Every health system building out an ASC network eventually faces the same decision in every new market: whether to acquire an existing center, build a new one or convert something the hospital already owns.
The question has taken on more weight as deal activity in the space has accelerated. Becker’s has tracked a broader wave of health systems betting big on ASCs, including outlier moves such as Ascension’s $3.9 billion, 250-center deal.
Atlas Healthcare Partners CEO Aric Burke said the honest answer is usually all three, applied selectively.
“You’ve got to be strategic about where you put your capital,” he told Becker’s.
Atlas’ default starting point is acquisition.
“Are there acquisitions in their market that could be faster speed to market?” Mr. Burke said, outlining the first question Atlas works through with a health system partner.
“You’re likely to acquire a center quicker than you build one,” he said.
The economics tend to favor buying, too, provided the deal brings something more than square footage.
“In general, it’s going to be less expensive to buy a center, especially when you have some synergies that you can bring to the table,” Mr. Burke said, “then usually get some market share, some [existing] relationships, and some built-in business that comes with it.”
Atlas’ role in this process is to help hospitals and health systems scan the market and identify acquisition opportunities, then manage those transactions on their behalf.
Acquisition works only if there’s a viable target in the market, and Mr. Burke said that’s not always the case.
“There are times where there’s nothing to acquire, and so then you have to build new,” he said. Health systems have not slowed new construction even as M&A heats up; Becker’s reported on 23 hospitals and health systems investing in ASCs in a single recent quarter.
Even then, Atlas evaluates a middle option before a ground-up de novo: converting an existing hospital outpatient department.
A true de novo brings its own set of decisions, starting with where the center physically goes. Atlas helps their partners with site selection, whether for a medical office building or new build.
Mr. Burke pushes back on treating buy-build-convert as a single strategic choice a health system makes once.
“In the end, it’s usually a hybrid. You have to probably do both,” he said. “But being strategic with what you’re trying to create on the front end is key to success.”
That front-end strategy work — service line coverage, physician alignment, and where multi-specialty versus single-specialty centers belong in a market — is what determines which of the three paths makes sense for a given market, not a fixed preference for one method over the others.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
