The pandemic accelerated the migration of surgical procedures to the outpatient setting, and many hospital executives are expanding their outpatient strategies. But that doesn't mean they're eager to buy ASCs.
Instead of purchasing existing centers, health systems are partnering with large ASC chains to develop new centers, or opening surgery centers of their own. For example, Minneapolis-based Allina Health partnered with Surgical Care Affiliates, an Optum company, in December 2019 with plans to develop a dozen surgery centers in five years. The partners announced their newest facility in Brooklyn Park, Minn., in February and aim to have two more facilities in development by the end of the year.
Another prime example is St. Louis-based Ascension's partnership with Chicago and Nashville, Tenn.-based Regent Surgical Health in March. Ascension Capital invested in Regent as part of the partnership, and the two plan to develop, acquire and operate ASCs across Ascension's network, which includes 19 states. In the past, Regent has developed three-way joint ventures with hospitals and physicians and currently has 21 centers in its network.
Finally, during the first quarter, ValueHealth, a Leawood, Kan.-based digital healthcare company, partnered with Cleveland-based University Hospitals and Wilmington, Del.-based ChristianaCare to develop orthopedic ASCs.
Hospitals are also developing ASCs on their own. During the first half of April, Oakland, Calif.-based Kaiser Permanente announced a $25 million facility with an ASC in Woodbridge, Va.; Hartford, Ky.-based Ohio County Healthcare unveiled plans for a $16 million surgery center; and Brooklyn Hospital Center in New York City reported plans to develop a new ASC as part of a $1 billion project. Nashville, Tenn.-based HCA Healthcare broke ground on a new ASC in Texas as well, and UT Health San Antonio said it was building an outpatient center with an ASC.
ASC companies and private equity-backed groups have been more likely to purchase standalone specialty practices and outpatient centers so far this year. Surgery Partners plans to spend $400 million on acquisitions this year, and Dallas-based United Surgical Partners International has also set aside funds for growth after acquiring 45 ASCs from Towson, Md.-based SurgCenter Development last year.
Independent orthopedic groups are also finding new ways to avoid hospital employment where possible by merging to form supergroups. The most recent example is Ortho Alliance NJ, which formed April 7 as a merger between seven groups. The organization includes more than 100 physicians and is poised for future growth.
In the past 13 months, three other orthopedic supergroups have formed in Texas, Florida and Tennessee. In these instances, more than 100 physicians come together to remain independent of hospitals. The already large orthopedic practices, such as Philadelphia-based Rothman Orthopaedics and Phoenix-based HOPCo, are expanding geographically in traditional markets as well as new markets. Both Rothman and HOPCo developed new partnerships in Florida over the past year.