Healthcare is moving into the high value, low cost outpatient setting, and many institutions are focusing more on their ambulatory strategy than in the past.
Here are 100 things to know about ASCs and hospital ambulatory visits.
ASCs by the numbers
The following data is gathered from the March 2017 MedPAC "Report to the Congress: Medicare Payment Policy." Note: the data is for Medicare-certified ASCs only.
1. Number of ASCs in 2016: 5,519
2. The states with the highest concentration of ASCs are:
• Maryland: 5.8 ASCs per 100,000 persons
• Georgia: 3.2 ASCs per 100,000 persons
• Idaho: 3.1 ASCs per 100,000 persons
• Wyoming: 3.1 ASCs per 100,000 persons
• New Jersey: 3.0 ASCs per 100,000 persons
3. Independently owned centers: 73 percent of all ASCs
4. ASCs owned by multisite operators: 27 percent of all ASCs
5. Five ASC procedures where Medicare spends the most:
• Cataract surgery with IOL 1 stage: 18.6 percent of Medicare spending
• Upper GI endoscopy biopsy: 8.2 percent
• Colonoscopy and biopsy: 6.8 percent
• Lesion removal colonoscopy (snare technique): 5.6 percent
• Injection foramen epidural, lumbar and sacral: 4.8 percent
6. Number of single specialty ASCs in 2015: 2,878 (61 percent of all ASCs)
7. Number of multispecialty ASCs: 1,802 (39 percent of ASCs)
8. Number of gastroenterology-driven ASCs: 1,027 (22 percent of ASCs)
9. Number of ophthalmology-driven ASCs: 1,020 (22 percent of ASCs)
10. Number of orthopedic ASCs: 23 (Less than 1 percent of ASCs)
11. Number of pain management, neurology and orthopedics multispecialty ASCs: 221 (5 percent of ASCs)
Factors influencing the growing number of Medicare-certified ASCs
In the MedPAC 2017 report to Congress, the authors outlined the following key trends driving the move from the inpatient hospital setting to the outpatient ASC setting.
12. Changing clinical practice and healthcare technology advancements allow surgeons to perform more procedures in the outpatient setting.
13. ASCs offer greater convenience than hospital outpatient departments, including quick surgical scheduling.
14. Medicare beneficiary coinsurance is lower in ASCs than HOPDs for many procedures.
15. Physicians have more autonomy when performing cases in an ASC than an HOPD, including the ability to "design customized surgical environments" and participate in the specialized staff hiring process.
16. Physician investors receive a share of the ASC facility payment.
17. The ASC scheduling and room turnover is typically more efficient than a hospital setting, allowing physicians to perform a higher volume of procedures in ASCs than hospital outpatient departments, which boosts their professional fee revenue.
18. The U.S. healthcare system could reduce costs by more than $38 billion per year by performing all appropriate cases in the ASC setting, according to a report authored by Healthcare Bluebook, ASCA and HealthSmart. The report estimates ASCs could reduce Medicare costs by $2.3 billion per year.
Community hospital ambulatory visits
The following statistics are based on a Healthcare Cost and Utilization Project report released May 2017. The report gathered data on community hospitals reported in 2014.
19. Number of visits or stays for surgery in the ambulatory setting: 9.9 million (57.8 percent of all surgical visits or stays at community hospitals)
20. Total surgeries: 11.5 million (52.7 percent of all surgeries at community hospitals)
21. Average number of surgeries per visit: 1.2
22. Average length of stay: 0.2 days
23. Ambulatory setting visits by community hospital size according to the number of beds:
• Large: 53.9 percent
• Medium: 26.1 percent
• Small: 20 percent
24. Ambulatory visits at non-federal government owned community hospitals: 12 percent of all visits
25. Ambulatory visits at private nonprofit community hospitals: 77.2 percent of all visits
26. Ambulatory visits at for-profit community hospitals: 8 percent of all visits
27. Surgeries in the ambulatory setting by location and teaching status:
• Rural: 15.2 percent of all surgeries
• Urban nonteaching: 27.1 percent
• Urban teaching: 57.8 percent
28. Payer breakdown for surgical visits in the community hospital ambulatory setting:
• Private insurance: 48.6 percent
• Medicare: 30.8 percent
• Medicaid: 14 percent
• Uninsured: 2 percent
• Other: 4.3 percent
29. The five most common procedures done in the ambulatory setting at community hospitals are:
• Lens and cataract procedures: 1.4 million (12.4 percent of all procedures)
• Muscle, tendon and soft tissue operating room procedures: 755,600 (6.6 percent of all procedures)
• Incision or fusion of a joint, destruction of joint lesion: 607,800 (5.3 percent of all procedures)
• Cholecystectomy and common duct exploration: 577,500 (5 percent of all procedures)
• Excision of semiunar cartilage of knee 509,000 (4.4 percent of all procedures)
30. The most common types of muscle, tendon and soft tissue OR procedures in the ambulatory setting were rotator cuff repair and trigger finger surgery, accounting for 6.6 percent of all outpatient surgeries at community hospitals. The most common types of incision, joint fusion or destruction of joint lesions were knee and shoulder arthroscopies, making up 5.3 percent of outpatient surgeries at community hospitals.
Transactions
The following trends on ASC transactions and multiples are based on figures from the HealthCare Appraisers 2017 ASC Valuation Survey.
31. Prevailing valuation multiples for minority interest in single-specialty ASCs were reported as:
• Twenty-eight percent of respondents: 2 to 3.9 times EBITDA
• Fifty percent of respondents: 4 to 4.9 times EBITDA
• Twenty-two percent of respondents: 5 to 6.9 times EBITDA
32. Prevailing valuation multiples for controlling interest in single-specialty ASCs were reported as:
• Twenty-three percent of respondents: 4 to 5.9 times EBITDA
• Seventy-three percent of respondents: 6 to 7.9 times EBITDA
33. Prevailing valuation multiples for minority interest in multispecialty ASCs were reported as:
• Twenty-five percent of respondents: 2 to 3.9 times EBITDA
• Sixty-three percent of respondents: 4 to 5.9 times EBITDA
• Twelve percent of respondents: 6 to 7.9 times EBITDA
34. Prevailing valuation multiples for controlling interest in a multispecialty ASC were reported as:
• Twenty-five percent of respondents: 4 to 5.9 times EBITDA
• Seventy-five percent of respondents: 7 to 7.9 times EBITDA
35. Half of the respondents use a formula to determine minority interest transactions with new or existing physician investors; another 32 percent obtain an independent fair market value appraisal.
36. Minority interest sale takes three to six months on average for 55 percent of the respondents when dealing with a new physician. However, when selling controlling interest to an ASC, 56 percent say it takes six months to one year to complete the process.
37. Half of the ASC companies responding to HealthCare Appraisers' report sold controlling interest in their ASCs to a hospital or health system. Fitch Ratings predicts hospitals or health systems own about 25 percent to 30 percent of ASCs this year.
38. Forty-eight percent of ASC companies report earnings growth per year is expected to grow 3.1 percent to 6 percent for the first several years after the transaction; 19 percent expect growth exceeding 12 percent.
Quality statistics
Points 39 to 43 are based on data gathered from the March 2017 MedPAC "Report to the Congress: Medicare Payment Policy." Note: the numbers include only Medicare-certified ASCs. Points 44 to 51 are based on fourth quarter 2016 data from the ASC Quality Collaboration.
39. Number of ASC cases with subsequent hospital visits within three days of discharge: 51,146 (1.1 percent of all ASC cases)
40. Number of ASC cases with subsequent hospital visits within seven days of discharge: 96,740 (2 percent of all cases)
41. Multispecialty ASC statistics on subsequent hospital visits:
• Within three days of discharge: 22,348 (1.3 percent of all cases)
• Within seven days of discharge: 41,242 (2.4 percent of all cases)
42. Single specialty ASC statistics on subsequent hospital visits:
• Within three days of discharge: 28,798 (1 percent of all cases)
• Within seven days of discharge: 55,498 (1.8 percent of all cases)
43. Top five single-specialty ASCs with the highest percentage of subsequent visits to the hospital within seven days of surgery:
• Cardiology: 7.9 percent
• Urology: 4 percent
• Pain management: 2.4 percent
• Gastroenterology: 2.1 percent
• Ophthalmology: 1.2 percent
44. Patient fall rate in ASCs: 0.124 per 1,000 admissions
45. Patient burn rate: 0.016 per 1,000 admissions
46. Hospital transfer and admission rate: 0.96 per 1,000 admissions
47. Wrong-site, -side, -patient, -procedure, -implant events: 0.031 per 1,000 admissions
48. Toxic anterior segment syndrome rates: 0.24 per 1,000 admissions
49. Prophylactic IV antibiotic timing: 99 percent
50. Appropriate surgical site hair removal: 94 percent
51. Unplanned anterior vitrectomy for cataract surgery patients: 0.49 percent
Operating statistics
The following ASC operational statistics are based on data from VMG Health's Intellimarker Multi-Specialty ASC Valuation Survey 2017.
Case volume
52. Number of operating rooms per ASC on average: 4.17
53. Number of procedure rooms per ASC on average: 1.89
54. Average annual case volume per ASC: 4,303
55. Average daily average ASC cases per day: 17.2
56. Average annual surgical cases per operating room: 1,094
57. Percentage of cases performed by top two highest volume physicians in a single institution: 28 percent
58. Percentage of cases performed by top five highest volume physicians in a single institution: 52 percent
59. Five procedures with the highest case volume as a percent of total cases in an ASC:
• Gastroenterology: 29 percent
• Ophthalmology: 20 percent
• Orthopedics: 16 percent
• Pain management: 16 percent
• Otolaryngology: 8 percent
Average revenue
60. Net operating revenue: $8.4 million
61. Facility square footage: 15,447
62. Rental rate per square foot: $30.58
63. Rent and occupancy cost per square footage: $39.59
64. Employee salary and wages spend: $1.7 million (21.6 percent of net operating revenue)
65. Occupancy costs: $505,000 (6.1 percent of net operating revenue)
66. Drug and medical supply costs: $1.9 million (23 percent of net operating revenue)
67. Net revenue per case for the five highest revenue generating specialties in ASCs:
• Orthopedics: $3,133
• Otolaryngology: $2,591
• Podiatry: $2,506
• Urology: $2,368
• Obstetrics & gynecology: $2,344
68. Net revenue per case for the five lowest revenue generating specialties in ASCs:
• Gastroenterology: $1,004
• Pain management: $1,074
• Oral surgery: $1,217
• Ophthalmology: $1,434
• Plastic surgery: $1,797
69. EBITDA margins for ASCs by revenue:
• Less than $3 million: 5.4 percent
• $3 million to $4.9 million: 10.4 percent
• $5 million to $6.9 million: 19.9 percent
• $7 million to $8.9 million: 23.7 percent
• Greater than $9 million: 33 percent
Average staffing
70. Full-time nurses per ASC: 15
71. Nurse staff hourly wage: $36.47
72. Nurse staff hours per case: 6.8
73. Full-time tech staff per ASC: 6.7
74. Tech staff hourly wage: $23.69
75. Tech staff hours per case: 3.1
76. Full time administrative staff per ASC: 9.1
77. Administrative staff hourly wage: $26.44
78. Administrative hours per case: 4.4
Revenue cycle
79. Total operating expenses: $6 million (76.2 percent of net operating revenue)
80. Days cash on hand: 37
81. Net accounts receivable: $797,000
82. Accounts receivable days outstanding: 33.2
83. Net working capital: $1.3 million (13.3 percent of revenue)
84. Net working capital less cash: $435,000 (5.3 percent of revenue)
85. Payer mix as a percentage of gross charges:
• Commercial: 56 percent
• Medicare: 27 percent
• Worker's compensation: 10 percent
• Medicaid: 7 percent
• Other: 7 percent
• Self-pay: 5 percent
Hospitals opening or planning ASCs
86. Marlton, N.J.-based Virtua, a nonprofit health system, is seeking New Jersey State Health Planning Board approval to relocate Mount Holly, N.J.-based Virtua Memorial Hospital to a new campus equipped with an ASC in Mount Holly.
87. Weston-based Cleveland Clinic Florida broke ground on Family Health and Ambulatory Surgery Center in Coral Springs, Fla.
88. Warren, Ohio-based Mercy Health hosted a grand opening for its new $14.5 million facility in Warren.
89. Hospital for Special Surgery in New York City plans to open the HSS ASC of Manhattan in June.
90. Los Angeles-based Shriners for Children Medical Center is holding a dedication ceremony for its new facility which features an ASC.
91. Honolulu-based Kaiser Permanente Hawaii opened a 9,444-square-foot ASC at Mapunapuna Medical Office on April 18.
92. New York City-based Lenox Health Greenwich Village plans to open an ASC in the National Maritime Union Building in New York City.
93. Worchester, Mass.-based UMass Memorial Health Care, the largest health system in Massachusetts, has plans to lower costs for consumers through its new ASC in Shrewsbury.
94. Milwaukee-based Aurora Health Care plans to construct a new ASC and medical office building in Greenfield, Wis.
95. Lafayette, Ind.-based Unity Healthcare repurchased ownership of the Unity Surgical Center in Lafayette, Ind., from Indianapolis-based Franciscan Health.
96. Lawrence (Mass.) General Hospital opened a new $56 million surgery center.
97. Fairbanks (Alaska) Memorial Hospital opened a new surgery center in March.
98. New York City-based NYU Langone Medical Center submitted a certificate-of-need application to the state Department of Health for its ASC.
99. West Park Hospital now has ownership stake in Northern Wyoming Surgical Center, both based in Cody, Wyo.
100. Abilene, Texas-based Hendrick Health System opened a surgery center in Brownwood, Texas.
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