There were only 86 new ambulatory surgery centers (ASC’s) built in 20161.  With a total of about 5,2602, that means there was only an increase of 1.6% in centers built last year, which is radically below the growth rate of healthcare expenditures nationally of about 5.5%-6%, and even below the rate of inflation.


Has Market Saturation Arrived?



Combine this information with several other factors:

  • 65% of payer mix (collections) is commercial3
  • A rise in awareness around surprise balance billing and legal attempts to curb this in many states
  • The rise of narrow networks in large part due to the ACA
  • Patients are becoming more educated and aware of costs of healthcare, as well as having more tools for them to calculate their expected costs
  • Increased financial sophistication of ASC owners and access to better data analytics


Insurance companies have made ASC billing much more difficult in the last few years with increased requirements around medical necessity and documentation, attempts to limit self-referrals, and capped day rates, among other efforts.  Some payers have even gone after referring providers and threatened to drop them from their contracts if they continue to refer to out of network ambulatory surgery centers.


Winners and Losers

This means that ASC’s that are contracted and in network with payers are experiencing growth at the expense of facilities that are out of network.


Since the marginal cost per procedure is not high for surgeries at ASC’s, but the fixed costs and overhead are very high, this means that they are basically a capacity utilization game.  This means that if you can do a lot of volume you can be immensely profitable, but at low volume they are likely losing money.  With increased financial reporting and data analytics, many ASC owners have better insight into the profitability of their business, as well as the marginal cost basis that allows them to negotiate favorable rates with insurance companies.


Apache Health is increasingly seeing ASC’s in the market polarizing to highly utilized or highly underutilized.  Many that were full in past years have dropped as much as 90% in volume as the business shifted to other centers.  We expect this trend to continue where referring doctors become part owners or participate financially in the ASC, or move their business somewhere else for other competitive reasons.


Big systems that are heavily contracted are winning share, as evidenced by how Tenet / United Surgical Partners International, “Tenet reported operating 470 outpatient centers in the United States. Tenet’s ambulatory segment reported $429 million net operating revenue in the first quarter of 2016 and same-facility systemwide revenue increase of 11 percent. The same-facility systemwide cases increased 8.6 percent and revenue per case was up 2.2 percent4


The Future

We expect an intermediate term trend where there is some shifting of volume from some ASC’s to others as facilities with better management, physician recruiting, and ASC billing take more of the volume.  This may lead to some of the massive growth in the number of ASC’s we saw a decade ago to reverse itself and potentially a contraction in the number of facilities.  This should actually help the industry overall by increasing average utilization and thus driving profitability up.  The remaining ASC’s will be more competitive and are likely winners in large part due to improved revenue cycle management (including contracting) and physician recruiting (marketing).  Over the longer term we expect ambulatory surgery center case volume to continue to increase and increased capacity utilization will eventually drive both overall growth in procedure volume, as well as ultimately an increase in building more ASC’s.


About Apache Health

Apache Health is a leading ambulatory surgery center billing service.  We are experts in out of network billing.  Our comprehensive outsourced revenue cycle management services include medical billing, coding, accounts receivable and denials management, payer enrollment and contract negotiation, integrated practice management software and electronic health records, and advanced reporting and analytics (business intelligence).


If you would like assistance with ASC billing for your practice, are looking to audit your coding or the coding of your ASC billing company, or are looking to find out how you can increase your collections, please contact:


Sean McSweeney


Apache Health