This Week in Surgery Centers: The Latest ASC Market Trends from Hospital Leaders 2024

Ep. 95: Joan Dentler – The Latest ASC Market Trends from Hospital Leaders

Here’s what to expect on this week’s episode. 🎙️

🎙 Avanza Healthcare Strategies is about to release its 6th Annual Hospital Leadership ASC Survey, which it designed to help the industry better understand hospitals’ intentions regarding ASC development and partnership.

As we look to 2025, Joan Denter, Founder, joins us this week to discuss this year’s results. A few highlights:

• 57% of hospitals now own 2+ ASCs, up from 47% in 2023.

• 70% of hospitals allow employed physicians to invest, a significant jump from previous years.

• 90% of hospitals plan to grow their ASC portfolios, up from 70% last year.

• 53% of hospitals say an ASC is required for recruiting surgeons. Another 40% say it’s a helpful advantage.

• Only 5% of hospitals now use third-party ASC management (down from 23% in 2019).

Top Reasons for Growth?

1️⃣ Increasing surgical capacity

2️⃣ Enhancing physician relationships (a new top priority!)

3️⃣ Responding to consumer-driven trends

Listen to the full episode for even more takeaways!

Episode Transcript

[00:00:00] Welcome to this week in Surgery Centers. If you are in the ASC industry, then you are in the right place every week. We’ll start the episode off by sharing an interesting conversation we had with our featured guest, and then we’ll close the episode by recapping the latest news impacting surgery centers.

We’re excited to share with you what we have, so let’s get started and see what the industry’s been up to.

Erica: Hi everyone. I hope you all had a wonderful Thanksgiving. Here’s what you can expect on this week’s episode. This week, our host Nick Latz sits down with Joan Dentler, founder of Avanza Healthcare Strategies, to explore the insights from their sixth annual hospital leadership ASC survey. Together they break down the survey results uncovering key trends in ASC ownership, the growing interest from hospitals and health systems, the equity dynamics, and the role of third party management companies.

Erica: And the best part is that all of these [00:01:00] insights are backed by the data that Joan and her team have aggregated and analyzed. So the takeaways are equal parts, interesting and meaningful. And after Nick’s conversation with Joan, we will switch to our data and insight segment. So HST released our annual state of the industry report in September, which analyzed client data from 590 surgery centers.

Erica: So today I’ll share with you the numbers we were able to put together regarding pre authorization rates and insurance verification rates. And we’ll look at how those numbers compared to 2023. Hope everyone enjoys the episode and here’s what’s going on this week in surgery centers.

Nick: Joan, welcome back to the show.

Joan: Thanks Nick. It’s good to be back.

Nick: Excited for this conversation, Joan, because we’ve had a couple of these conversations in years past around your survey and our view here at HST is That the survey you guys do with health and hospital [00:02:00] leadership around all things ASC is one of the best pieces of thought leadership that we see published, year in and year out across ASC space.

Nick: So super excited to dig in with you here. For our listeners that maybe haven’t had a chance to join us in years past. Can you give the audience a little bit of an overview of Avanza and the annual survey that you do?

Joan: Sure. Avanza is a healthcare advisory firm. Primarily focusing in the ambulatory surgery center space, though we also work in other outpatient service lines.

Joan: We’ve been in existence since 2007 and a few years back we had been looking for information on where hospitals were when it came to surgery centers. We obviously were getting calls from hospitals and health systems who wanted help with developing surgery centers, but we couldn’t find any data about that sector.

Joan: So in [00:03:00] 2019 we decided to put together our own survey of hospital and health system leaders to look at. Just several different areas of interest around ambulatory surgery, and we’ve done it every year since then, so we’ve compiled quite a bit of data and are able to see some great trends now developing, which is fun.

Joan: We do the survey every year. We usually have it. Completed towards the end of the year and release it on our website, on our social media, and then obviously places like this, which we’re excited. This is the the first time we’ve actually released any of the data from this year.

Nick: Fantastic. And we’re excited to see a little bit of a sneak peek on some of the data for 2024.

Nick: It sounds like this is going to be the sixth annual survey you’ve done. Is that right?

Joan: That’s correct. That’s correct. We even did one during COVID. Which was quite interesting. So [00:04:00] yes,

Nick: staying consistent. Okay. And can you remind our audience in terms of the the folks that you guys surveyed and the methodology that you use to compile the data, how have you approached that?

Nick: Has it been? Has it been similar to years past?

Joan: Yeah. We work with firm health leaders which is well known in the hospital and health system world. And we work with them to actually perform the survey so that it’s unbiased and objective. We aren’t putting in our own thoughts in here. We ask that they survey primarily c-suite individuals with hospitals and health systems.

Joan: And that, that is the audience that responds every year or the actual decision makers, either operational people, clinical people, or financial leadership. And most, most all of whom are in the C suite of health systems. We also request that they look for larger organizations and that’s really because.

Joan: We’ve learned that smaller hospitals and [00:05:00] health systems sometimes don’t, aren’t playing in the ASC space quite as much as the large organizations are. Every year, even though we tell them we don’t care about this, it turns out that the data pretty much comes 50 50 from not for profit hospitals and health systems or profit hospitals and health systems.

Joan: And we also require that it. It’s geographically pretty much equal from all the sectors of the United States. So it’s just United States, but we’ve got pretty much somebody from every state who are participating in the survey.

Nick: Fantastic. So the respondents are executives of hospitals and health systems.

Nick: Their questions are largely around ASC strategy and approach. So let’s dig in and peel back the curtain on some of the sneak peeks. So as we look at ASC ownership trends, that’s, what’s been one of the great things about your survey every year. So you can see how this changes every year.

Nick: What are you seeing in terms of ownership trends? of A. [00:06:00] S. C. S. In this latest set of data.

Joan: One thing that we see that’s pretty interesting this year is more than half about 57 percent of the hospitals and health systems that responded have two or more A. S. C. S. That’s up just looking back one year.

Joan: That’s up. 2023. It was 47%. So it’s grown every year of hospitals and health systems that not just have one ASC, but have two or more. And out of those, we had several that actually had five or more ASCs within their network. So we’re really seeing that these and, our takeaway from that is it’s, These aren’t rare anymore.

Joan: They’re definitely something that hospitals are realizing they’re going to need in almost all of their markets. We’re also seeing that they are continuing to allow employed physicians to invest. And that’s jumped up a lot this year from previous years. It’s always seen. [00:07:00] stuck around 50 percent had would allow physicians who were employed by the health system to also invest in ASCs this year, it jumped up to seven out of 10 are allowing employed physicians to invest.

Joan: So that’s been one of the biggest changes that we’ve seen in the ownership structure in the 2024 survey.

Nick: Okay. And I want to dig into that ownership structure in just a second here. But cross the 50 percent threshold in 2024. So that’s a big milestone. Do you have any indications into looking out into future years in terms of continued level of investment interest in health systems and ASCs going forward?

Joan: We see no reason that’s going to slow down. Like I said when we’re looking at the data this year and we’re seeing quite a few of the hospitals and health systems having five or more that just tells us that we’re really seeing ambulatory surgery centers as [00:08:00] replacing outpatient surgery at the hospital in the main hospital.

Joan: And they’re really trying to push it out more and more into the other markets that they’re serving as opposed to just where the mothership of the hospital health system tend to be. We don’t have a real glimpse of where it’s gonna be. What we are seeing that when we ask the question if, what’s your, what are your plans for future growth?

Joan: We’re also seeing ex seven out of 10. Was last year’s a number that said a percentage that we’re going to do future growth this year. It’s nine out of 10 have said that they are going to be continuing to grow their ASE portfolios in the future. So yeah, nothing but growth

Nick: And that’s a good data point there.

Nick: To your point, we don’t know the exact percentage in future years, but the investment plans are at least higher. And so that, that seems like that may indicate, Hey, we expect the growth to be just as good or potentially [00:09:00] even maybe. Accelerate based on that,

Joan: right? And since we are seeing so much activity, we didn’t really address this in the survey.

Joan: So this is just a little editorial comment on my part. But since we’re seeing so much movement in the C. O. N. Landscape in a lot of states where they’re doing away with the C. O. N. Or they’re making the C. O. N. A lot easier to obtain. We really don’t see any reason why this won’t continue to grow.

Nick: Got it.

Nick: Okay. The reasons I know part of what you dig into are the reasons for continued ASC growth and ownership. What are you seeing in terms of trends for reasons across health systems?

Joan: This one’s. The number one reason has stayed the same for the last two or three years, which is interesting, which is to increase surgical capacity.

Joan: That, that seems to be very clearly what they’re telling us is why they’re looking at ASCs. But right behind that this year, very closely behind it and up significantly from the years [00:10:00] past were to enhance physician relationships. So we are seeing that there are that to have the physicians happy is a big driver.

Joan: We’re also seeing a response to consumer driven trends. So they’re telling us that the consumers and the physicians are the two groups that are really set of wanting to see this happen. The other three answers that came in pretty close to those other three at the very top were reducing costs pressures from payers and preventing surgeons from moving cases, which I think in the past was always, it was usually the number one reason was physicians were threatening to lose case move cases out of the system.

Joan: That’s not quite the number one reason anymore, but it’s still a concern of hospital leaders.

Nick: Yeah, that’s super interesting. And the reason number two you said was enhancing the overall position relationship, right? You’d mentioned before that another data point is around more employed [00:11:00] positions being offered equity interests in these ASCs.

Nick: Do you think that’s a big piece of this? Physician relationship bucket.

Joan: It definitely. When you, when a health, a hospital or health system is opening an ASE and they are treating the employed physicians different from the unemployed physicians or the non employed physicians that can cause all kinds of issues within the medical staff.

Joan: And so we’re really, again, seeing those two issues, increasing physician, employed physician investment. And the idea that we’re, they’re trying to enhance those relationships. I, I tell surgeons often, they really are in the driver’s seat when it comes to pushing a hospital to develop an ASC.

Nick: Yeah. And physician recruitment is always so important and top of mind for health systems,

Joan: right?

Nick: I’ve got to imagine it helps. Not just from the upsetting the apple cart of existing employees, but actually going out there and recruiting new positions, I would think.

Joan: And that’s a new question actually [00:12:00] that we added this year, Nick, that really came from a lot of our clients telling us this.

Joan: that they were learning that if they didn’t have an ASC, they could not physician, they could not recruit the surgical specialties like they would like. And so we actually asked that question for the first time in 2024. Ask him if not having an ASC was hurting. Their their physician recruitment, we had 53%, which is pretty incredible number of the respondents say that having an ASC was requirement for their surgeons their surgeon candidates to come.

Joan: If they did not have an ASC, or if they didn’t plan to open an ASC within the. First 12 to 24 months of a physician being recruited, the physicians were looking elsewhere. And then another 40 percent said that it was helpful in their recruitment. So that’s 93 percent of the hospitals and health systems saying that having an ASC [00:13:00] impacted their physician recruitment.

Nick: Yeah. It sounds like there’s a there on the recruitment side for sure.

Joan: Definitely.

Nick: Okay, great. Wanted to ask you, Joan, shift gears a little bit and ask you about the management of these ASCs, the management of ASCs that are part of health systems and hospitals. What conclusions or data were you able to get around the trending of third party management?

Joan: This was a question that we have asked this one. We have asked every year. That’s what’s again, making this a little more fun now that we have this many years of surveys. And we were asking it because again, we were hearing from our clients we’re not sure if we need a management company, a third party to manage our centers or not.

Joan: Yeah. In 2019, 23 percent of the hospital’s leaders that we surveyed said that they did use third party management. They wanted third party management. In 2024, that has dropped [00:14:00] 5%.

Nick: Wow.

Joan: It is steadily been decreasing every year. And this year dropping to 5 percent is pretty pretty telling.

Joan: And I think that’s something that we’re seeing anecdotally, but it’s interesting to have the data to show that in your listeners can, like I said, look at our previous surveys and just see that number dropping. And if people are interested, the majority of the ASEs that we surveyed this year use what we refer to is internal management.

Joan: And that means basically having your administrator, your business office manager, and your medical director and your board run the center. So there isn’t any sort of outside third party at all involved in the management. They’re running much more like small businesses. Which is what they pretty much are.

Joan: They just happen to have ownership by hospital or health system.

Nick: Yep. Yep. And the 5 [00:15:00] percent is one data point that surprised me a little bit from this year, that’s lower than I would have expected in your opinion, what’s driving the decline And third party management of these

Joan: ASCs. What, again, and this is more anecdotal because we haven’t asked the why on this so much as much, but I think what we’re seeing is the value proposition just isn’t there for a lot of the hospitals and health systems and physicians.

Joan: It’s what are we paying for? There are a lot of groups out there that are providing. Services like billing and there’s, they’re really strong it’s products out there as HST like HST that there’s really not the need for the third party manager. There was. Back when I got into this field in 2000, the late, I actually got into ASEs in the late nineties and they’re almost that all the ASEs were run by management companies.

Joan: So I think it’s really the growth of [00:16:00] technology, the growth of really sophisticated vendors that are allowing this internal management to really thrive.

Nick: And you mentioned the internal management teams. Can you give us a sense of what’s maybe the typical composition of, internal management team of a health system with, call it five or more ASCs.

Nick: What does that group look like? Are you seeing the head of ASC is a, as a more common role in these health systems?

Joan: In a lot of the health systems, yeah, what we’re seeing is either a VP of ambulatory and who is over all the ambulatory for the system, including the ASCs. We’re also seeing some of the health systems that have five or more ASCs hiring somebody internal who will not manage the ASCs, but basically be the hospital representative to the ASCs and allow for things like negotiating contracts.

Joan: So there’s some [00:17:00] economies of scale for all the ASCs that have hospital, Ownership from one hospital or health system. Maybe you’re able to negotiate better contracts with vendors for all of their ASCs. So it’s more standardization within the hospital and health system. So those are the things that this person, whether it’s an executive director over ambulatory surgery or whether it’s a, we’ve seen all different types of titles for that role that individual, or maybe it’s a couple of individuals that form a committee that protect basically the hospital’s investment in these ASCs and make, making sure that the brand of the hospital is staying high quality.

Joan: High quality care within the ASC. We really are seeing a lot of people who are moving from the management company world into being employed by hospitals to run their ASC division. And I say that I don’t see it really any different [00:18:00] than a hospital having a director over radiology or a director over lab or a director over, some other aspect of the hospital.

Joan: The ambulatory surgery centers represent a lot of revenue to the hospitals as well. Having, investing in those positions makes total sense. So there really a lot of times it’s not a reason to have that, those positions and an outside management company. It’s double dipping.

Nick: Gotcha. If you were An ASC management company and you were interested in getting more health system business.

Nick: What would you be thinking about doing differently?

Joan: I would be thinking about really fine tuning the value proposition. What whatever percentage fee you are charging or flat fee that you’re charging or for whatever percentage of equity that you are requiring what are you doing for that the Or the hospital and health system and physician partners, the board of ASC can’t go out and just buy in the marketplace by [00:19:00] itself.

Joan: What we’re seeing is the management companies that are thriving are the ones that do provide. High value for that. They aren’t just, saying, showing up for a board meeting and handing out distribution checks. They’ve they have great relationships with vendors. They have great relationships with payers.

Joan: They really do provide a lot of value for that fee. So I would say that’s the biggest question is what is the value you’re providing for that fee?

Nick: Okay. So we’ve talked about a lot of data around ASC expansion as a trend in health systems and that service line certainly seems to be increasing and will increase going forward.

Nick: What about growth plans for other service lines across health systems? Are you seeing any data there?

Joan: Yeah, we really are. And that’s been interesting as well, because like I said, at these hospitals and health systems that have a vice president of ambulatory all of these services are falling under there and they’re looking to move things like [00:20:00] imaging is the big one.

Joan: We did ask the question this year, what others. ambulatory service lines. Are you looking at moving outside of the hospital into a more outpatient, whether it be an ambulatory care center or an outpatient services center that we’re seeing where it’s an M. O. B. combined with a lot of services and imaging came in at 63 percent and we’re seeing that ourselves with a lot of our clients.

Joan: Emergency services and this kind of varies state to state based on some of the rules. We’re seeing lab oncology infusion. We have centers that are putting surgery with a breast center with an infusion center with an, with imaging. So it’s a one stop shop. So I would say pretty much all of the services that that can be done within that 24 hour.

Joan: window where the patients are able to go home, not spend the night in the [00:21:00] hospital. We’re really seeing the hospitals trying to make those more patient friendly and group them together so that they can, like I said, at the base of an M O B as opposed to having a Starbucks or maybe in addition to having a Starbucks, you have all of those services in one place.

Joan: So the patient just can go from one service to the next.

Nick: Got it. Okay. In terms of the 2024 report, Joan seems like you’re putting the final touches on there and then it’ll be distributed more broadly. Where can your, the audience go to find that report when it gets published?

Joan: Like I said, we always put the the final, the full report up on our website, which is avanzastrategies.

Joan: com. And you can get the reports from all the years up there. So you can do your own slicing and dicing of the data, however you would which we get a lot of requests for people for that. Also we will be putting it out on our LinkedIn page. We have a very active LinkedIn page at [00:22:00] avanza.

Joan: Healthcare strategies. There we also will be emailing out to all of our we have a mailing list of about 10, 000 people, hospitals, health systems, attorneys vendors to those spaces. So we’ll be sending that out to them in an e blast. It’ll be out there. And we often get a lot of calls from media who want to do things like this to talk to us about it.

Joan: So I’m sure there will also be some things in some of the publications that everybody’s familiar with in both the ASC space and the hospital and health system space.

Nick: Fantastic. We’ll also incorporate a link within our show notes here. Great. When it gets published. Final question for you, Joan. We do this every week with our guests.

Nick: What is one thing our listeners can do this week to improve their surgery centers?

Joan: Thing that I would just say is we just had an election. It’s changing as we speak. We just got a proposed name of the head of CMS. I think, if there’s one thing that [00:23:00] will probably come to fruition between a a drive for lowering costs and a a friendly Senate to this is going to be site neutrality.

Joan: And so I would say the one thing that everybody should be doing is really paying attention to the news. Because I think that and getting ready for the fact that hospitals and ASCs will no longer have this big variance between how much they charge for. outpatient surgery and that can be both good and bad for both hospitals and ASCs.

Joan: It’s going to change the landscape a lot. So I think just really staying abreast of that because I think it’s been put in many bills and that haven’t passed up to this point. So we’re assuming it’s probably going to be one of the first things in January. So it’s not this week, but I would say in the coming weeks, get ready.

Joan: It’s coming.

Nick: Yeah, that’s great insight and certainly something that everybody should be thinking about. Joan, thanks so much for joining us [00:24:00] again this week and look forward to seeing the full report when it comes out.

Joan: Thank you so much, Nick. We appreciate it.

Erica: HSC Pathways released our annual state of the industry report this past September, highlighting best practices, key process steps, and KPIs for every step of the patient journey and for nearly every recurring administrative duty. Most Importantly, using our own unique data set from our clients, we were able to extract data points so that anyone in the industry could compare themselves to their peers.

Erica: Two quick disclaimers. We only pulled data from clients who gave us permission and we omitted any extreme outliers. So today we’re going to take a look at pre authorization rates and insurance verification rates. So let’s start with pre auth. On average, only 24 percent of ASCs completed pre authorization when it was required.

Erica: While that number may seem low and It is extremely low. It’s actually a 3 percent improvement from 2023 when only [00:25:00] 21 percent of cases achieved pre auth that required it. To get to this number, Will Evans, our data analyst, took the distinct count of visits with completed pre auths and divided that by the total distinct count of visits.

Erica: Any cases marked as NR are not required were excluded from both the numerator and the denominator, which just made sure that the data focused solely on the cases where pre auth was actually applicable. So why does this matter for ASCs? When pre authorizations aren’t completed, it can lead to delays in patient care, scheduling issues, claim denials, all of which impact both revenue and patient satisfaction.

Erica: Making sure that cases are preauthorized not only improves cash flow, but also helps operating rooms run smoothly and reduces last minute cancellations. Before I get into tips to improve your pre author rates, let’s look at insurance verification in 2024, only 78 percent of cases completed insurance [00:26:00] verification, which again, while low is a 2 percent increase from 2023.

Erica: And to find that rate, Will Evans divided the distinct count of visits with documented insurance by the total distinct count of visits. This calculation provides a clear view of the proportion of patients with insurance coverage for their procedures. And the same concerns arise as with the low pre auth rates.

Erica: If you’re not verifying insurance for every patient, you’ve really opened yourself up to a whole slew of issues, delayed payments, denials, patient surprises, and incomplete insurance verification is one of the leading causes of claim denials and appeals. So this is absolutely something you want to pay close attention to and make sure you’re making continual improvements to.

Erica: Okay, so if you’re not seeing the success that you’d like to, or maybe it’s just consuming so much of your staff’s time to be able to make sure all the pre auth paperwork finalized and making sure that you’re verifying insurance [00:27:00] multiple times which is totally understandable.

Erica: Here are a few tips that will help, you in both scenarios.

Erica: First, you really want to identify trends. So are there specific procedures or payers that often fall through the cracks? Do pre offs or verifications tend to slip during a particular time of day or week? Conducting monthly reviews can help you spot patterns and address Procedural gaps before they become a bigger issue.

Erica: So if you don’t have that, the analysis part of it, it’s going to be nearly impossible to be effective in starting somewhere. So it’s definitely worth putting in the time of identifying any trends that you can next, no surprise here, but you really want to focus on communication. So a major barrier is often just a disconnect between your front office scheduling team, the physician office, and your billing staff.

Erica: So you could do quick daily huddles, or ideally, real time communication tools can help make sure pre auth needs and insurance verification issues are addressed [00:28:00] promptly. Establishing workflows to flag missing information before the patient arrives can also prevent last minute complications. And also just make sure, if your staff is limited, if you are running on a lean team Using these kind of communication tools and clearinghouse tools, which we’ll get to can just save your team a ton of time and also improve these rates.

Erica: So I gave this away, but you want to leverage technology, right? So many ASCs overlook tools that integrate with clearinghouses and payers that will automate the process. The pre auth and insurance verification checks, when a procedure is scheduled, you obviously want to do an immediate insurance verification check then, but you also want to do, every time it’s the first of the month, the day of a procedure, what, it cannot be a one and done because things change so quickly.

Erica: So a good practice management system or EHR can absolutely help to streamline these process. Shameless plug, HST Clarity does an amazing job at this. So if it is something [00:29:00] you’re struggling with using a simple tool like HST Clarity, that’s extremely effective, can help you see improved rates here.

Erica: And also all of these, all this technology can also just alert your team to potential issues before they arise. Okay. Standardized templates can really help. So for pre auth mismatched documentation will, of course, lead to denials, even if the process was technically completed. So standardized templates, these checks and balances especially for common procedures can really help align your documentation with payer requirements and prevent costly errors and repeat mistakes.

Erica: And finally, train your team. So continuous education for both billing and front office staff is key. I’m sure everybody who comes to you, everybody who’s in these roles have some level of experience but things are constantly changing. So we have to continue to learn and evolve as well. So you want to encourage your teams.

Erica: Or support them if they want to attend state or national conferences where they can participate in [00:30:00] kind of these billing focus sessions and network with others in the field ongoing training will not only improve accuracy, but it’s also going to boost your team alignment and morale as well. And by focusing on these strategies, you’ll see better pre auth rates better insurance verification rates, which will ultimately lead to smoother operations and faster payments.

Erica: And if this is a metric you track, please head over to HST’s LinkedIn page and leave a comment. I’d love to hear how you compare and any tips you may have for others to help them improve. If you’re interested in more data points and use cases, subscribe to our podcast so that you don’t miss any upcoming segments, or head to our website to check out the full state of the industry report to get your hands on even more data.

Erica: And that officially wraps up this week’s podcast. Thank you as always for spending a few minutes of your week with us. Make sure to subscribe or leave a review on whichever platform you’re listening from. I hope you have a great day and we will see you again next week.

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