There comes a point when health system’s ASC moves stop being a side project and start requiring a more involved strategy, and, according to Atlas Healthcare Partners CEO Aric Burke it’s when revenue is above roughly $2 billion to $3 billion, and a portfolio has grown past about five centers.
“I think health systems over two to three billion in revenue probably need to have a real, dedicated ASC strategy,” Mr. Burke told Becker’s.
Deals like Ascension’s recent 250-center acquisition show what’s at stake for systems that cross that threshold without a plan already in place.
Below that, he said, systems tend to struggle with a different question entirely — whether an ASC strategy will end up hurting their own hospital’s margins.
For scale, more than 80 U.S. health systems report annual revenue above $2 billion, and more than 70 top $3 billion, meaning Mr. Burke’s threshold captures a sizable slice of the country’s largest systems, even as thousands of smaller hospitals sit well below it.
Why five centers is the fork in the road
Revenue size determines whether a system needs a strategy at all. Center count, Mr. Burke said, determines whether that system can keep running the strategy itself.
“If you have a couple centers, you can probably manage them yourself decently well,” Mr. Burke said. “But when you get past around five centers, it’s kind of a fork in the road.”
From there, he laid out the two paths.
First is the hospital builds its own ASC strategy, which requires an in-house team to manage a growing ASC portfolio.
Mr. Burke called this “expensive overhead,” and noted there’s an “execution risk” that comes along with it.
The second is to bring in a partner, and work with a management company that “can help bring capital and expertise and do things quicker and probably better,” as Burke put it.
ASC management fees run a median of roughly $436,000 a year per center (about 4.9% of net operating revenue), and climb past $1 million annually at the highest-volume centers, according to VMG Health benchmarking data.
In practice, health systems building out ASCs on their own commonly run into a few recurring problems, including site selection that misreads local market demand, physician alignment that breaks down between employed and independent surgeons, and construction or staffing timelines that slip when a system builds its first few centers without dedicated ASC experience.
In a 2024 report, HFMA noted that unless ASCs are already a core business line, most health systems aren’t immediately equipped to build and support a dedicated team to grow and operate a surgery center footprint at pace.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
