Why Avanza’s Bullish on ASCs in the Wake of COVID-19

Dear Colleagues,

Much has been said in recent weeks about the social and business opportunities buried within the COVID-19 crisis. Who hasn’t been on a video conference when someone tried to invoke Sir Winston Chuchill’s quote: “Never let a good crisis go to waste.”

Without a doubt, surgery centers took a big hit when elective procedures were all but banned, but the rewards for doing the right thing are starting to make themselves known. The federal government is ready to open the doors of ASCs, and we urge providers to see the opportunities ahead.

Five Reasons for Optimism

1. A tremendous backlog of elective surgeries awaits ASCs.

Here's some good news: We have no evidence that the demand for elective surgeries has diminished as a result of the COVID-19 crisis. It’s time to start rescheduling all those delayed procedures. In addition, figure out how you can pick up the slack for hospitals with a backlog of procedures, as well as those prioritizing COVID-19 cases.

2. Patients will seek out ASCs for safety and cost savings.

To manage their risk of COVID-19 infection, Avanza anticipates patients will choose ASCs as a safer alternative to hospitals. According to one study, the post-operative surgical site infection rate is six times lower for ASCs than hospital outpatient surgery departments (HOPDs). Another advantage for ASCs: personal financial strain from the pandemic will prompt patients to opt for ASCs as a lower-cost alternative to hospitals.

3. ASCs can easily expand capacity.

By extending operating hours beyond their typical schedule, ASCs can significantly increase surgical capacity without a substantial capital outlay. Generally speaking, ASCs are nimble organizations, able to quickly pivot to accommodate new opportunities and operate more efficiently and cost-effectively than hospitals.

4. Surgeons and payers are embracing ASCs.

Many hospital-based surgeons who received emergency credentials to operate at ASCs are now exploring opportunities to continue their affiliation with ASCs. These recruitment opportunities could strain ASC-hospital relationships and should be handled with care. We also expect ASC-friendly commercial payers will take an even more proactive approach to safely migrating procedures to ASCs. Conversions of HOPDs to ASCs were on the rise before the pandemic, and we expect this trend to continue.

5. CMS will greenlight more ASC procedures based on new evidence of safety, efficiency and cost-effectiveness.

The Centers for Medicare & Medicaid Services (CMS), through its 1135 waiver authority, recently implemented the "Hospital Without Walls" policy. The policy allows ASCs to contract with healthcare systems to provide hospital services or enroll and bill as hospitals during the emergency declaration. Avanza anticipates this move will produce further evidence that ASCs can safely perform higher-acuity Medicare cases. In addition, CMS’s recent willingness to fast-track telehealth and other patient-centered solutions could be a sign it will expand its list of ASC-payable codes/procedures in its next annual update.

From Avanza’s perspective, ASCs are well positioned for a rapid recovery and to be a model for providing high-quality, low-cost care. Consumer- and payer-driven trends favor ASCs, and hospitals are recognizing they need an ASC in their portfolio to accommodate patients and payers looking for a lower acuity, less expensive option for outpatient surgery. This was true before COVID-19 proved our point.

Avanza is Ready to Help

With hands-on experience in surgery centers, hospitals and academic medical centers, Avanza Healthcare Strategies provides strategic guidance focusing on outpatient services. We are uniquely qualified to help you strengthen your bottom line, turn healthcare's changing regulatory environment into strategic opportunities and meet expectations for increased collaboration, better health outcomes and stricter cost containment. We're here to help, with no long-term commitment or equity stake required.

Learn more about Avanza at AvanzaStrategies.com or contact us at [email protected] or 512.479.6700.