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Article Author:

Paul D. Smith, Jr.

CPA, MSA

Specialty Snapshot: Ambulatory Surgical Centers

Ambulatory Surgery Centers (ASCs) include approximately 3,500 companies with 5,000 centers and a combined annual revenue of about $18 billion in the U.S. ASCs perform a variety of outpatient surgical procedures that discharge the patients the day of the surgery. Procedures include eye, orthopedic, hand, ear-nose-and-throat, and plastic surgery, as well as podiatry, endoscopy, and laparoscopy.

ASCs are able to operate at a lower cost than hospitals and offer patients more convenient locations. ASCs have generally taken advantage of technology to utilize electronic health records to conveniently track patients, procedures, insurance, and billing.

Investments in equipment and lease-hold improvements can be high because the facilities must remain state of the art. Centers are typically owned by hospitals, by partnerships between physicians and hospitals, or by physicians and a management company.

ASCs are regulated by state and federal governments. Most states require centers to meet various licensing requirements, including periodic inspections. Some states require that new centers first acquire a Certificate of Need, to avoid duplication of healthcare facilities within a region or area. To be eligible for Medicare reimbursements, centers must meet the "Conditions of Coverage," which are standards for facilities, equipment, personnel, and medical care. About 85% of centers are Medicare certified, and subject to detailed federal laws, including the False Claims Act, the Fraud and Abuse Law, and HIPAA. 

There is strong potential for ASCs to increase in growth over the next couple of years due to a shift of procedures from hospitals and health systems to lower-cost, and potentially more efficient, ASCs. It is important to note that about 70% of the $18 billion in revenues generated by surgical centers is produced by independent or privately held centers as opposed to larger hospitals and health systems. This being said, we are also seeing significant interest by hospitals and health system in acquiring ASCs in an effort to replace some of the lost revenues due to lower hospital surgical volumes.¹

Benchmarking data