partnerships. One example shared during the conference: the merger of Surgical Care Affiliates with Optum.

 

But investment in ASCs doesn’t guarantee success. There are numerous disadvantages to ASC investment, such as lower reimbursement for hospital-equivalent procedures, or those that are also performed in hospitals on an outpatient basis. (Physicians, however, often receive higher payment rates for procedures performed in ASCs.) Some ASCs face challenges aligning physician compensation with the ASC’s long-term goals; others struggle to achieve and sustain healthy case volumes.