Will the pandemic spark more ASC sales? 4 observations

Independent surgery centers experienced revenue loss last year when elective surgeries were limited due to COVID-19, but many ramped cases back up and aim to stay independent if possible.

"I believe in 2021 that independent surgery centers will unite in a more organized way to use their resources to build relationships with hospitals and management companies more as peers than as a competitor," James McClung, BSN, RN, a board member of the Texas Ambulatory Surgery Center Society, told Becker's. "The independent ASC industry has been the leading industry for a large portion of the innovation happening in controlling medical care cost and providing more for less."

ASC chains also anticipate growing market share in the coming months by adding new centers, working with physicians on de novo ASCs and partnering with health systems to enter new markets.

Four observations:

1. Seventy-two percent of ASCs remain independent despite a high level of mergers and acquisitions last year, according to VMG Health. In 2020, Dallas-based United Surgical Partners International added 3,700 physicians, and Deerfield, Ill.-based Surgical Care Affiliates added 1,000 physicians. Both grew primarily through acquiring other surgery center companies and plan to increase acquisition efforts in the coming year. United Surgical Partners International aims to purchase 25 to 40 new ASCs while Optum, Surgical Care Affiliates' parent company, aims to add 10,000 physicians in 2021.

2. ASC companies are extending partnerships with health systems on surgery center networks:

  • Regent Surgical Health, based in Chicago and Nashville, Tenn., became the exclusive national ASC development partner for St. Louis-based Ascension March 4.
  • Surgical Care Affiliates partnered with Minneapolis-based Allina Health in 2019, and the partnership announced plans to build a new ASC in Brooklyn Park, Minn., earlier this year.
  • United Surgical Partners International extended its existing relationship with San Francisco-based Dignity Health for a joint-venture ASC in Citrus Heights, Calif.
  • ValueHealth, a Leawood, Kan.-based digital healthcare company, entered into partnerships with Cleveland-based University Hospitals and Wilmington, Del.-based ChristianaCare on orthopedic ASCs during the first quarter.

3. Surgery centers are joining larger organizations, including private equity. US Digestive Health in Exton, Pa., partnered with four gastroenterology practices in Pennsylvania to begin the year. There were also four private equity transactions in orthopedics during the first quarter, including U.S. Orthopedic Partners acquiring two Mississippi-based practices.

"There is going to be more money flowing into orthopedics in general," said Michael Ast, MD, an orthopedic surgeon at Hospital for Special Surgery in New York City. "We've watched private equity starting to make moves into orthopedics. I don't think that's going to slow down. They're not only going to invest in the practice side, but they're going to go into surgery centers as another opportunity to help practices open new centers, expand existing centers and expand the potential service lines at existing centers."

4. Physicians are selling ASC real estate in multimillion-dollar transactions. In March, El Paso-based Sun City Orthopaedics and West El Paso Surgical Center, a joint venture between physicians and HCA Healthcare in Nashville, Tenn., sold its medical real estate portfolio for $9.5 million. Montecito Medical Real Estate purchased two medical office buildings and an ASC from Tyler, Texas-based Precision Spine Care in March as well.

More articles on surgery centers:
12 things to know about ASCs, key insights
How 2 physicians believe ASCs will adapt post-pandemic
3 ways private equity firms and ASCs could clash: Q&A with John Prunskis


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