ASCs, the Benefits of Physician Ownership

Two physicians opened the first ambulatory surgical center (ASC) in 1970 in Phoenix, Arizona to create a workplace where they could call the shots. For the first time, physicians were in control of everything from scheduling to the types of medical equipment purchased.

While many ASCs remain independent (100 percent physician-owned) like the very first one, the intense market demand for care outside of the hospital setting has led to an influx in corporate investment and co-ownership of practices. Still, today, more than 5,800 ASCs exist all over the country, providing economic and convenience benefits to providers and patients alike for same-day surgical procedures.

“Over the last several years, it’s become apparent that the hospital setting just isn’t the most appropriate for a lot of surgical and procedural care,” according to Dr. Michael Owens, a gastroenterologist in Portland, Oregon. “Patients, health systems, and payers are all looking to the ASC now for mutual benefit.”

ASCs offer a plethora of procedures today, ranging from orthopedic surgery to endoscopy. According to March 2022 data from the U.S. Centers for Medicare & Medicaid Services (CMS), 32 percent of single specialty ASCs, or EASCs, perform endoscopies – upper endoscopy, colonoscopy, etc. – and 37 percent of multispecialty centers offer endoscopy services.

“EASCs fit well for everyone in this healthcare scenario,” according to a study in Clinics and Colon and Rectal Surgery. “They are more efficient than hospital-based procedures, they are less costly to payers than hospital-based procedures, and they provide an additional source of revenue to healthcare providers.”

Pros and Cons of Physician Ownership

For providers with a full or partial stake in ASC ownership, the benefits extend beyond those offered owners of any profitable business, according to Owens. Physicians also have the chance to offer greater value-based care, he said.

For physicians with any stake in outpatient service ownership, benefits for them and their patients include:

  • Eliminating the need for negotiations over types of medical equipment used.
  • Having the opportunity to specialize in certain specialties of care.
  • Controlling scheduling and offering greater flexibility for patients.

“ASCs are typically nimbler, faster to react to change and may therefore have the ability to embrace new methods, technology and policies,” Owens said. “But this is not always the case, a poorly run ASC might be more disadvantaged than other sites of service.”

Having a good business partner can be crucial to success, Owens said, but it is not imperative for physicians to have a business administrative background to put the needs of their patients first and run a successful practice.

“We are professionals who do understand the delivery of health care as experts, and I’d encourage my colleagues to want more seats at the table,” he said.

The Role Payors Play in Where Patients Seek Care

There are many factors to consider when deciding where to seek care for patients needing a routine or advanced endoscopic procedure. Perhaps it’s urgency for diagnostic or therapeutic care, the ability to travel, a desired physician to see, the convenience of available appointment times, or simply going to the first place found on Google.

But one influence is increasingly difficult to ignore: the bill.

Depending on type of coverage and whether benefits are from private or public sources, patients may unknowingly be directed to select certain locations for care. Increasingly, payors are favoring ambulatory service centers (ASCs) as a cost-effective alternative to hospitals.

“The ASC is usually more efficient, and the patient will benefit by having specialized care in a more efficient manner,” according to Dr. Adam Goodman, a gastroenterologist and professor at NYU Langone Hospital-Brooklyn. “The system benefits by less administrative costs, greater efficiency, and more procedures getting done in a similar amount of time.”

Ultimately, patients receive the same quality of care, but at a much-reduced cost, Goodman said.

It is estimated today that 90 percent of colonoscopies are performed in ASCs, hospital outpatient clinics, or in physician’s offices. Up to 32 percent of the ASC’s in the U.S. specialize in endoscopy alone, while 37 percent of the multi-specialty centers offer endoscopy services, including upper GI endoscopy, sigmoidoscopy, endoscopic retrograde cholangiopancreatography (ERCP) and endoscopic ultrasound (EUS).

Since ASCs typically offer specialized care, procedures can usually be performed more efficiently and quickly than at hospitals, resulting in lower costs. Patients seeking care at ASCs are likely also to have fewer complex conditions, requiring fewer resources for care. A recent study in California found colonoscopies cost an average $2,300 less when performed at an ASC rather than a hospital.

In fact, large payors have increasingly created policies that favor ASC care and may put continued pressure on physicians to perform non-urgent procedures in these settings. In some instances, insurance companies won’t pay for a routine colonoscopy in the hospital anymore. For example, United Healthcare now restricts sites available for non-emergent surgeries and Empire Blue Cross Blue Shield in New York began requiring proof of medical necessity for certain procedures to be performed outside of an ASC in 2021. The New York-based company argued procedures they were pushing to ASCs have been safely provided in such settings for many years. This is particularly true for GI endoscopy.

Studies have shown how care provided at ASCs is significantly cheaper than hospitals – with one report from Regent Surgical Health estimating healthcare cost savings up to $38 billion annually. Additionally, combined out-of-pocket expenses for patients could be reduced by roughly $5 million annually, according to the report. Even for advanced GI endoscopy procedures like ERCP or EUS, ASCs can offer a cost-effective alternative to a hospital.

ASCs are becoming increasingly popular throughout the country, and there are more than 5,000 operating nationwide today. If payors continue to drive future care to the centers, that number will only grow.

Reducing Medicare Costs by Migrating Volume from Hospital Outpatient Departments to Ambulatory Surgery Centers

From Advancing Surgical Care (Download PDF)

More than 5,800 Medicare-certified ambulatory surgery centers (ASC) provide outpatient services to Medicare beneficiaries. On average, Medicare pays ASCs one-half of hospital outpatient department (HOPD) rates for the same procedures, meaning that every time a procedure for a Medicare beneficiary is performed in an ASC instead of an HOPD, the Medicare program saves money. This report seeks to update estimates of those savings to the Medicare program for the period 2011 to 2018 and project those savings for 2019 through 2028.

Surgeons Migrate to ASCs as Surgeries Move to Ambulatory Settings

From OutpatientSurgery

It’s no secret that the ongoing coronavirus pandemic has challenged American health systems in ways that they are not used to being challenged. Many have had to adjust rapidly to best meet the needs of their patient population, while doing what they can to stay afloat financially. Among the most attractive solutions to this problem is the migration of procedures to ambulatory surgical centers (ASCs)

10 Big Challenges for ASCs

One year ago, many ASCs were closed or at limited case volume to divert resources to hospitals treating COVID-19 patients.A year later, the pandemic has had some silver lining in driving more cases outpatient, but there are several challenges ahead. ASC owners and operators will have to navigate their organizations through a new healthcare ecosystem emerging in the next 12 to 24 months.
From Becker’s ASC:

Ten challenges:

1. Boosting case volume. The COVID-19 pandemic, and other natural disasters last year, depressed ASC volume because centers temporarily shut their doors. While many ASCs have resumed operations, other factors are keeping them from reaching 100 percent capacity. Social distancing measures and lack of supplies force centers to lower their daily case volume. Unemployment in some areas will continue to challenge surgery centers, as patients don’t have access to insurance or necessary funds to undergo elective surgery. ASCs will need to find new ways to boost case volume, through facility expansion, adding services, employer partnerships or accepting alternative payment plans. Read more