State of the ASC Industry 2022
Charles Dickens’ famous quote would aptly describe the past two years: “These are the best of times and the worst of times.”
These past two years have been the best of times because the industry is booming, with outpatient migration accelerating. Patients don’t want to go to hospitals and have recognized ASCs as a high quality, low cost, safe option for surgery.
Volumes are up across the industry, most notably in complex cases like total joint replacements. We had a record number of new projects (~250) announced in ‘21.
And it was the worst of times, given the fine people we lost along the way (like dear ASC friend Jon Trujillo) and the pervasively disruptive impact of COVID in all areas of our lives.
Supply chain disruptions, staffing shortages, wage inflation, rising construction costs, changing regulations and more have all added complexity to our world.
Attempting to predict the future is a fool’s errand. Indeed, I’m reminded of Plato’s famous quote from The Republic: “I am the wisest man alive, for I know one thing, and that is that I know nothing.”
Despite that, a few trends are worth calling out:
- Consolidation. The last 13 months completed the most acquisitive era in ASC history, led by Tenet’s $2B+ purchase of over 130 SurgCenter Development ASCs. Indeed, hospitals increasingly recognize that the future is outpatient. Other big chains, like Surgery Partners, HCA, and SCA will feel the pressure to ‘keep up’. Even so, surgeons continue to be both the drivers of ASCs and, with their patients, the beneficiaries of ASC success.
- Competition. This is different than consolidation. It means new competitors coming to every market. Yes, it looks like hospitals systems finally getting serious about outpatient care. But it also looks like dozens of private equity groups acquiring orthopedic practices. And other ‘Johnny come lately’ types hoping to profit from the outpatient migration. This means good operators will face competitor from those trying to buy their way in. It also means existing ASCs will face volume pressure as more groups try to pick off more of the uncommitted surgeons left.
- Sub specialization. Surgeon and patient expectations are rising. Our own firm has opened a joint replacement only center and spine only center in the past two months. To truly get to world class care for complex cases (joints, spine), the undiluted ASC focus is required. We’ll see more of these subspecialty centers in the future.
All this means that our ASC world is getting more complex, not less. Success will continue to flow, as it should, to those who do it the right way.
For the past forty years, the invisible engine that powers the whole industry is partnerships. ASCs create joint venture forums for surgeons, hospitals, and businesspeople to collaborate meaningfully. The most successful ASCs and ASC firms hold this principle as inviolable. It’s easy to say, but tough to do well. It’s powered our past and will continue to power our future.
Elon Musk said, “There have to be things that inspire you, that make you proud to be a member of humanity.”
To each of you in the wider ASC community, thank you. Thank you for making the world a better place each day. For delivering phenomenal patient care. For driving healthcare costs down. For being a part of the solution and thus inspiring me (and so many others).
I am proud to be a member of this cohort. I hope you are too.
Darin Jay (DJ) Hill is the leader of Compass Surgical Partners, an innovative ambulatory surgery center development and management company with a proven track record and deep expertise in musculoskeletal (MSK) care.