5 factors that will make or break ASCs

As operation costs skyrocket and reimbursements stagnate, ASCs are facing huge challenges to maintaining profitability. Here are five factors that can make or break ASCs in the coming years, according to seven ASC leaders. 

1. Supply chain strategy

Supply chain issues have been burdening ASCs since early on in the COVID-19 pandemic, and disruptions aren't expected to ease for a while. 

Successful ASCs will maintain a creative supply chain strategy — accessing different supply channels and thinking ahead about potential shortages. 

Brandon Thompson, RN, administrator of CarePlex Orthopaedic ASC in Hampton, Va., told Becker's his team is having trouble returning back to sole-source supply contracts, making it difficult to buy things at a discount. 

"Supply allocations have also been added to the mix of the pandemic pain. We have increased our budget reserve for essential supplies instead of buying when needed," Catherine Llavanes, CEO of Sante Health Partners in Los Angeles, told Becker's. "This will help ensure that there will be minimal disruption if there is a supply shortage. We try to be prepared and stay in tune with the daily changes in emergency management in each state we operate. 

2. Staff recruitment

ASCs, like all healthcare providers, are having to get creative to recruit staff and compete with the high salaries of hospitals. 

"Staffing is by far the biggest challenge that we're facing today," Andrew Wade, CEO of OrthoSC in Myrtle Beach, S.C., told Becker's. "The inflationary market pressure on all of our collective purchasing power and the 'great reshuffling' have created extreme wage competition and a hyper-competitiveness within the market."

ASCs are using key strategies like offering flexible hours, improving wages and benefits, and cultivating a positive work environment to recruit and retain staff amid shortages. 

"We're addressing these challenges by raising wages/benefits, looking for ways to create increased flexibility in where, when and how our team members do their jobs, and working harder than ever to ensure that our team members know that we appreciate and value their vital part in our collective ability to take care of our community," Mr. Wade added. 

3. Securing reimbursements

ASCs are not seeing a correlating increase in reimbursement amid skyrocketing operation costs. Administrators and executives are developing strategies like direct-to-employer contracting and attracting patients to bypass them. 

"As we see the push for single-payer healthcare, it's getting harder and harder to negotiate good rates with insurance companies," Allison Stock, BSN, RN, administrator of Lenox Surgery Center in Lenox Township, Mich., told Becker's. "It is extremely important to be aware of what your payer contracts are, and if they are covering your costs of procedures in your ASC."

While some ASC leaders are seeing shifts in payer behavior, with some insurers interested in migrating procedures from hospitals to ASCs, others are opting for direct-to-employer contracting, a model that offers the ability to eliminate the payer from the care process. 

"I believe direct-to-provider contracting between employers and physician practices should be getting more attention as the cost of healthcare continues to rise," Nicholas Grosso, MD, an orthopedic surgeon at the Centers for Advanced Orthopaedics in Bethesda, Md., told Becker's. "Employers are feeling this increase and have no choice but to pass costs down to employees."

4. Harnessing case volume growth

ASC surgery volume is projected to grow 25 percent in the next decade, according to analysis from Sg2 Healthcare Intelligence, a Vizient company focused on market analytics and insights, but administrators have to be ready to attract patients in a "shopping era" of healthcare. 

Patients are consumers with higher standards for care, and ASCs, independent physicians and physician groups need to stand out. Successful ASCs will harness strategies like technology advancement, price transparency and, most of all, highlighting the cost savings seen in surgery centers. 

5. Cost containment

ASC costs must remain low to meet budget expectations for net income, a difficult feat amid a 40-year inflation apex

"The biggest enemy [to ASCs] right now is the rising cost of everything," Amy Noble, practice administrator for the Center for Pain Control in Wyomissing, Pa., told Becker's. "From equipment to supplies to staffing, expenses continue to rise while reimbursements are stagnant."

And while CMS raised ASC payment rates by 2 percent for 2022, many leaders don't expect the rate to cover the costs. 

"Although the 2 percent effective inflation rate update is appreciated, it falls far short of [some] important realities … it falls short of the latest inflation projections, which began to manifest in the first quarter and developed fully in the second quarter — time enough for CMS to have taken them into consideration," said Alfonso del Granado, administrator of Covenant High Plains Surgery Center in Lubbock, Texas.

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