Your Primer to Healthcare Mergers and Acquisitions

5 Reasons ASCs Are Dominating The Healthcare Marketplace

Nov 21, 2017

by Hilsman Knight

By Hilsman Knight, Managing Director

Volume 4 Issue 24, November 21, 2017 

Ambulatory Surgery Centers (ASCs) have rapidly become an preferred option for outpatient procedure services. As a result, the procedures that had been traditionally preformed in hospital settings have been transitioning more to the ASC model and previously designated inpatient procedures are now classified as outpatient procedures. Not only has this has led to more options for patients, but also positive patient outcomes and an increased quality of care. As of 2017, the number of ASCs exceeded 5,200 facilities in the U.S. and trends indicate that this number will continue to grow. Here are five reasons ASCs are the future of healthcare.

  • Synergies. Hospital outpatient departments (HOPDs) are at a disadvantage because they cannot screen patients prior to admittance. Many ACSs have some component of physician ownership. This allows ASCs the ability to self-select who is a right candidate for their ASC. If a patient is too high risk, the procedure can be taken to the HOPD. The ability for the physician to dictate the patient pathway is advantageous to all parties involved in the process.
  • Marketplace. No one wants to go to the hospital. Now more than ever, healthcare consumers are wising up and avoiding the hospital environment like the plague. Consumers in favor of faster, safer options are having elective procedures done in ASCs. By going to have a surgery done in an ASC, the patient wins by staying healthier and typically will see a reduction in their recovery time. Readmittance, which is a constant struggle for hospitals, becomes a distant concern with the ASC model.
  • Affordable Care. In January 2017, United Health’s Optum purchased Surgical Care Affiliates in a cash and stock deal for $2.3 billion. This acquisition show that Insurers understand that these facilities provide much lower means of costs than outpatient hospital alternative.
  • Reimbursement. The entire healthcare marketplace is not only innovating to accommodate patients but also to cost containment measures applied by insures. Many studies have shown that Medicare cost savings are achieved with the ASC option. ACSs are reimbursed at lower rates than HOPDs. The lower reimbursement equates to about 58% of what Medicare reimburses an HOPD for the same procedure. Over the years this has led to billions of dollars being saved on Medicare patients.
  • Technology. Technology is playing an important role in the evolution of ASCs. Improvements and advancements in telehealth will allow ASCs to continue to develop and utilize services such as laboratory and imaging with more cost-effective means. Advantages will continue to grow with scale, further lowing costs for ASCs.

As the controversy around affordable healthcare and tax reform continues to be at forefront of healthcare discussions, ASCs will be the option for consumers interested in alternatives to hospital care. The ASC model is sustainable long term and the opportunity for investors will continue to grow as the ASC model develops.

Hilsman Knight

Hilsman Knight CM&AA

Managing Director

Hilsman's career has been focused on facilitating M+A transactions in the healthcare industry. He has successfully led business owners through a transition of their business and has a comprehensive understanding of the financial and strategic buyers in the healthcare marketplace. In his previous position with CKS Advisors, he worked with physician practices, ambulatory surgery centers, and retail healthcare businesses. As a Managing Director at VERTESS, Hilsman helps healthcare business owners achieve their objectives and maximize their value in transactions.

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