The ASC merger and acquisition space has undergone a dramatic transformation over the past few decades, from a niche market to a core focus for major health systems, payers and private equity.
Jim Freund, managing partner at Physician Transaction Advisors, has been at the forefront of this evolution, advising on hundreds of deals and witnessing the shifts firsthand. Mr. Freund joined Becker’s to discuss how technology, market forces and the migration to outpatient care have reshaped the ASC industry.
Editor’s note: This interview was edited lightly for clarity and length.
Question: What are the biggest shifts you’ve seen in the ASC and physician practice market, whether in deal structures, valuations or new types of buyers?
Jim Freund: We’ve been doing this a very long time, and having gone through several hundred transactions, it’s changed dynamically. There wasn’t a lot of interest in healthcare years ago, but interest from the financial world has grown significantly. Large corporations like UnitedHealthcare and Optum, Tenet and Ascension are all buying into surgery centers. Everyone in healthcare recognizes the migration to outpatient care, and that’s changed the market.
We remember when there were few surgery centers and little interest. Now every health system and payer is focused on outpatient care. They want cases performed in high-quality, less invasive settings. Technology has changed everything, driving the shift from inpatient to outpatient. With that shift, dollars are moving, and the challenge is how to capture them, be efficient, and make it successful. Hospitals are not as cost-effective as free-standing surgery centers. Smart money has moved in this direction, creating strong interest in outpatient organizations. Whether independent or in a partnership, this is the direction the industry is going.
It’s even amazing how much has changed in the last six or seven years. Early on, surgery centers were the only things being transacted. Then came dermatology, ophthalmology and other practice specialties. It’s been an interesting shift in mindset — not just in transactions, but also in technology and services. Thirty years ago, we were the first software provider in the surgery center space. Now, conferences are almost entirely driven by technology services.
