The ASC industry, historically fragmented and independent, is shifting towards hybrid ownership structures involving hospitals, private equity firms and corporate healthcare platforms as financial pressures of independent practice become insurmountable for many.
The rise of three-way joint ventures
As payer incentives align towards outpatient settings, hospitals and health systems have become increasingly interested in the ownership and development of ASCs. Recognizing that traditional acquisition models have historically led to decreased satisfaction and autonomy among physicians, some health systems have adopted three-way joint venture models with physician groups and management companies.
Mark Langston, chief development officer at Compass Surgical Partners, told Becker’s these ventures have become central to the company’s growth and a lifeline for practices facing consolidation.
Mr. Langston frames three-way JVs as a direct response to the “squeeze” on independent physicians and ASCs. He said small practices struggle in risk-based models, lack payer leverage and often can’t afford needed infrastructure.
“Independent physicians are really in a squeeze right now,” he said. “If you have an independent surgery center, it’s tough. If you’re in an independent practice, also tough. If you’re doing both—good luck in today’s world.”
Three-way JVs pool resources while maintaining physician equity and autonomy. Compass focuses on aligning incentives, embedding with health systems to build local strategies, reduce administrative burdens, optimize anesthesia coverage and recruit staff.
“For the ASC, we focus on the imperatives in today’s environment: how do we work within a three-way joint venture to bring you a connected strategy in a metropolitan area?” Mr. Langston said. “How do we create opportunities to coordinate care between primary care physicians and specialists who are ASC partners to deliver the highest quality of care?”
By partnering with management companies and physician groups, health systems can expand their ASC footprint faster, without shouldering the full capital and operational burden.
“Syndication” over consolidation
Officially launched in May, ReKlaim seeks to build a “national coalition” of independent ASCs and physician-owned hospitals through physician ownership, shared infrastructure and “union-style economics,” ReKlaim’s founder, Dutch Rojas, told Becker’s.
“The general idea is, how do you become the all-in-one platform for business services?” he said. ReKlaim supports physician-owned practices in a number of ways, but principally by bundling risk across employee benefits, property, casualty and malpractice insurance to cut down on physicians’ insurance and benefits costs.
ReKlaim also helps these groups consolidate administrative workloads including payroll, revenue-cycle management and compliance through systems that remain in physicians’ control. It also aims to strengthen practice finances through direct employer contracts and private labeled, self-funded employer plans and access to capital markets.
“We are working to organize, not sell [physicians], aligning them to form a real counterweight to the legacy system,” Mr. Rojas said. “Independent physicians aren’t selling. They’re syndicating.”
Private ownership for long-term growth
Longstanding MSO NueHealth is physician-centric organization whose strategy revolves around its private ownership, which allows leadership to invest in initiatives that may not generate immediate returns but create long-term clinical and operational value.
The company has developed, managed or owned more than 150 facilities and partnered with over 3,000 physicians and 30 health systems.
“Being privately held allows us to make decisions based more on long-term value than quarterly results,” NueHealth’s CEO Michael Sheerin told Becker’s. “A privately held company can be agile, innovative and really allows us to work with this incredibly rapidly changing healthcare market. One of the major attributes is the benefit of being privately held in our decision-making and agility.”
For example, the company is able to invest in stay suites located next to ASCs. These hotel-like rooms support patients who lack a post-op caregiver or who live far away, enabling surgeons to shift more complex cases safely into the outpatient setting.
While expensive upfront, the suites have driven significant case growth at centers that use them. These programs often unlock procedures that would otherwise be limited by post-discharge requirements.
“More surgeons find comfort in their patients having access to these stay suites, and the patients love the outcome they’re getting,” he said. “We believe over the long term it has increased volume and surgeons that want to work at that center.”
NueHealth’s privately held structure also allows for flexibility that many management companies cannot offer. While many MSOs require equity participation for every partnership, NueHealth does not. This model resonates both with physician groups that want to retain ownership and health systems that want to grow outpatient capacity without giving up large stakes.
