ASC Industry Awareness
ASC Near-Term Growth Opportunities
Demand for outpatient care continues to be high, which fuels growth opportunities like direct-to-employer contracting, increasing scale, and new patient care initiatives for ASCs, OBSs, OBLs, and OBSSs across the country. ASCs are also getting into higher acuity cases that present further care conveniences for patients and their families. 2024 is turning out to be a big year for ASCs in the New York City metro area, with the state of New York shrinking a hospital in the university system to open funds for an ASC. A new freestanding ASC received its CoN and will be coming soon to Birmingham, Alabama. In the Pacific Northwest, an orthopedic group just opened its second site for ambulatory procedures.
Fighting the Reimbursement Battle
Surgery centers are working hard to counteract reimbursement challenges due to working in an imbalanced third party payment system by optimizing workflow, offering lower-cost higher-yield procedures, and negotiating well with suppliers and payers where feasible. Reimbursements tend to trail migration of even higher acuity procedures to ASCs, which is a continuing obstacle reimbursement experts help ASCs to fight. ASC leaders continue to work toward the day when they are on a level reimbursement playing field with HOPDs. Until then, optimizing scheduling, staff, technology, and revenue cycle will keep ASCs on offense.
Healthcare Industry/Trends
Medicare Dis-Advantage
More than 500,000 Americans will lose their Medicare Advantage (MA) plans as Humana leaves 13 markets. Most of the 10% of Humana’s effected MA subscribers have other options. CVS may also lose the same percentage of its Aetna MA members in 2025. As the MA program enters its annual enrollment period in mid-October, margins are tightening, provider relationships are straining, and subscribers are experiencing difficulty using benefits. MA requires providers to move toward a full-risk arrangement rather than fee-for-service. MA is facing rising costs and earnings pressures as a squeeze in government payments are nudging some insurers to fly to more secure havens. With one-hour nurse home visits for screening tests incurring as average $1,818 per visit, MA is rife with challenges and ripe for change.
Jobs Available in Healthcare for Next Decade
Our continuing projected physician shortage is well documented. However, less well-rehearsed is the shortage of nursing assistants, which is projected to be the greatest US healthcare staff shortage over the next five years, with a deficit of at least 100,000. According to the US Bureau of Labor Statistics, healthcare is the industry with the highest total of projected new jobs through 2033. Leading the pack are home health and personal care aides, with a whopping 820,500 projected. Staffing shortages, an aging demographic, cost containment, and technological capabilities all play a role in that statistic as they do in the continuing push for more virtual care.
Healthcare M&A, Valuation, Revenue Cycle
Providers, Payers, RCMs, and PE Scrutiny
The private equity firm, TPG Inc., and UnitedHealth Group are both interested in acquiring Surgery Partners Inc., a large national healthcare management firm with 180 locations, including ASCs, surgical hospitals, physician practices, and urgent care centers. Elevance Health (previously Anthem) is introducing its new primary care venture, Mosaic Health; as yet another payer widens its scope with private equity backing. Federal agencies and several state legislatures are seeking greater legal oversight of private equity healthcare transactions. While aimed at large payers and providers, oversight rules could be applied to PE agreements with revenue cycle management firms like the recent PE deal for R1 RCM.
Out-of-Network Watch
Late Summer Contract Issues
Just before contracts were to expire September 1, the nation’s largest hospital chain, HCA, and UHC came to multi-year agreements, resolving disputes affecting 38 hospitals. Not all can come to agreements at the nth hour. Most locations of UF Health (University of Florida) will now be out-of-network with UHC. UF cited that UHC was offering commercial rates below inflation, and considerably less than market rates. The results are not just academic. UF is having similar issues with Aetna, which resulted in the cancelation of a life-altering heart procedure for one subscriber. In August, the Superior Court of California for San Francisco County dismissed an antitrust lawsuit against MultiPlan for out-of-network price fixing.
Healthcare Digital Transformation Watch
Pressing Healthcare IT Issues
Strategic Imperatives in the healthcare IT market include use cases for generative AI, enterprise-wide interoperability software, patient engagement technologies, and protecting against cybersecurity threats. The American Telemedicine Association (ATA) is urging CMS to boost telehealth into 2025 so that current funded capacity does not lapse. AI use cases in healthcare are being tested and debated with clinicians hoping AI will reduce administrative workloads while only augmenting treatment decision-making. Eight-one percent of healthcare executives state that they use cloud services for most of their operations, making the means of prioritizing cloud security of vital importance. Health system consolidation poses a significant challenge for cybersecurity, as seen in February’s Change Healthcare breach.
Legal
Breach of Contract Verdict for Texas Ortho Group
From the office of Jon Sistare, JD, Attorney at Law
Despite recent discussion by the Biden Administration to prohibit non-compete agreements, those that are in place are still alive and well as demonstrated recently in a Texas court. On September 3, 2024, Fondren Orthopedic Group won a $25.6 million breach of contract jury verdict in Harris County, Texas, in a case against the large health care facility owner and operator, HCA Healthcare.
The parties had executed a partnership agreement that owns and operates Texas Orthopedic Hospital, a hospital specializing in orthopedic surgery services. The jury in this case found that HCA had broken the non-compete provisions of the contract by opening 10 competing hospitals in the Houston area. In addition, HCA prevented the Fondren group doctors from doing the same by invoking the same non-compete provisions the larger entity was found to have violated.
An attorney for Fondren Orthopedic, the plaintiff in this case said, “HCA had the size, the scale, and the power, and felt they could do what they wanted. The hospital contract with Fondren was for 57 years, and about halfway through, they just decided they would no longer honor the contract. HCA owned 60% of the hospital with Fondren, but 100 percent of their improperly opened competing hospitals and sent business to their fully-owned places.”
At a Glance
Regulators Exchange Better Reimbursements for Debt Relief
NC Hospitals Assisting Low and Middle Income Residents
US Justice Department’s Summer Health Care Fraud Sweep
Brings Criminal Charges against 193 for $1.6B in Losses
Hospital Launches Health Education and Learning High School
Memorial Hermann System Starts First-of-a-Kind Effort
Corporate Attempts in Healthcare Continue to Falter
Several of Walmart and Amazon Efforts are No More
2025 Employer Healthcare Costs Projected to Rise 9%
Inflation, Expensive Specialty Drugs, and Demand Push Costs Up
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