July 14, 2023

ASC Industry Awareness

Narrowing Reimbursements Challenge ASC Growth

Surgery migration from inpatient to outpatient has been a huge boon to surgery centers, but one that clearly affects surgery center strategies for hospitals. This is not the only factor affecting growth, however. Some factors are challenging the rate of growth of surgery centers, primary among them lower reimbursements, which are shrinking compared to costs. Unfortunately, Medicare rates for ASCs are not keeping up with costs, either. Challenged reimbursements are one of the often-cited obstacles to ASC ownership, along with capital investment. Increasing administrative burdens from payers, such as prior authorization, are likewise challenging physician-owned practices.

ASC Potpourri

Like it or despise it, Newsweek has come out with its Best ASCs Survey for 2024. If you want to join in the survey as a surgery center professional, click here. You have until July 18 to enter. Have you ever wondered where your state stands among US states in its pure number of ASCs? Wonder no more. Get the state-by-state ranking here. Even with the financial challenges associated with building and growing ASCs, 21 new ASCs were announced or were in development in June, as have 65 new ASCs since the beginning of 2023. Eight states have been identified where current ASC development activity is particularly strong.


Healthcare Industry/Trends

US Health Spending to Top $7T within Eight Years

A new PWC report predicts that US healthcare costs will rise by 7% in 2024 due to pressure from inflation, rising product costs, and rising wages – all of which are complicated by staffing shortages. For perspective, US medical expenses rose 5.5% in 2022 and 6% in 2023. New FDA-approved cell and gene therapies and medications are hitting the market, which add significantly to costs. In like manner, US health spending is predicted to increase significantly over the next decade. Nationally, health expenditures are predicted to grow at a 5.4% annual clip through 2031, then accounting for approximately 20% of the US economy. Spending in 2022 was $4.4 trillion and is expected to eclipse $7 trillion by 2031.

Why Health Insurance Costs Are Rising

Commercial insurers are expecting to spend more of their subscribers’ premiums on medical care, particularly for older Americans who held off on elective procedures during the pandemic. Humana and UHC are both warning about new costs due to pent up demand for medical procedures, such as joint replacements, especially among older adults who were more at risk for COVID-19. In May, the end of public health emergency signaled that additional costs would be borne by both payers and their subscribers. This is not an insignificant blip. On June 14, Barron’s noted that the Dow dropped .7% and UHC was responsible for all but .1%  of it. As Americans take the brakes off and get the care we have been delaying, our health insurance is likely to get pricier.


Healthcare Digital Transformation Watch

While AI Makes News, Telehealth Makes Quiet Strides Forward

Healthcare AI continues to take the spotlight, and understandably so, however, telehealth is stealthily nudging its way ahead. Sustainable telehealth use will depend upon continued equivalent reimbursement for telehealth and in-person services, since they both require the expertise and time of medical professionals. A late June Epic Research study found that fewer in-person follow-ups are associated with telehealth visits than office visits, indicating that telehealth can be effective without requiring office follow-ups. The American Medical Association is supporting telehealth growth, since 70% of physicians surveyed want to keep providing it to their patients. A near supermajority of US senators are backing an effort that would expand Medicare coverage for telehealth and make COVID-19 telehealth flexibilities permanent.


Healthcare M&A, Valuation, Revenue Cycle

ASC Acquisition Slows as PE Turns to Cardiology

ASC acquisition mania seems to be waning as management companies get a bit more creative in their strategies for growth. High interest rates and potential recession concerns are not stopping healthcare deals, but the midyear outlook shows a modest decline from 2022, which was a huge year for healthcare mergers and acquisitions. Private equity is turning its attention to cardiology after spending the last several years focused on ASCs. UHC/Optum is acquiring home care company, Amedisys, for $3.3 billion, to make gains in the post-acute space. Amazon, CVS, and Google are also making significant healthcare moves in 2023. See here for 13 additional June healthcare mergers making news.


Out-of-Network Watch

Standoff and Resolution Season

Anthem patients of Mercy Health, one of the largest healthcare systems in Ohio and Kentucky with 23 hospitals and hundreds of clinics, will find themselves out-of-network at the end of the month. Anthem and Mercy Health are in an all too familiar standoff, unable to reach contractual agreement. Fifteen thousand patients are being affected as Conway Regional Health System in Arkansas went out-of-network with UHC on July 1. The two are still negotiating, but Conway says UHC is not offering competitive rates. Anthem and Nationwide Children’s Hospital in Columbus, Ohio were able to come to terms on Anthem’s Medicaid coverage. Louisville’s large Norton Healthcare and Cigna have also resolved a standoff that stood to saddle over 10,000 patients with further payment concerns.



Biden Administration Healthcare Cost Proposals

   From the office of Jon Sistare, JD, Attorney at Law

The Biden administration will announce steps it is taking to help lower health care costs, including the targeting of so-called junk insurance plans and surprise medical bills.

The administration will propose rules that would close loopholes on insurance plans that often provide reduced coverage, including undoing Trump administration rules on short-term policies. Those plans provide cheaper alternatives but critics say they leave consumers lacking comprehensive coverage and at risk for high bills in a medical emergency.

The administration will also release guidance intended to prevent providers from evading billing regulations by contracting with hospitals defined as out-of-network.

Under the proposed rule, short-term plans would be limited to three months with a one-month renewal period, a reversal from the previous administration allowing plans that lasted as long as three years. The rule also aims to increase transparency for consumers.

Companies would be required to disclose if plans charge more for preexisting conditions, and whether comprehensive coverage is actually offered. The measures still must go through a rulemaking process and likely will be finalized later this year, according to a senior administration official.


At a Glance

Do Younger or Older Doctors Get Better Results?
More a Function of Staying Up-to-Date and Seeing Many Patients

Eli Lily Overtakes United Health Group
Is Now the World’s Largest Healthcare Industry Firm

Senators Press Medicare Advantage Insurers
Demand Documentation on How UHC, Humana, and Aetna Deny Claims

Tennessee Hand Surgeon Shot and Killed Patient
29-Year-Old Man Charged in Campbell Clinic Attack

AAOS Renews Call to Protect Healthcare Workers
Needs to Be Addressed through Policy and Practice Changes


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