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April 5, 2018

The Benefits and Increasing Prevalence of Ambulatory Surgery Centers

MHT Partners  | Healthcare Investment Bank

The first Ambulatory Surgery Center (“ASC”) was established in the 1970s by two Phoenix, AZ-based physicians seeking to “provide timely, convenient, and comfortable surgical services” to patients.1 Today, as the healthcare industry collectively seeks to drive down costs, improve patient health outcomes and overall satisfaction, ASCs have become an increasingly common option for both outpatient and higher acuity surgical procedures.

Economic efficiency and a focus on value-based care are the foundation of ASC’s value proposition across the continuum of care. Recent data published on the cost effectiveness of ASCs supports the notion that ASCs are often a more cost-effective alternative to hospitals for both patients and employers. A 2016 study from the Ambulatory Surgery Center Association estimates that $37.8 billion is saved annually by utilizing ASCs as opposed to hospital outpatient departments.2   Additionally, advances in technologies have made outpatient care in ASCs an increasingly viable option for complex procedures that have historically been performed in hospital settings. This shift in patient volume to ASCs, among other factors, has resulted in many health systems opening their own ASC, or seeking ways to form partnerships with ASCs owned by physician groups or private investors. These partnerships are forged with the confidence that ASCs can provide an improved cost structure relative to hospitals due to greater staffing flexibility and lower facility overhead.

ASCs stand to benefit from the shift from the traditional fee-for-service reimbursement model to value-based care. Value-based care focuses on providing higher quality patient outcomes at lower costs. ASCs have a narrower scope of processes in a single setting and as a result are better able to focus on the patient experience, often resulting in better patient outcomes. Quality care has long been a focus for ASCs, with industry initiatives promoting quality and safety, such as the ASC Quality Collaboration. Additionally, ASCs are subject to ample regulatory scrutiny from the Centers for Medicare and Medicaid Services including policies related to medical records, tracking diagnoses, and safety within ASCs. Moreover, a key assurance to the quality and safety of ASCs are that they are led and owned by economically incented and thus highly engaged physicians. For perspective, physicians have ownership stakes in approximately 90% of all ASCs.

MHT Partners believes that several factors will continue to drive the increasing preference of ambulatory surgery centers in the healthcare market today. These factors include ASCs’ economic efficiency and an emphasis on value-based care. Patients will continue to seek high-quality, low-cost outpatient procedures, and health systems will seek to embrace the subsequent economic benefit.  With the opportunity to lower costs, drive efficiencies and improve patient care, ASCs will remain an important part of the healthcare conversation in the coming years.

1 “History.” History – Ambulatory Surgery Center Association (ASCA), www.ascassociation.org/aboutus/whatisanasc/history.
2 “Study: Commercial Insurance Cost Savings in Ambulatory Surgery Centers.” Study: Commercial Insurance Cost Savings in Ambulatory Surgery Centers – Advancing Surgical Care, 14 June 2016, www.ascassociation.org/advancingsurgicalcare/reducinghealthcarecosts/costsavings/healthcarebluebookstudy.

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