The outlook for ASC mergers & acquisitions: It's all about the bottom line

Regent Surgical Health has been at the forefront of ASC development and management since 2001.

Chief Development Officer Jeff Simmons sees one thing dictating the biggest trends in ASCs: the bottom line.

"It's all about the money," he says. "It's about trying to maximize revenue and profit with a shrinking reimbursement."

To do that, surgery centers are looking to hospitals to partner with them and ensure they are fully reimbursed.

Hospitals are looking to ASCs to perform surgeries because of pressure from insurers to cut surgical costs down.

"Under the ACA, most of the dollar risk is now in the hospitals' hands, so the more facilities the hospitals control, the more of the insurance dollars they can take on. It's all about revenue and profit," Simmons said.

For example, a knee or hip replacement surgery would've taken two to five days traditionally and cost a hospital $50,000, but in an ASC, the procedure can be done in 23 hours for around $15,000 to $20,000.

"The insurance companies are banking and many times requiring hospitals to do these cases in an outpatient facility because of that," Mr. Simmons says.

Mr. Simmons said that it's getting to the point where when a hospital is signing a new physician on, they'll partner with them in a surgery center they're developing or operating. The joint venture method allows hospital systems another recruitment tool, and to a lesser extent, it eliminates competition from a physician leaving for another practice or competing system.

"If a doctor is coming out of their fellowship program and is looking for a place to land, or a doctor wants to leave a private practice, not only will they be an employee at the hospital, but they'll be a partner in the surgery center it's developing," Mr. Simmons says.

Mr. Simmons said it's almost getting to a point, unless an ASC is doing pain or endoscopy, where centers have to align with hospitals.

"If a surgery center is getting paid Medicare rates, they can't afford to these cases anymore," Mr. Simmons says.

As for the future of the acquisition cycle, Mr. Simmons doesn't see a horizon coming for a "number of years." Although the demand for independent ASCs is high, so is the supply. There might come a day when the market normalizes, it's difficult to predict, he said.

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