3 expert insights on ASC, health system joint ventures

Three key insights to know:

1. H2C director Nick Beale:

"The ASC and physician practice management space continues to benefit from a shift toward lower-cost care settings. Treating lower-acuity cases in the outpatient setting creates value for all stakeholders from a cost-management perspective. Coupled with a push toward population health management, utilizing outpatient centers is seen as an efficient method to provide care for patients. Both health systems and private equity sponsors alike are seeing strong economies of scale through creating integrated networks. These integrated networks can spread out the increasing costs of technology while realizing the benefits. We expect these trends to continue."

2. Louis Levitt, MD, vice president and secretary of The Centers for Advanced Orthopaedics:

"I have noticed that private practices have shifted from being hospital-centric to developing joint ventures with hospitals. By partnering with a hospital, private practices receive financial support and access to their larger referral network. I predict that ASCs will continue to grow as their own entities, without hospital control, and will one day control the subspecialty market."

3. Joan Dentler, president and CEO of Avanza Healthcare Strategies:

"When an ASC is acquired by a hospital or health system, it puts pressure on the other providers in the market to respond. Larger organizations tend to wield greater market power, influence and negotiating strength with payers, providers and suppliers.

For other hospitals and health systems in the market, this response may include pursuing an ASC acquisition of their own, or exploring whether to build a de-novo surgery center. ASCs in the market with specialties overlapping the acquired surgery center may consider approaching a local hospital or health system about a partnership. An ASC may even consider merging with another surgery center as a way to achieve greater size, scope and purchasing power. To remain competitive, smaller organizations will need to grow, or they risk being ignored by partners critical to their short- and long-term success."

More articles on transactions and valuations:
ASC could be part of outpatient expansion in California innovation district
4 new joint-venture ASCs — November 2019
PE-backed eye platform acquires New Jersey eye group — 3 insights

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