Ambulatory surgery centers have certainly become much more popular and widespread in recent years, but that doesn’t mean that their ongoing success is guaranteed. On the contrary, today’s ASCs are still facing many tough challenges as they work to establish their place in America’s health care landscape and build their reputation as cost-effective providers of high quality services. Some of the most difficult issues that ASCs must contend with include:
Problems surrounding reimbursement are most often cited as the biggest operational challenge by ASC administrators. Both Medicare and insurance companies are typically either holding reimbursement rates steady or planning to decrease them, even as the cost of providing services goes up. This can have a particularly significant impact on ASCs, where reimbursement rates for many surgical specialties are already in a state of flux. Many ASCs are working to compensate for uncertainty surrounding reimbursement by concentrating on boosting operational efficiencies, paying particular attention to case costing or diversifying their offerings, but these strategies can still be a major struggle in today’s market.
Industry professionals agree that while volume doesn’t necessarily ensure an ASC’s success, a lack of volume almost certainly ensures its failure. For this reason, ASCs are constantly battling to maintain or increase case volume by searching for new physicians and keeping existing physicians satisfied and motivated to bring new cases.
Getting payors on board
The relationship between ASCs and payors is a critical one, as it can have a huge impact on both reimbursement and volume, but many ASCs still find it challenging to get payors on board with what ASCs are offering. Despite the fact that ASCs can provide higher quality at a lower cost, some payors are still skeptical of that message and are therefore not taking any steps themselves to drive volume to ASCs. This results in situations where payors are paying substantially more for the same procedure performed in the same zip code area by the same physician, with the only difference being the site of service where the procedure took place: a scenario which does not make good business sense for either the payor or the ASC. In an effort to make their message about quality and cost-effectiveness resonate more with payors, ASCs are increasingly sharing valuable cost and outcome data with payors in order to encourage them to drive more volume and provide higher reimbursements.
High deductible health plans
Effective revenue cycle management, particularly when it comes to billing and collections, is vital to ensuring an ASC’s profitability and overall financial health. However, when ASCs must deal with a large volume of high deductible health plans, this can place a major strain on billing and collections efficiency due to the challenge of collecting these higher deductibles and co-insurance from patients upfront. If patients are not able to pay their full cost share, the resulting bad debt can severely impact an ASC’s profitability. In order to avoid this, some ASCs are working with patients through CareCredit or other payment programs to either collect the full deductible upfront or to ensure that a plan is made for payment over a set period of time.
While consolidation within the health care industry can be a useful step towards creating greater efficiencies under a value-based care system, it can nevertheless have a less positive effect on individual ASCs. Specifically, when surgeons become employees of hospital systems, they are no longer able to perform cases at independently owned ASCs, which leads to a drop-off in case volume. Likewise, primary care physicians who join hospital systems are then no longer useful to ASCs as referral sources. Finally, in markets containing both an ASC and a hospital outpatient department, consolidation strongly favors the hospital and reduces cases available to the ASC. In the face of this competition from bigger health systems, many ASCs are working to attract and retain physicians and surgeons by focusing on providing exceptional value to both physicians and patients.
The question of industry consolidation and its impacts on physician recruitment and retention highlights a broader challenge that today’s ASCs are grappling with: the question of staffing in general. ASC administrators are unanimous in their assessment that staffing an ASC is a highly complex undertaking. Many administrators point to the fact that ASCs have matured to the point where they are essentially the same as hospital surgery departments, but without the same level of revenue, and therefore without the same complement of staff to fully support their operations. As a result, ASC staff members must typically fill many roles within the center, and finding such multifunctional specialists is not an easy task.
Regulatory compliance is a major administrative burden, even more so in an environment where regulatory requirements are often in flux. Beyond the already challenging task of keeping a center running at peak operational efficiency, ASCs must also work to stay on top of constantly changing issues such as Quality Net reporting, compounding pharmacies, and reimbursement changes.