Surgery Partners is headed to more orthopedics, physician recruitment and possible co-investment with payers: 8 key quotes

In the second quarter of 2018, Surgery Partners boosted surgical cases 17.8 percent and reported revenue was up 54.2 percent year over year. 

Here are eight key quotes from Surgery Partners Director and CEO Wayne DeVeydt from the second quarter conference call, as transcribed by Seeking Alpha:

On quality benchmarks at ASCs: "When we benchmark our average deficiencies per survey as reported by the Accreditation Association for Ambulatory Health Care, we experienced over 40 percent fewer deficiencies when compared to all other ASCs combined. These are exceptional results that we are proud of, but we will continue to push to improve further."

On net promoter scores: "We're pleased to report that Surgery Partners has achieved best-in-class net promoter scores in both patient and physician satisfaction, achieving scores of 91 and 81, respectively. These scores place Surgery Partners in the upper echelon of NPS scores as compared to some of the best consumer brands in the world."

On physician recruitment: "While the number of docs recruited in the first half of 2018 versus 2017 are up slightly, their productivity in terms of case volume has more than doubled as compared to a year ago, and the average direct contribution margin per case has also increased slightly. We continue to add to our physician recruitment team and expect those figures to continue to improve as the year progresses."

On future M&A: "Our goal is to deploy between $80 million and $100 million of capital per year related to M&A at prevailing industry multiples to help build out our platform. We have deployed nearly $50 million year-to-date at attractive multiples and are confident that we will meet our capital deployment goals this year."

On practices and centers sold: "Concurrent with our focus on building upon our core competencies, we are exploring strategic alternatives for those assets that are not aligned with our growth goals. To date, we've consolidated or closed 16 physician practices, closed or sold two ASCs and are in the process of evaluating the best path forward for our optical businesses. We're also in the process of consolidating many of our core physician practice groups including anesthesia under common surgical facility management. We're confident these moves will provide for greater focus and agility in decision-making."

On key specialties: "While we recognize that [the] Medicare environment is a lower pay environment than the commercial environment, we think as a company, part of our long-term strategy is if you look at the core book today and you look at the musculoskeletal, GI and ophthalmology buckets by themselves, they represent about 85 percent of our book business, and MSK being the largest of that book. And so we get very excited about this shift we're seeing [in CMS potentially adding more orthopedic surgeries to the ASC payable list]."

On new orthopedics acquisitions: "One [of our acquisitions] is an orthopedic group that we picked up in Nebraska, another is a spine group that we picked up in Southern California, and I would tell you our pipeline we have today is very much aligned around MSK. And so I think when we look at long-term strategy, we're making all the investments today to position ourselves to be the partner of choice whether we're recruiting a physician, whether we're acquiring a practice or whether we're working with partners about a JV in a market, because they're recognizing that this shift is happening."

On payer partnerships, co-investment possibilities: "[We may engage in] what I would call is a very innovative kind of outside-the-box new partnering, and that's where we explore opportunities with payers to actually co-invest in some of these ASCs and the opportunities we see there, to not only participate in the value chain of ASCs but be actually incented to really take advantage of the quality metrics that we have in these facilities in a low-cost environment, actually move more of their membership to an in-network but high-volume concentration and I would tell you we have a couple of those discussions underway right now. I don't want to get over our skis on those, because large carriers can move sometimes slow in this process, but that being said, I'm hopeful we'll have at least one of those inked by the end of the year, which will be a real proof point as we move out with large carriers around the art of the possible."

More articles on surgery centers:
USPI deployed $120M on acquisitions in 2018 so far, and more to come
15 new ASCs and outpatient centers in July 2018
5 tips to cut ASC supply costs

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