During its January 2019 corporate presentation, Surgery Partners examined the current state of the company and projected growth for the future.
The company laid out a plan to meet its long-term 10 percent to 16 percent compound annual growth rate target. The three pillars of profit growth that will help Surgery Partners achieve this goal include:
• Organic growth: 2 percent to 3 percent growth in volume and rate revenue cycle management
• Margin improvement, based on corporate and organizational synergies
• Acquisitions of high-growth specialty centers
Five things to know from the presentation:
1. Surgery Partners currently has 109 ASCs and 18 surgical hospitals across 32 states. The number of ASCs owned by national operators had a 5 percent compound annual growth rate from 2006 to 2016, and around 58 percent of centers remain independent, according to data from Definitive Healthcare.
2. The company sees orthopedics as a key element of success in the future, citing 100 million adults in the U.S. with chronic pain and the projected two-times increase in hip procedures through 2026. Surgery Partners is expanding its network of total joint, orthopedic and spine capabilities.
3. The current case mix for Surgery Partners centers includes:
• Musculoskeletal: 35 percent
• Ophthalmology: 28 percent
• Gastroenterology: 22 percent
• Other: 15 percent
Within its diversified case mix, the company is focused on value-add specialties that are supported by the aging population, including orthopedics.
4. For the 2018 fiscal year, Surgery Partners reported adjusted EBITDA guidance of $230 million to $235 million; revenue guidance for the year remained $1.75 billion to $1.8 billion. According to the presentation, the company has gone "from a collection of great assets, but undermanaged to a scalable platform with clear strategic direction and purpose."
5. Part of the company's growth strategy over the past year included pruning assets to realize streamlined, surgical facility assets and develop a holistic infrastructure. After conducting an assessment of its portfolio, Surgery Partners divested or shut down underperforming sites, initiated enterprisewide system consolidation and focused energy to rebuild its de novo, in-market and M&A pipelines. The company deployed at least $100 million for acquisitions.