Mercy Clinic acquires Oklahoma City-based orthopedic practice, ASC — Outlook for 2019 ASC M&A

O'Fallon, Mo.-based Mercy Clinic acquired a 50-year-old orthopedic practice in Oklahoma City that includes an ASC, according to an Edmond Sun report


Effective Jan. 1, Mercy Clinic acquired Oklahoma City-based Orthopedic Associates and its on-campus ASC, renaming it Mercy Clinic Orthopedic Associates. The practice includes 12 providers and multiple locations across the greater Oklahoma City area.

According to the report, post-acquisition the practice has been able to accept more types of insurance, and it has joined Mercy's larger provider network. This acquisition kicks off what could be an active year in ASC M&A and joint venture centers between hospitals and physicians, according to president and COO of Surgical Notes, Randy Bishop.

"ASCs are increasingly finding themselves the target of hospitals and health systems for many reasons, including hospitals desiring to recapture lost volume, increase surgical capacity, grow their presence in the market and solidify relationships with physicians," wrote Mr. Bishop in a December 2018 article for Becker's ASC Review. "Such hospital-physician ASC joint ventures have seen a rapid rise over the past several years."

In 2018, Avanza Healthcare Strategies and Clark Hill | Strasburger released a report on hospitals and health systems investing in ASCs, indicating the larger organizations are making ASCs an important part of their outpatient strategy. HealthLeaders Media conducted the survey polling 109 healthcare executives, which found 41 percent of organizations had ownership in or were affiliated with freestanding ASCs and two-thirds of those centers were joint ventures. Forty-eight percent of the respondents anticipated ASC investments and affiliations in the future.

"According to the respondents, the business case for ASC investments is clear: greater market share, lower costs, improved physician engagement and more satisfied patients," the Avanza release noted.

The report also showed that most organizations surveyed — 62 percent — owned or had affiliations with just one ASC; 93 percent owned four or fewer centers. Hospitals also typically prefer a majority controlling interest, and 29 percent of the respondents said they prefer full ownership of the center.

Hospitals and health systems aren't the only potential acquirers in 2019. Large and mid-sized ASC chains are also looking to expand in 2019 and private equity investors are making headway into the healthcare space, especially the gastroenterology, ophthalmology and orthopedic space.


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