The offer values Surgery Partners at $3.2 billion. Bain Capital, which already holds a 39% stake in Surgery Partners, has no interest in selling its shares.
Surgery Partners is the third-largest ASC operator in the U.S., with more than 160 centers and 4,600 affiliated physicians. Following the announcement, Surgery Partners’ stock surged 20% on Jan. 28. The deal remains subject to regulatory review.
The proposed acquisition has raised concerns among industry leaders about increasing consolidation in the ASC space. Historically fragmented, the ASC industry remained largely independent, with 68% of facilities operating autonomously as of 2023. However, as private equity consolidation accelerates, leaders are concerned about how administrators, physicians and patients may face significant consequences.
“This is a textbook example of how private equity firms are consolidating their hold over healthcare in general, and the outpatient surgery business in particular,” Shakeel Ahmed, MD, CEO of Atlas Surgical Group in St. Louis, told Becker’s. “This merger will again glaringly outline the negative impact that private equity has had over our business. Not only will this limit fair trade and good patient care, by prioritizing financial returns over quality care and fair competition, private equity would continue to negatively impact our business.”
Dr. Ahmed emphasized that private equity firms operate on short-term investment cycles — typically less than 10 years — prioritizing rapid financial gains before selling the company or taking it public again. This model often leads to cost-cutting measures such as staff reductions, replacing experienced personnel with lower-cost workers and pressuring physicians to generate higher revenues to justify their continued employment, he said.
Bain Capital has been investing in Surgery Partners for more than eight years. After going public in 2015, it merged with National Surgical Healthcare in 2017, and Bain acquired HIG Capital’s stake in Surgery Partners.
The effects of consolidation in other healthcare sectors are already emerging. As physician employment shifts away from independent practice, competitive options dwindle, often leading to increased costs and reduced autonomy for providers. The American Medical Association reported that in 2022, only 44% of physicians owned their practices, compared with 76% in the early 1980s.
Dr. Ahmed also said Bain Capital’s acquisition could have ramifications for payer negotiations.
“This is also a recipe for the implementation of aggressive contract negotiations with payers, which then results in more restrictions by the same payers on patient treatment options and lower reimbursement rates for doctors,” he said.
While private equity investment in healthcare has slowed in recent years, firms remain interested in the ASC market. According to a PitchBook market analysis, healthcare specialist funds have struggled to match the peak returns seen from 2012 to 2014, and exit activity has declined. In 2023, private equity firms recorded 788 healthcare acquisitions, down from 940 in 2022 and 1,114 in 2021.
Despite the downturn, private equity firms continue investing in ASCs. In November, Surgery Partners secured an $800 million equity offering, with Bain Capital contributing $225 million. Surgery Partners’ independent board committee, supported by financial and legal advisors, will review Bain Capital’s proposal. Notably, private equity firm TPG and Optum also expressed interest in acquiring Surgery Partners in 2024, though no deal materialized.
