Despite increasing healthcare consolidation, the ASC industry has remained fragmented, independent surgery centers remaining in the majority as the driver of low costs.
Seventy percent of freestanding ASCs are independently owned and operated, according to VMG Health's "Annual Healthcare M&A Report 2022."
This number has remained relatively flat even throughout the COVID-19 pandemic. Seventy-two percent of ASCs were independent from 2020 to 2021, according to VMG Health's "2019 Healthcare M&A Report" and "2020 Healthcare M&A Report"
On the other hand, physician medical groups are increasingly consolidating, according to VMG Health's 2022 report. There were approximately 461 deals announced in the sector in 2021, a 145 percent increase from the 2020 volume. Of these deals, 70 percent of transactions were attributed to private equity firms.
VMG Health cites rising labor costs and rising supply costs, as well as increased competition and a transition to value-based care, as the reason that independent physician groups are turning to consolidation.
Despite the fragmentation, large ASC chains continue to grow — with United Surgical Partners International buying both SurgCenter Development for $1.1 billion and eight Compass Surgical Partners ASCs for $78.1 million in 2021. However, most ASC companies have opted for rapid growth, which means acquiring smaller ASC chains to amass market share quickly.
Additionally, hospitals see ASCs as a major opportunity for growth, but instead of investing in existing centers, they are opting to develop ASCs internally.