Eyeing the Financial Landscape: ASC Finance Experts Offer Advice on Economy

“You could make the case that the ASC industry is in a period of its own contraction,” Fox says. “We are seeing ASCs going out of business; in some centers, case volumes are lower than projected; credit is becoming harder to secure, and the government is pushing to cut reimbursements. The ASC industry has had many years of solid growth and excellent financial results. In any industry, it is a natural trend to have periods of change or what I have called contraction. So how does the industry prepare? It may be somewhat late to prepare — respond may be a better term.”

ASC teams need to take a hard look at the core operations of their centers, Fox adds.

People may choose not to have an elective procedure if they are unsure about the economy and their job security, warns Mark Babin, district sales manager for CIT Healthcare. Many centers, however, offer procedures that are necessary overall, and provided the patient has insurance, will be paid for regardless of the national economic picture, Babin says.

“CMS (Centers for Medicare & Medicaid Services) is systematically introducing the new rates as a percentage of hospital charges over the next four years,” Babin adds. “This gives an existing surgery center the opportunity to act accordingly to ensure they will be able to succeed with the projected changes. Since these are Medicare patients, the center needs to clearly understand the percentage of Medicare patients and what affect the changes will have on the other payors in their market (how the other insurance companies follow Medicare guidance).”

ASC teams should work through these numbers based on their case mix to have a clear picture of what the future holds, and some centers may need to look at syndicating to new physicians, some with different specialties, Babin notes.

“Operational changes may need to be made to ensure the center is running as efficiently as possible,” he adds. “All centers should have open communications with the payors in the market to confirm payment rates so there are no surprises.”

ASCs and other specialized facilities will be under additional scrutiny if general acute care hospitals continue to lose their best patients (in terms of reimbursement) to physician-owned facilities, says Brian Morris, managing director of CapitalSource’s healthcare credit group.

“Again, in the long term those who decide to affiliate rather than enter into adversarial relationships may be better prepared for economic downturns, shifts in regulatory policy and reimbursement cuts,” Morris says.

Advice From the Professionals

In order to survive financially, ASCs may need to adjust their specialty mix to better focus on more potentially-profitable areas, Shapiro says. Solid internal management is critical and it is wise to have a good business manager or book manager to oversee cost containment, receivables and billing management.

“Without having this person, an ASC may have to rely solely on a nurse manager to handle these items, which can be problematic,” Shapiro says.

For owners of new centers to get a good financial foothold, it is

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