CAN MEDTECH KEEP UP WITH ASC EXPANSION?

Definitive Healthcare

The shift from inpatient to outpatient care centers has been well-documented over the last few years. Ambulatory surgery centers (ASCs) are often the focal point in this trend, situated at the sweet intersection of cost and convenience, pulling attention from hospital outpatient centers.

Traditionally, acute care hospitals have dominated the surgical arena, the exclusive providers of procedures like total knee replacements and cardiac catheterization – and therefore holding the focus of medical technology (medtech) suppliers.

However, ASCs performed more than half of outpatient surgeries in 2017 and are showing no signs of slowing down. This poses a challenge for medtech companies, as ASCs deal with a unique set of needs distinct from hospital outpatient centers. Surgery centers are reimbursed at lower rates, have lower patient volumes, and are smaller than acute care hospitals. These factors generally mean ASCs are dealing with smaller budgets and have little area for supply storage, preventing them from taking advantage of bulk buying discounts, group bargaining, and other cost-saving measures. To compete in the ASC market, medtech companies are forced to shift their approaches and tailor their offerings when selling to surgery centers.

Why ASCs are attracting payors, patients, and physicians

Despite these disadvantages, surgery centers could be a lucrative new target for medtech companies that are willing to compromise and get innovative with their solutions. In delivering accessible, cost-effective care, ASCs are attracting growing numbers of patients and the attention of payors – including the Centers for Medicare and Medicaid Services (CMS). On average, ASCs offer surgical procedures at costs 35-50 percent less than hospitals, which saved the U.S. healthcare industry roughly $40 billion last year according to a survey from Bain & Company.

In 2017, nearly 5,200 ASCs performed more than 7.9 million procedures that resulted in nearly $4.8 billion in charges, according to Definitive Healthcare’s platform on surgery centers.

To further encourage the outpatient shift and even the playing field, payors are decreasing hospital reimbursements and reducing patient copays at ASCs. Surgery centers have lower operating costs than hospitals, making them more profitable for payors even while charging patients less for surgical procedures.

Patient consumers respond to cost and scheduling accessibility

For patients with low risks of surgical complications, surgery centers offer low-cost procedures and at-home recovery without the hassle of getting to their nearest hospital. More procedures than ever have been removed from the CMS inpatient-only list, including 2019 newcomers like surgical nasal and sinus endoscopies (CPT 31241), implantation or replacement of carotid sinus baroreflex device (CPT 0266T), and anesthesia for extensive spine and spinal cord procedures (CPT 00670).

Currently, the three specialties expected to see the greatest rise in popularity at surgery centers are orthopedic, spinal, and cardiovascular surgery.

Orthopedic procedures are increasingly common across the outpatient market, driven by the popularity of joint replacement procedures – particularly total knee replacements, which were taken off the inpatient-only list in 2018. Total joint replacements are 30-35 percent less expensive at ASCs than hospitals. Comprehensive joint replacement (CJR) procedures accounted for more than $7 billion in U.S. healthcare spending last year, and, with an aging baby boomer population, this number is expected to continue growing. The Bain survey reports that ASCs are predicted to provide nearly 25 percent of all outpatient hip replacements and 30 percent of all outpatient knee replacements by the mid-2020s.

Top 3 Orthopedic Surgical Procedures by Volume at ASCs

1. Knee arthroscopy (HCPCS code 29881): 24,744
2. Knee arthroscopy (HCPCS code 29880): 20,762
3. Wrist endoscopy (HCPCS code 29848): 18,319

Spinal procedures, which have been linked to sudden and fatal complications in higher-risk patients, are also becoming increasingly common in surgery centers. Currently, over 50 active ASCs specialize in spinal surgery across the U.S. according to Definitive Healthcare data. Some of the most profitable and cost-effective procedures at ASCs, surgery centers are anticipated to perform roughly 30 percent of outpatient spinal procedures by the mid-2020s.

Top 3 Spinal Surgical Procedures by Volume at ASCs

1. Cervical spinal disectomy with fusion (HCPCS code 22551): 731
2. Lumbar spinal fusion (HCPCS code 22612): 102
3. Cervical spinal fusion (HCPCS code 22554): 11

Cardiovascular surgeries are still predominantly performed in hospitals, with only 10 percent of all cardio procedures attributed to surgery centers in 2018. However, the Bain survey anticipates that up to 35 percent of all cardiovascular procedures will be done in ASCs by the mid-2020s. This trend has been creeping steadily upward since 2005, when diagnostic cardiology was approved for outpatient departments. Now, angiograms and angioplasties are frequently performed in surgery centers. In 2019 alone, 12 cardiac catheterization procedures were removed from the CMS inpatient-only list.

Top 3 Cardiovascular Surgical Procedures by Volume at ASCs

1. Cardiac catheterization; dialysis (HCPCS code 36902): 7,241
2. Insertion of cardiovascular catheter (HCPCS code 36561): 5,356
3. Removal of cardiovascular catheter  (HCPCS code 36590): 2,265

Physicians want to feel they’re being heard

Physicians seeking a more collaborative environment are also drawn to ASCs over hospitals. Surgery centers offer more flexible scheduling than hospitals, often operating during regular business hours. As smaller care centers, ASCs are generally less bureaucratic than hospital outpatient centers. In the Bain survey, about 70 percent of physicians reported being a primary decision-maker or having direct influence on purchasing decisions, compared to roughly 45 percent of physicians at hospitals.

The growing number of outpatient facilities is contributing to the healthcare staffing shortage, with clinicians either leaving hospitals in favor of surgery centers or splitting their time between multiple affiliated care centers. Ensuring physicians feel valued is one of the keys to retaining talent – something many ASCs can do better than larger hospitals and health systems. Many hospitals and health systems are responding to this trend by acquiring or partnering with surgery centers, limiting network leakage and increasing their pools of available clinicians.

What MedTech suppliers are doing to win the ASC market

Savvy suppliers know that having a physician advocate or opinion leader can be the difference between winning and losing a sale. In surgery centers, where nearly two-thirds of physicians offer input on purchasing decisions, medtech companies need to impress more than just a few decision-makers at the top of a care organization. Currently, more than 2,400 ASCs report hospital or IDN affiliations according to Definitive Healthcare.

Even when working with a surgery center affiliated with a hospital or health system, medtech suppliers must be aware of an ASCs unique needs. Where hospital staff would value operation room coverage and information on available product upgrades, ASCs are more focused on technical support and information on payor reimbursements. Surgery centers see lower patient volumes and staff fewer administrators and clinicians, therefore requiring simpler and less expensive technological solutions than hospital outpatient centers.

Successful medtech suppliers are willing to partner with ASCs to develop simplified, lower-cost products that cater to a facility’s specific needs. This could include offering technical support services, streamlining administrative function, and offering custom services so facility leaders aren’t paying for services they won’t use and will be less likely to take advantage of discounts offered by competing suppliers.