ASD Management

Leading Nationally

The Next Five Years: Trends and Strategies for ASCs

By Robert Zasa

A new trend in the ASC industry is the rise of independent ASCs (smaller, yet multi-specialty) affiliating with each other to form regional ASC networks. These networks can engage with ACOs or with other large payers. Many of these centers, particularly on the west coast, wish to stay independent but need multiple regional locations to remain competitive.

In states such as New Jersey and California, where hospital networks are particularly strong, ASCs have already, and will continue to form affiliations with these larger networks. Following the typical model of 51% hospital ownership, ASCs can collect larger reimbursements than they can obtain on their own because of the hospital’s ability to leverage payers. While lower than the standard HOPD rates, hospital-affiliated ASCs can achieve reimbursement rates that are typically 15-20% higher than those of freestanding ASCs. This strategy increases the surgery center’s net revenue and distribution payments to the physicians.

Along with stronger reimbursements, increased procedure and case volume will continue to drive new business to ASCs. Medicare has recently increased the number of spine procedures performed at ASCs for which they will provide reimbursement. Additionally, ASCs continue to expand their range of services to drive patient volume and increase revenues, performing everything from total joint replacement, cardiac pacemaker installation, improved GI procedures and more.

A more general, yet equally important trend for ASCs is the growing number of physicians leaving their practices, retiring or selling their practices to hospitals. ASC administrators will need to increase their focus on physician recruiting to remain successful. Younger physicians who had a stake in recently sold practices and surgery centers, and independent physicians who have not yet affiliated with an ASC will be primary targets for recruiting.

Finally, growing numbers of surgeons are aligning with large group practices (which are joint venture partners in the surgery center using the group practice exemption) and primary care physician networks. Primary care physicians in large group practices drive ASC surgical volume by referring patients to the surgeons. In addition, management companies who are working with these physician groups are expressing interest in becoming a partner in a surgery center, which allows them to invest without contending with management compliance issues. As revenue is generated by the group, it is distributed using their own income distribution formula through the practice. Regardless of the vehicle, it will be more common for primary care physicians to align with the surgeons and surgery centers in the near future.

Are ASCs in for another rough Q1? HOPD to ASC Joint Venture Conversion
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HOPD to ASC Joint Venture Conversion

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