Becker's ASC Review

20 TRANSACTIONS How will the economy affect ASCs in 2024? By Patsy Newitt F ive ASC leaders joined Becker's to discuss how a potential economic downturn could affect ambulatory healthcare space growth. Editor's note: ese responses were edited lightly for clarity and length. Anupam Pradhan, MD. Chair of Orthopedic Surgery at Southwest Joint Replacement and Sports Medicine (Dallas): e last few years have been interesting as far as our ambulatory surgery growth. Aer COVID-19, there was such a pent-up demand for surgery that our centers were busy and schedules were packed. Aer that initial rush, things got back down to normal. is past year was steady, but probably a little more muted than previous years and years prior to COVID-19. As far as the economic downturn, I think there's still a lot to be played out. Interest rates were high and began coming down at the end of last year but seem to have stabilized. It'll be interesting to see where they go and how that affects the economy overall. I think the Fed seems to be slowing down on their anti-inflationary policy, and that usually is good for the economy. CMS still drives a lot of the decision-making as to what can get taken to ambulatory surgery. ey recently approved shoulder replacement for accepted outpatient procedure codes, and this should help drive more to surgery centers in general. Hopefully we see at least stable to slight growth for ambulatory surgery in general. David Baskin, MD. Professor of Neurosurgery at Weill Cornell Medical College and Texas A&M Medical School (Houston): ere is a lot of economic uncertainty in 2024. We don't know if the economy is going to go up, down or sideways. Assuming there is a downturn, this will, of course, affect all walks of life. e question is whether there will be more emphasis for ambulatory surgery to save cost, in which case we may not see as much of a downturn. On the other hand, ambulatory surgery oen is for conditions that are more elective and patients may choose to delay it. Michael Davis, MD. Professor and Chief of UNM Health Sciences System's Division of Urology (Albuquerque, N.M): An economic downturn will have an impact on the growth of ASCs, although likely not as impactful as was seen in the past three years. While there are challenges imposed by increasing labor costs, administrative expenses and materials, there are also factors that may contribute positively to the growth of ASCs. Technology advances in revenue cycle management play a critical role in ASC operations. e development of AI in the realm of revenue cycle management could have a positive impact on margins and decrease the costs of labor and administration associated with ASCs and revenue cycle management. Technology will make the revenue cycle management more efficient when it comes to billing and coding, reduce errors and result in faster reimbursements. Increased costs of labor, administrative expenses and supply are likely to reduce the profitability of ASCs. Despite this, the growth of ASCs is being driven by their increasing role in healthcare delivery. ASCs offer surgical procedures at significantly lower rates compared to hospitals, which is beneficial to payers and patients. Due to this trend, and some procedures that were traditionally hospital based moving into the ASC realm, like robotic surgery, there will be expansion of ASCs into the future. erefore, the economic downturn will likely have a bigger impact on hospital margins and less so on ASCs, making this a cost-effective alternative for payers in certain areas of surgical care. As seen by the effect of the COVID-19 pandemic, the economy will adversely impact healthcare revenue in times of a downturn. ASCs will obviously be negatively impacted by the increased costs associated with things like inflation, interest rates, labor, administrative costs and costs of capital. e fact that they provide a less HCA nets $5.2B in 2023, names CFO: 5 notes By Paige Haeffele N ashville, Tenn.-based HCA Healthcare rounded out 2023 with fourth-quarter net income totaling $1.61 billion, a decrease of 26% year over year. "In the quarter, we experienced strong demand for services across our diversified portfolio of markets, facilities and service lines," Sam Hazen, CEO of HCA, said in the company's fourth-quarter financial report, published Jan. 30. "This growth coupled with improved cost trends drove solid financial performance in the fourth quarter." The company said Bill Rutherford, executive vice president and CFO, plans to retire May 1. He will be succeeded by Mike Marks, HCA's current senior vice president of finance. Here are five notes on the company's financial performance in the fourth quarter of 2023 and the year overall: 1. HCA reported a net income of $5.24 billion in 2023, compared to $5.64 billion in 2022. 2. Its ASCs saw 270,286 surgery cases in the fourth quarter and 1,044,415 in the year overall; the yearly total represents a 2.1% increase. 3. The company sold two ASCs in 2023, ending the year with 124. 4. In the fourth quarter, outpatient revenues accounted for 38.3% of patient revenues at all facilities. Outpatient procedures accounted for 38.3% of patient revenues in the year overall. 5. HCA predicts growth in 2024, setting its 2024 net income guidance between $5.2 billion and $5.6 billion. n

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