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The outlook for the ASC industry looks positive in the coming years, but challenges remain.

According to Becker's ASC Review, in an article written on August 9, 2023- Patsy Newitt writes,

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"Here are four pieces of good news and four pieces of bad news for the ASC industry:

Good news

1. Payers are increasingly pushing procedures to the outpatient setting as cost savings and convenience are enticing patients and insurance companies. UnitedHealthcare's 2023 site-of-service policy, which went into effect April 1, is one effort from payers that could push procedures to the ASC setting.

2. ASC multiples have increased since the pandemic, according to a report by VMG Health, and they have steadily increased over the last five years. In 2022, the median total invested capital to earnings before interest, taxes, depreciation and amortization was 7.9 times; the 25th percentile was 7.4 times and the 75th percentile was 8.0 times.

3. Physicians are seeing the opportunities of ownership stake in an ASC: They can offer ancillary revenue, more autonomy and work-life balance.

"The independent models search for economies of scale and physician leadership critical to long-term sustainability," Joe Peluso, administrator at Aestique Surgery Center in Greensburg, Pa., told Becker's. "Operational risk is distributed across the majority of physician shareholders that can selectively positively impact resources to contain costs and improve overall patient outcomes, as well as the patient and caregiver experience as a pathway for growth."

4. Technological developments, including surgical robots, virtual reality and data analytics, are increasing the ability to perform procedures at ASCs. Technological advancements in automation and EMRs are necessary for many ASCs to access economies of scale. Outlook for the ASC industry looks positive.

Bad news

1. CMS plans to add 26 dental surgical codes to the ASC payable list. ASCA pitched 62 other codes, including total shoulder replacement, but CMS declined to add them. The inability to receive Medicare payments for some standard procedures in ASCs may stifle growth.

2. Additionally, CMS is floating a 3.34 percent conversion factor decrease in its proposed Medicare physician fee schedule for 2024 released July 13. Many physicians are fed up with these continued cuts.

"Continuing to cut physician fee schedule rates drives clinical care across the country towards system-based healthcare," Taif Mukhdomi, MD, interventional pain physician at Columbus, Ohio-based Pain Zero, told Becker's. "It's difficult to name another profession that is faced with compensation cuts multiple times a year. Even physician assistants and nurse practitioners are affected by the 85 percent rule from Medicare.

3. Recruiting and retaining staff is still burdening ASCs nationwide. Many ASCs have to spend a quarter or more of their net operating revenue on employees to stay ahead of shortages, according to a report from VMG Health. Additionally, ASCs in many markets have to compete with the deep pockets of hospitals and travel nurse agencies for staff.

4. Anesthesia costs are skyrocketing and many ASC leaders are concerned that they won't be able to sustain the rising costs as margins sink. ASCs rely on great anesthesiologists and anesthesia group partnerships to perform their procedures, but in some markets independent anesthesiologists are hard to find.

"I worry it reduces the number of ASCs," Michael Chwalek, senior financial analyst at Ambulatory Surgical Centers of America, told Becker's. "I don't see a quick solution to rising anesthesia costs or the stipends to support them. Some existing ASCs won't be able to afford them, and it will discourage the development of new facilities."

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