Ambulatory Surgery Centers
Business for Sale Industry Economics
2002 - 2020
2020 - 2026
Operators that offer outpatient surgical and emergency care services make up the Ambulatory Surgery Centers business. Ambulatory surgical centers (ASCs) provide better patient care and quality while lowering healthcare expenditures. ASCs, give a cost-effective option to hospitals that are dealing with scheduling delays, limited operating room capacity, financial challenges, and inefficient operating room turns.
Furthermore, many surgical methods have become less invasive as a result of improvements in medical technology, allowing a considerable number of inpatient operations to be done in outpatient settings. The landscape of the ambulatory surgery center sector has evolved significantly, according to the Ambulatory Surgery Center Association (ASCA), shifting away from physician ownership to include hospital ownership.
Medicare, Medicaid, private insurers, and patients have all benefited from the ASC care model, which has helped them save money on healthcare. According to the ASCA, Medicare saves more than $2.6 billion per year on average because treatments conducted at ASCs are less expensive than those conducted in hospitals. In the five years leading up to 2020, industry revenue is predicted to increase at a 2.7 percent yearly pace to $29.5 billion.
As a consequence of the COVID-19 (coronavirus) pandemic, industry revenue is predicted to fall by 4.8 percent by 2020. Because of the industry’s cost-competitive services and low operating expenses, profit is expected to stay strong during the timeframe. ASCs, for example, often have minimal equipment acquisition costs, but hospitals must perform a significant number of operations, which increases medical equipment prices. Nonetheless, profitability is expected to decline over the next five years, with a further decline in 2020 due to the pandemic-induced reduction in demand.
Over the five years to 2025, industry sales are expected to expand at a 4.0 percent yearly pace to $35.9 billion. Several reasons, including the transfer of surgical services to outpatient care settings and demand for convenient, specialized treatment, are projected to propel market growth throughout the forecast period. Furthermore, cost-conscious consumers wishing to have procedures done at a cheaper cost than those conducted in a hospital are expected to generate income.
ASCs have been obligated to incorporate a productivity factor decrease in their payment adjustments in the last several years. As a result, ASCs will likely continue to develop joint ventures with hospitals and other healthcare systems in order to retain top-quality surgeons and ensure that they have the ability to handle large patient volumes.
Surgical and emergency services are provided on an outpatient basis by operators in the Ambulatory Surgery Centers business. Orthoscopic and cataract surgery are among the treatments performed, as well as providing operations for patients who have suffered catastrophic injuries and needed rapid aid. According to Becker’s Hospital Review, ophthalmology procedures account for 30.0 percent of all ambulatory surgical center (ASC) procedures, followed by orthopedic (15.0 percent), gastroenterology (14.0 percent), and pain management procedures (14.0 percent) (10.0 percent ).
Since the 1970s, ASCs have flooded the healthcare industry as a high-quality, but cost-effective, alternative to inpatient treatment provided by hospitals. Because hospitals often have scheduling delays, long operating room turnover times, and financial constraints that restrict the capacity to acquire new medical equipment, many patients choose to seek treatment from ASCs. In the five years leading up to 2020, industry revenue is predicted to increase at a 2.7 percent yearly pace to $29.5 billion.
The COVID-19 (coronavirus) pandemic, on the other hand, is predicted to stifle growth in 2020, as operators see a significant drop in demand as patients postpone non-essential treatments due to virus worries. Industry revenue is predicted to fall by 4.8 percent in 2020 alone, according to research.
Because many industry operators have seen an increase in procedure volumes while operating costs have stayed low, profit is expected to continue high. Profit, calculated as profits before interest and taxes, will account for 19.7% of revenue in 2020. Despite this, reimbursement constraints have resulted in a profit reduction during the time, with a further shrinkage projected in 2020 as a consequence of declining demand owing to the pandemic.
ASCs are a cost-effective alternative to inpatient healthcare paradigms, notably hospital-based inpatient care. ASCs are tempting to many patients due to restricted operating room availability in hospitals, which has been worsened by hospital consolidation.
The most frequent procedures performed by ASCs, according to the Medicare Payment Advisory Commission (MedPAC), were cataract surgery with intraocular lens insert (stage 1); upper gastrointestinal endoscopy/bioscopy; colonoscopy, and biopsy; lesion removal colonoscopy; and injection foramen epidural (lumbar, sacral). ASC ownership has also changed away from being primarily controlled by doctors.
According to the Ambulatory Surgery Centers Association (ASCA), hospitals control 21.0 percent of all ASCs, although just 3.0 percent are exclusively owned by hospitals. In comparison, about 61.0 percent of ASCs are owned solely by physicians, followed by hospital-physician (16.0 percent), corporate-physician (11.0 percent), and corporate-only (11.0 percent) (7.0 percent ). The introduction of new medical technology has resulted in more operations not being deemed medically invasive, encouraging patient demand for outpatient treatment at ASCs and other facilities, and hospitals have sought either sole- or joint-ownership models of ASCs during the last five years.
The sector, on the other hand, has been subjected to rigorous controls. At the federal and state levels, ASCs are subject to a plethora of regulations. ASCs must provide data on quality metrics to the Centers for Medicare and Medicaid Services in order to obtain payment for delivering treatment to Medicare enrollees (CMS). ASCs must also show that they are in compliance with Medicare’s regulations on a regular basis.
Many ASCs have also voluntarily cooperated with independent accrediting organization’s obligations to appeal to patients on the premise of maintaining the highest standards of care, thereby worsening the industry’s regulatory risk. Nonetheless, according to MedPAC, Medicare payments for industry services have increased dramatically to cover additional operations, allowing ASCs to bill Medicare separately for certain supplementary services.
Overall, compared to hospitals’ outpatient departments (HOPD), the sector delivers more low-cost treatments, prompting many insurers to establish more advantageous reimbursement rates. According to the ASCA, Medicare saves $2.3 billion each year owing to reduced prices for treatments at ASCs compared to HOPDs. Furthermore, ASCs are reimbursed for around 55.0 percent of the amount given to HOPDs, providing incentives for both private and public insurers to increase the number of operations that beneficiaries undergo at ASCs.
Over the last five years, the sector has made an effort to appeal to Medicare recipients. In both HOPD and ASC settings, according to MedPAC, patient demographics differ. ASCs, for example, see Medicare patients mostly aged 65 to 74, with many of these patients needing less sophisticated procedures than HOPDs.
The number of Medicare-certified ASCs climbed from 5,363 in 2013 to 5,532 in 2016, according to MedPAC’s review of data from the Centers for Medicare & Medicaid Services (latest data available). The industry is likely to continue to consolidate, despite the mean number of operating rooms per ASC and the median number of operating rooms being unchanged.
UnitedHealth Group Incorporated’s acquisition of Surgical Care Affiliates Inc., Envision Healthcare Corporation’s merger with AmSurg, and United Surgical Partners International’s joint venture with Tenet Healthcare Corporation are just a few of the major mergers that have occurred in the current period.
Over the five years leading up to 2020, the number of industrial businesses is predicted to expand at a 2.5 percent yearly pace to 4,764 operators. According to HealthCare Appraisers, 38.0 percent of ASCs questioned purchased one to five facilities in 2014, with 24.0 percent acquiring six to ten centers and 10.0 percent acquiring more than 16 centers (latest data available).
Despite this, the market is dominated by businesses with ten or fewer ASCs, illustrating the fragmentation of the business; by 2020, no one operator will possess more than 5.0 percent of all ASC establishments. During this time, acquisition activity has been brisk, since the number of chain centers has exceeded the industry’s general expansion. As a result, during the five years to 2020, employment in the sector is predicted to rise at a 4.8 percent yearly pace to 172,422 jobs.
The Ambulatory Surgery Centers business is predicted to rise over the next five years, rebounding from the brief dip caused by the COVID-19 (coronavirus) pandemic’s drop in patient numbers. Ambulatory surgical centers (ASCs) will likely continue a cost-effective, high-quality treatment model while healthcare providers are under increasing pressure to decrease expenses.
According to an article in Modern Healthcare, outpatient services account for around 65.0 percent of hospital income. As a result, many hospitals are expected to develop joint ventures with ASCs, which will make it more profitable for both ASCs and hospitals to pool their limited resources. According to the Association of American Medical Colleges, demand for doctors is predicted to outnumber supply by 46,000 to 90,000 by 2025, indicating a physician shortage.
As a result, ASCs will likely be able to deliver more outpatient treatments as a result of cooperative collaborations with hospitals, despite the restricted number of doctors available. In the five years leading up to 2025, industry revenue is expected to expand at a 4.0 percent yearly pace to $35.9 billion. During the forecast period, profit is predicted to climb, owing to the introduction of new healthcare technology that will broaden the industry’s spectrum of treatment and more consolidation among lesser enterprises, which will likely result in higher operational efficiency.
In a healthcare system that is intensely focused on managing growing costs, ASCs will most certainly continue to deliver low-cost treatment over the next five years. ASCs often focus on a single specialty, like gastroenterology or ophthalmology, which helps to keep certain expenses, such as medical equipment, low. ASCs will likely find it simpler to comply with quality control systems than a normal hospital inpatient center since they have fewer operating rooms.
Many ASCs are likely to continue voluntarily joining regulatory compliance bodies, such as the ASC Quality Collaboration, in order to show that they deliver high-quality care. The ASC Quality Collaboration establishes quality standards, some of which are recognized by the National Quality Forum (NQF).
ASCs have been obliged to provide quality-of-care data to the Centers for Medicare and Medicaid Services (CMS) in order to obtain Medicare and Medicaid payments since October 2012 ASCs must submit quality measures to the CMS in order for payments to be determined, and the number of quality measures necessary for data collection is likely to increase throughout the forecast period. For example, starting in 2016, ASCs have been required to report statistics on influenza vaccine coverage among healthcare professionals, which is a new obligation in comparison to previous years.
Minor procedures may be conducted in an outpatient context, such as an ASC, for less money than in a hospital inpatient environment, hence the introduction of new healthcare technology is anticipated to stimulate demand for industry services. Patients are projected to want more outpatient treatments, including those delivered at ASCs, as anesthetics improve and less invasive medical methods, such as arthroscopy, become available.
Furthermore, the business will very certainly continue to deliver low-cost services, which will be critical for Medicaid and Medicare to keep prices down. According to a study of Medicare procedure volumes conducted by the Ambulatory Surgery Center Association (ASCA), ASC operations for Medicare beneficiaries are estimated to save $4.0 billion by 2021, up considerably from $2.3 billion in 2013. As a consequence, even the most modest projections for Medicare savings show that ASC treatments may save a lot of money.
Over the next five years, the industry will most likely be characterized by greater consolidation. During the forecast period, consolidation among the top US chains is likely to continue, mostly as a result of bigger ASCs purchasing smaller ASCs. Many hospitals will likely join with ASCs, allowing them to access stronger information technology systems and fulfill expanding patient loads while having to deal with more rigorous reimbursements, thus compounding the industry’s consolidation.
As a result, during the five years to 2025, the number of industrial firms is predicted to grow at a 4.4 percent yearly pace to 5,914 businesses. In addition, employment in the sector is expected to grow at a 4.3 percent annualized pace to 212,966 people during the same time period.
Many ASCs are required to recruit part-time or per-diem personnel in order to keep pay expenses low. Cost-cutting techniques, such as restricting operating hours to two to four days per week or outsourcing administrative functions, such as billing services, will almost certainly continue to be critical to development over the next five years.
The Ambulatory Surgery Centers sector is in its early stages of development. The industry is characterized by faster growth than the broader economy, a rapidly expanding quantity of services, and rising customer acceptance of sector services. The business is also characterized by rapid technical development since operators must keep current with the most up-to-date tools and processes in order to be successful.
Ambulatory surgical centers have seen substantial development in the last five years, owing in part to the business’s capacity to conduct outpatient procedures rather than requiring patients to attend hospitals as inpatients, which has resulted in a rise in demand for the business.
Over the ten years to 2025, industrial value added (IVA), which is used to evaluate an industry’s contribution to the broader economy, is expected to expand at a 3.0% yearly pace. This is quicker than the total economy, which is predicted to increase by 1.9 percent on an annual basis over the next ten years. The industry is characterized by rapid technological development.
Operators are expected to keep up with constantly changing equipment and processes. Employees in the sector are expected to get ongoing training in order to guarantee that the best practices and approaches are used. New procedures like laparoscopic surgery, which uses micro-instruments to create smaller incisions and thereby reduces patient suffering and recovery time, are examples of this.