Thirty years ago, surgery usually equated to an invasive procedure that required an overnight hospital stay and extensive recovery time. Since then, advances in medical equipment, surgical techniques and anesthesia have enabled many inpatient procedures to be performed on an outpatient basis. As evidence of this shift, the percentage of surgeries performed in hospitals on an inpatient basis plummeted between 1981 and 1999, from 81% to just 37% of total surgeries.
The dramatic shift toward outpatient procedures paved the way for the rise of ambulatory surgical centers (ASCs), outpatient healthcare facilities that perform surgeries outside of a hospital setting. ASCs can offer patients greater convenience and shorter recovery times at a fraction of the cost compared to hospitals. In the U.S. today, over 22 million surgeries are performed each year at more than 5,000 ASCs. (To learn more about the factors driving historical as well as recent ASC growth, this 2009 study by KNG Health Consulting provides a detailed analysis.)
Patient visits to ASCs have more than tripled over the past 15 years and are expected to increase in the years ahead, primarily due to technological development, an increased consumer focus on reducing healthcare costs, longer lifespans and an aging population. Millions of baby boomers are reaching retirement age, and their desire to maintain an active lifestyle is expected to fuel demand for outpatient procedures such as arthroscopic knee surgery. This article by Tracy K. Johnson of Health Strategies & Solutions, a leading healthcare management and consulting firm, outlines some of the reasons why ambulatory care services will play an important role in the future of healthcare.
The ASC industry is highly fragmented, creating an opportunity for successful ASC operators such as First Surgical Partners Inc. (OTC BB: FSPI) to emerge as market consolidators. FSPI currently operates two ambulatory surgery centers and a general acute care hospital in the Houston area. The Company’s surgeons perform non-emergency procedures including bariatric surgery; ear, nose and throat surgery; reconstructive and plastic surgery, orthopedic surgery, pain management, neurosurgery and podiatry.
Its state-of-the-art facilities and ability to attract top surgeons set First Surgical apart from its regional competitors. Additionally, the Company’s expert management team has a successful track record of developing and operating physician-owned surgical facilities. On average, each executive team member has over 15 years of experience managing hospitals and ASCs.
FSPI plans to add four surgical centers over the next two years, rapidly expanding its operating network beyond the Houston market. The Company also expects to benefit from the upcoming planned conversion of its ASCs to hospital outpatient departments, which receive favorable reimbursement rates (and offer other advantages) compared to ASCs. The combination of these initiatives should help drive long-term growth and profitability for FSPI. The Company recently declared its second quarterly cash dividend, a clear sign of its management team’s dedication to generating shareholder value.
FSPI provides investors with a strong ground-floor opportunity that has yet to be discovered by the market. Simply put, First Surgical is great at what it does, gearing up to expand, and directly positioned to profit from the long-term trend toward ambulatory surgical care. Don’t miss out on your chance to invest.
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