Becker's ASC Review

6 ASC MANAGEMENT 'ASCs have to be nimble': How ASCs can face potential financial losses By Patsy Newitt A mid the COVID-19 pandemic-spurred economic downturn, many ASCS are looking to the 2008 recession as a blueprint for rebounding and growing. ASC leaders were faced with a 21-year high inflation rate earlier this year in addition to Medicare reimbursement cuts and higher overhead costs and staff wages. Some ASC leaders say government stimulus checks and a prioritization of big hospitals has hurt ASCs' long-term ability to thrive. "e artificial flow of government stimulus and its preferential flow to the big hospitals is a situation that was nonexistent in 2008 but has created real challenges this time around," Sukdeb Datta, medical director of Datta Endoscopic Back Surgery & Pain Center in New York City, told Becker's. "To get out of this situation, ASCs have to be nimble and maybe move to a different reimbursement model." As a strategy to stand out and drive revenue, many ASC leaders are looking to switch to a value-based care model as payers migrate to bundled payments for their lower costs and better patient outcomes. "e payers are now interested in discussing bundles on some of the higher spends that can be done in the outpatient setting," Jeffrey Flynn, administrator and COO of New York City-based Gramercy Surgery Center, told Becker's. "With the bigger push to move procedures out of the hospital, many of us are in discussions for bundled payments with a boost in the reimbursement to bring it to a more cost-efficient setting." ASC leaders are also looking to avenues such as private equity and physician investment to maintain profitability amid rising margins. And while much of the economic outlook is grim, some ASC leaders are optimistic about where the ASC industry is headed. "As ASC managers adopt [banking, retail and other] technologies, we anticipate another great era," Greg Horner, MD, managing partner at HealthPoint Ambulatory Surgery Co. in Pleasanton, Calif., told Becker's. "It is my hope that the ASC industry, the payers and we in the investment community help thoe who need it the most share in the next heydays of quality and efficiency from ASCs." Independent ASCs, in particular, could come out on top, some ASC leaders said. Independently owned centers can offer surgeons a greater opportunity for ownership, and physicians oen do not incur management or purchasing fees, provided the center has a strong and experienced management team. "e current impending recession, however, is partially characterized by a major surge in real estate prices, even though Americans have much less buying power," Alejandro Badia, MD, founder and chief medical officer at OrthoNow Immediate Orthopaedic Care in Doral, Fla., told Becker's. "However, strangely, the demand seems to remain, and if supply can increase, despite the huge increase in supply chain and construction costs, then we will have many more ASCs in the market to provide care. I believe this is a testament to the great advantages afforded by independent ASCs. e future is perhaps even brighter now." n USPI to run up to 600 ASCs by end of 2025: 8 notes By Alan Condon T he ASC market is expected to be Dallas-based Tenet Healthcare's main growth driver in the coming years, with the company's surgery center business, United Surgical Partners International, aiming to have 575 to 600 ASCs by the end of 2025. Eight things to know: 1. USPI has about a 7 percent share of the ASC market, with 410 surgery centers and 24 surgical hospitals across 34 states, CEO Saum Sutaria, MD, said during a July 22 earnings call. The company aims to acquire 77 to 90 ASCs through 2025, develop 30 to 40 new centers in partnership with Towson, Md.-based SurgCenter Development, and develop another 32 ASCs with physicians. 2. As more services and procedures shift to the outpatient environment, Tenet has been bolstering its ASC business to drive revenue. It has spent more than $2.5 billion in capital investment to scale USPI since December 2020 and expects to see 12 percent growth in 2022 after acquiring interest in about 160 ASCs in less than two years, company executives said in a February earnings call. USPI expects 2022 net operating revenue to rise to $3.2 billion or $3.3 billion, with surgical cases increasing 3 percent to 4 percent year over year. 3. At the end of June, Tenet acquired Dallas-based Baylor Scott & White Health's 5 percent equity position in USPI to own 100 percent of the company's voting shares, Dr. Sutaria said. 4. Other recent USPI acquisitions include a $1.1 billion deal to buy SurgCenter Development — adding 85 ASCs to its network — and another $78 million paid to acquire ownership of eight Compass Surgical Partners ASCs. 5. USPI agreed to form a joint venture partnership in 22 ASCs with Owings Mills, Md.-based United Urology Group. The company will acquire a portion of UUG's ownership interests in its established and new surgery centers in Maryland, Colorado and Arizona, adding more than 140 urologists to USPI's network. 6. USPI partnered with Centura Mercy Hospital and local physicians to build an ASC in Durango, Colo. The surgery center will feature three operating rooms and offer services that include spine surgery, orthopedic surgery, pain management and gastroenterology. 7. More than 3,400 physicians joined USPI in 2021, increasing the number of physicians in the company's network to more than 11,000, the most of any ASC chain. 8. USPI has more than 20,000 employees and serves 1.5 million patients a year, according to its website. n

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