Becker's ASC Review

36 TRANSACTIONS HCA's ASC profitability up despite drop in Medicaid, self-pay volume By Patsy Newitt N ashville, Tenn.-based HCA Healthcare saw outpatient surgery volume decline for the second consecutive quarter because of lower Medicaid and self-pay volumes, executives explained in a July 23 earnings call transcribed by Seeking Alpha. HCA saw 254,371 same facility outpatient surgeries, compared with 259,733 in 2023, a 2.1% decrease. Here are five things to know: 1. The decline is "exclusively in Medicaid and uninsured," HCA Healthcare CEO Sam Hazen said in the call. 2. HCA's revenue and profitability grew in the ASC and hospital outpatient surgery increased in the quarter despite the volume decline, Mr. Hazen added. 3. Mr. Hazen speculated that the decline in volume could be from "patients who migrated from Medicaid into the exchanges through the redetermination process, maybe in a different seasonality category with respect to when they access services," so the volume decline could level out in the second half of the year. 4. "I think it's important to understand that the revenue growth — the service level growth that we've seen in our outpatient surgery business — has been solid and produced a good financial outcome for the company," Mr. Hazen said. 5. HCA's same-store ASC revenue growth was about 8% in the second quarter, CFO Mike Marks said in the call. n Hospitals 'forced to embrace' ASCs in mad dash for outpatient surgery By Patsy Newitt Hospitals continue to look to ASCs as outpatient surgery becomes more popular and the need to cut costs grows. Jim Freund, managing partner for Physician Transaction Advisors, joined Becker's to discuss three trends on the horizon for the ASC industry. More procedures ere will be continued migration of procedures from the inpatient to the outpatient setting, Mr. Freund said. is is largely because cost savings at ASCs are "really significant," he said. Medical procedures can cost as much as 58% more at hospital outpatient departments when compared to a physician office or ASC, according to an analysis by Blue Health Intelligence, the Blue Cross Blue Shield Association's data analytics company. Additionally, ASCs are oen a more preferable setting for patients and physicians. Outside of cost savings, patients flock to ASCs for the convenience and physicians enjoy the autonomy and financial gain that they can offer. "ere's no question there's going to be more and more cases and procedures done in outpatient settings," he said, adding that in the current healthcare landscape, there's a "greater acceptance and movement of procedures to the ASC space." More hospital partnerships As outpatient migration continues, hospitals have been "forced to embrace it," so Mr. Freund predicts an uptick in hospital partnerships and ASC ventures. A January survey of health system executives by VMG Health found that 60% of leaders were considering pursuing outpatient surgery joint ventures in 2024, the highest area of interest of any potential specialty partnerships. In 2023, Becker's reported on 55 hospitals and health systems opening ASCs. "ey're either going to be part of that or they're going to lose in that race," he said. "So you see all the big consolidators out there, and even the smaller ones, are creating partnerships with healthcare systems, whether it's an independent or a joint venture group." While there are challenges with hospitals trying to "implement their systems into the surgery center space," Mr. Freund said, "that just doesn't work," and hospitals need to allow physicians the autonomy that drew them to ASCs. More consolidation Although the ASC industry remains fragmented, with 68% of ASCs being independently owned, Mr. Freund expects consolidation to tick up. Larger groups that have scale can bring to independent physicians, he said, and this is necessary as healthcare as a whole becomes increasingly consolidated. It's "very challenging from a cost perspective, from a technology perspective and from a staff perspective" to remain independent. n Indiana medical office building sells for $2.6M By Claire Wallace A 12,750-square-foot medical office building in Lafayette, Ind., has sold for $2.6 million, according to a July 17 report from ConnectCRE. Current tenants still have three and a half years remaining on their lease. The facility was sold by a private investor and acquired by a regional hospitality group. The MedMark Medical Center occupies a 3.48-acre lot near a dense retail corridor, according to the report. n

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