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Global Credit Research - 16 Sep 2013
New York, September 16, 2013 -- Same-store volume growth at ambulatory surgery centers will continue
to grow, while hospital inpatient surgery procedures have contracted,
Moody's Investors Service says in a new report, "Ambulatory
Surgery Centers Buck Trend With Growing Usage Rates." When
health insurers began looking for ways to reduce the rising cost of hospital
treatments, they found one in the centers.
"Ambulatory service centers provide care without the high-cost
infrastructures associated with hospitals," says Vice President
-- Senior Analyst, Ron Neysmith. "More procedures
can be done safely on an outpatient basis and outpatient facilities are
reimbursed on average 57% of the hospital rate for similar procedures,
so insurance payors, including Medicare, have increasingly
been directing patients to lower-cost settings."
Ambulatory service centers' same-store revenues have been
growing in the low- to mid-single digits since 2007,
Neysmith says, while hospitals have seen same-facility inpatient
surgery cases decline 0.22% annually since then.
Patient utilization trends for the healthcare industry have fallen since
the recession due to higher unemployment, reduced workers'
insurance coverage and increasing co-payment fees. Elective
surgeries have also decreased as patients delay treatments they believe
are not critical.
"In a highly fragmented market, the larger players with economies
of scale and joint-ventures with physician groups and hospitals
will benefit from patient referrals," Neysmith notes.
Among companies, Moody's believes AmSurg Corp.,
Symbion, Surgical Care Affiliates, Surgery Partners and United
Surgical Partners International are well positioned to benefit from the
shift to outpatient facilities, thanks in part to their minority
ownership by referring physicians, who experience greater efficiencies
in such settings.
The ambulatory service centers that will perform the best are those that
concentrate on procedures that earn higher revenues per treatment,
such as orthopedic and pain management treatments. Among companies,
Surgery Partners and United Surgical Partners International are well positioned
in those areas, from which they each earn about 50% of their
Among factors that could temper the growth of ambulatory service centers
are pressures on reimbursement rates, a shift to a bundled payment
rate system and increasing acquisitions of the centers by hospitals,
Moody's says. But overall, the centers are well positioned
to benefit from and cater to longer-term demographic trends,
including the aging population.
Moody's research subscribers can access this report at http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_157872.
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Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
Peter H. Abdill, CFA
MD - Corporate Finance
Corporate Finance Group
Moody's: Ambulatory surgery centers growing, while inpatient surgeries contract
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
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