Leading medical equipment manufacturers, including Stryker and Zimmer Biomet, along with hospital companies such as Tenet Healthcare are pivoting to capitalize on the expanding opportunities and increasing volume of procedures in the Ambulatory Surgery Center (ASC) space.
With the potential to provide over $55 billion per year in healthcare cost savings in the U.S., a migration of surgical procedures from hospitals to ASCs is expected to continue over the next few years in the post-pandemic environment. It’s a trend that will likely benefit the medical device manufacturers, such as Stryker and Zimmer.
Bill Prentice, CEO of the Ambulatory Surgery Center Association (ASCA), sees a growing awareness by Medicare, commercial payers and employers about how ASCs can play a role in reducing healthcare costs. He also notes that some payers are introducing policies to steer patients to the lower-cost setting in ways that could be very beneficial to ASCs.
Prentice noted that total knee and hip replacements have been covered by commercial insurers for several years, but Medicare has been slow to embrace ASCs. He predicts a steady progression of procedures moving from inpatient to outpatient settings now that the agency is adjusting its stance on ASC reimbursement guidelines.
In a 2019 report, research and consulting firm, Bain & Company, projected the percentage of hip procedures in ASCs to grow from just over 9% to 25% by the mid-2020s and knee procedures to grow from 10% to 30%. Furthermore, the percentage of spine procedures conducted in ASCs is projected to grow from 7% in 2015 to about 30% by the mid-2020’s, according to the Bain report.
As further evidence of this shift, hospital company, Tenet Healthcare, recently purchased 45 surgery centers from SurgCenter Development in a $1.1 billion cash deal. A large percentage of SurgCenter Development’s business is tied to orthopedic and spine procedures.
Stryker has been looking to capitalize on the movement of surgeries as it has been accelerating over the last decade or so. According to Nate Miersma, Styker’s Senior Director of the company’s new ASC business division, “this is clearly the continuation of a trend that started long ago, and we anticipate will continue into the future.”
In 2020, Stryker announced the launch of a new ASC business division. The new business unit has more than 13,000 unique products serving approximately 22 procedural specialties. With teams that specialize in the ASC landscape, Stryker is now better prepared to provide tailored solutions that will help ASCs grow their business and achieve their mission and goals.
“As ASCs continue to attract a growing number of surgical procedures, we anticipate increasing opportunities to collaborate with Stryker and its new ASC business unit,” said Rachel Wolfe, KR Wolfe President.
KR Wolfe has created a specialized in-house Stryker team specifically to service Stryker healthcare projects and installations, and is prepared for increasing business with Stryker and its new ASC unit.
Zimmer Biomet is another firm positioning assets to compete in the growing ASC marketplace. The company recently acquired Relign Corp, and Incisive LLC. During an earnings call in November, CEO Bryan Hanson stated that he expects the acquisitions to begin driving revenue growth in the ASC marketplace as early as next year.
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