Becker's ASC Review

6 ASC MANAGEMENT Underlying all of it is a philosophy Mr. Valentine describes as "back to the future." is mindset, he said, is a conviction that the path forward in healthcare runs through simplicity, transparency and accountability rather than further complexity. "We're moving back several steps so that we get back to square one on where healthcare actually meant something to everyone involved — and it was understandable," he said. "I call it the future because I believe other companies will follow. As long as folks recognize that somebody is out there actually trying to improve all of this, that's all we care about." n ASCs' strongest weapon against thin margins By Francesca Mathewes A SCs face rising financial pressures on multiple fronts, from declining reimbursements to rising costs of supplies and labor. This trend has pushed vendor and payer contract negotiations to make-or-break status for many ASCs. In its annual report to Congress released March 12, the Medicare Payment Advisory Commission found that the number of ASCs nationwide grew more than 2% per year on average between 2019 and 2024, and the volume of ASC surgical procedures per fee-for-service beneficiary increased 3.5% in 2024 alone, after growing at an average annual rate of 1.3% from 2019 to 2023. While this growth indicates significant opportunities for facility growth, many ASCs are still struggling to keep pace with demand as margins become increasingly thin. Melissa Rice, administrator of Loyola Ambulatory Surgery Center at Oakbrook Terrace (Ill.), recently joined Becker's to discuss her organization's process for collecting and presenting data in contract negotiations to keep her center ahead of rising costs. Editor's note: Responses have been lightly edited for clarity and length: Question: What's your biggest challenge when it comes to pulling together the right data ahead of a contract renewal? Ms. Melissa Rice: One of the biggest challenges in preparing for a contract renewal is pulling together accurate, aligned data from multiple sources and ensuring it tells a consistent, credible story across clinical, financial, and operational teams. Even when the data exists, the real hurdle is translating it into clear, compelling insights that demonstrate value — highlighting quality, efficiency and market competitiveness in a way that resonates with payers and supports stronger negotiation outcomes. Q: How has your approach to vendor negotiations shifted over the past couple of years given supply chain pressures? MR: Over the past two years, our approach to vendor negotiations has become more proactive, data-driven and collaborative in response to ongoing supply chain pressures. We engage vendors earlier, use utilization and benchmarking data to guide decisions, and prioritize total value — including reliability and performance — over unit cost alone. n Medicare Advantage uses ASCs as much as traditional Medicare. Here's why that could be an issue By Patsy Newitt M edicare Advantage now covers more than half of all Medicare beneficiaries, and it is built around financial incentives to reduce costs, but it uses ASCs at virtually the same rate as traditional fee-for-service Medicare. at finding, drawn from a KNG Health report commissioned by the Ambulatory Surgery Center Association, is one of the more counterintuitive data points in recent ASC policy research — and one of the most consequential. In 2023, 31.3% of ASC-eligible procedures among MA beneficiaries were performed in ASCs, compared to 31.9% among FFS beneficiaries. In 2022, the figures were 31.6% and 31.7%, respectively. Across two years of data, two program structures with materially different financial incentives produced nearly identical site-of-care outcomes. Why the gap should exist e logic for MA plans to steer aggressively toward ASCs is clear. ASCs cost Medicare an average of 62% of hospital outpatient department rates for the same procedures. MA plans, which operate on fixed per-member payments from CMS, keep the difference when care is delivered more efficiently. Every procedure that moves from an HOPD to an ASC is a margin improvement for the plan. MA enrollment has grown from 37% of Medicare beneficiaries in 2019 to 50% in 2024, a shi that now affects more than 33 million of the 67 million Americans covered by Medicare. e Medicare Hospital Insurance Trust Fund is projected to become insolvent in 2033. e financial pressure to find systemwide savings is not abstract. Yet the utilization numbers show MA plans have not converted their

• Cover