Major ASC market trends for leaders to know

The ASC industry is changing rapidly, as more cases move from the hospital to the outpatient setting. 

In addition, more health systems are pursuing joint venture partnerships with ASCs to grow their reach and save and manage costs. 

John Peloza, MD, an orthopedic spine surgeon at Midwest Orthopedic and Spine in Chicago, spoke with Becker’s about some of the biggest market trends he’s seeing in the ASC industry, from projected growth to major acquisitions from the last year. 

Dr. Peloza: Market Trends:

  1. The ASC market is growing with a projected compound annual growth rate of 6.02% from 2024 to 2030.
  2. Sixty-five percent of surgical procedures have moved to ASCs, driven by lower costs.

Regulatory changes: 

  1. CMS has been removing procedures from the inpatient only list, enabling more surgeries to be performed in ASCs, including orthopedic, spine and cardiovascular procedures.
  2. Rollback of certificate of need laws in several states can reduce barriers to ASC development.

Acquisitions:

  1. HCA Healthcare/Surgery Ventures acquired two Texas ASCs
  2. HCA Healthcare/Litchfield Hills Surgery Center
  3. Regent Surgical Health acquired Oregon Surgical Institute
  4. Tenet Healthcare/USPI added 57 ASCs in 2024 for a total of 518 ASCs in 37 states
  5. Prime Healthcare/Ascension

Challenges to consolidation:

  1. Regulatory and antitrust laws
  2. Operational integration
  3. Physician autonomy

        – MD control

        – Consistent quality of care

Rising Costs:

  1. Supply chain
  2. Labor

Fragmented nature of the ASC market:

  1. Local and independent players
  2. Economies of scale
  3. Standardizing operations across facilities

The trend to move surgical cases to ASCs will only accelerate in spite of the many challenges.  Because of minimally invasive surgical technologies and techniques, and much better anesthesia and pain management protocols, higher acuity and complex cases can be done in ASCs rather than hospitals. The cost of care in ASCs is markedly less because hospital overhead is astronomical. The best ASCs are single-specialty focused, resulting in better outcomes with fewer complications. The patient experience in an ASC is also much better with more personal attention and convenience.

Healthcare systems and hospitals regard ASCs as a significant threat to their business model. The most profitable segment of their revenue stream is moving to the outpatient environment, leaving them with high-cost, low-revenue chronic disease management. Therefore, they are adapting to this reality.

Healthcare systems/hospitals have several advantages. Their insurance contracts are substantially better than ASCs. Nonprofit systems do not pay income or property taxes, nor do they pay taxes on charitable donations. They also use tax-free municipal bonds to fund expansion. Publicly traded corporations have massive financial assets compared to individual ASCs or ASC companies. They also drive volume discounts on equipment and have more secure supply chains. They can afford to pay higher salaries and benefits for staff. They can offer physicians much better contracts per surgical case and can do joint ventures/ownership deals with surgeons. With a hospital partner, physicians have access to all hospital system resources. Expect acquisitions to surge in the future.

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Claire Wallace