Blog Post

ASC myth-busting: What suppliers and service providers get wrong about their ASC customers.

By Erin LaneRob Ryan

June 28, 2021

    Across Q3 2021, our research team will publish content helping suppliers understand pace of procedural shift to ASCs, common ASC purchaser archetypes, and how to define and iterate on an ASC strategy. But first, we'd like to debunk a few myths implicit in the approaches to the ASC market we're hearing from suppliers—because while neglecting the ASC market is an unsustainable market position, attempting to serve ASCs without understanding their complexity and nuance could prove fruitless as well.

    Ambulatory surgery centers (ASCs) are atop suppliers' and service providers' agenda in 2021, and rightly so—Covid-19 has accelerated the already-rapid shift of surgical procedures to non-hospital sites. Ambulatory surgery volumes are projected to grow by 11% over the next five years nationally, during which time inpatient volumes will fall by 3%

    ASC growth has caught our attention as well. We've fielded plenty of your questions, and through those conversations we've noticed that one critical concept remains misunderstood: ASC purchasing. We often hear suppliers and service providers say things like:

    • "There's a lot of buzz about ASCs and I'd like to learn more—but this is a 'future me' problem."
    • "ASCs are penetrating my businesses and I need to be able to serve them, so I need to change my marketing strategy to meet their needs."

    We're encouraged by this interest in the ASC market—but we'd like to debunk three myths that these approaches take for granted.

    Myth #1: We will remain commercially viable without serving the ASC market today.

    We expect a handful of high-acuity neurosurgical and cardiovascular procedures to remain inpatient strongholds for years to come. But many routine and elective surgeries, such as joint replacements and spinal fusions, are already shifting to freestanding sites, which consumers, physicians, and payers generally prefer. We expect outpatient migration to be gradual and vary in pace across markets, but destructive to laggard adapters' market presence nonetheless.

    ASCs' lean operating model creates a distinct set of purchaser needs compared to hospitals, meaning serving them requires a thoughtful, time-consuming shift in approach from the traditional model. Suppliers that don't devise, implement, and iterate on an ASC strategy today risk shedding business to their more proactive competitors.

    Myth #2: Serving ASCs is just about updating our marketing message.

    Your ASC strategy cannot be limited to tweaking your sales pitch for ASC customers. ASCs are different enough from hospitals and important enough strategically to necessitate a wholesale review of product strategy and client service, in addition to sales and marketing.

    60% of ASC physicians report a willingness to switch device makers for a 15% discount on a similar product, according to Bain and Company, meaning suppliers without a differentiated product meeting the needs of ASC purchasers risks disloyalty and revenue loss.

    For example, designing products that impact episodic cost, outpatient eligibility, and surgical throughput can drive differentiation by enabling ASCs to achieve their core goal of growing volume—and overall margin—despite low reimbursement.

    Myth #3: There is one ASC purchaser "archetype" that represents the entire ASC market.

    Yet differentiating is made more difficult (but no less important) by the fact that purchaser preferences vary significantly across different types of ASCs. Take independent physician-owned ASCs, which have lean or even nonexistent supply management systems.

    As a result, these ASCs put a premium on simplified transactions and just-in-time supplying. Management company-owned ASCs, meanwhile, are eager to secure preferred contracts at the regional or national level, generating large-scale cost savings.

    What does this heterogeneity mean? First, suppliers must understand the needs of their specific purchaser and tailor their product design, client service, and marketing strategies to those purchasers' specific needs.

    Second, suppliers should prioritize specific market segments to serve in a differentiated manner rather than trying to serve the entire market at once. We will publish a strategy decision guide aimed at guiding your decision on which segments to prioritize.

    The bottom line

    Suppliers will squander a growth opportunity at best—and shed market share at worst—if they do not treat the ASC market with the degree of immediacy, complexity, and nuance it deserves. Successfully serving the ASC market requires that suppliers weigh their capabilities and identity against the unique and variable needs of this increasingly important customer.

    About Advisory Board

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