“The trend of hospitals buying out practice[s] is slowing down,” he said. “The new trend is large megagroups coming together through private equity as the new challenges and opportunities. Some of these groups have opted not to directly enter the ASC space, but, to achieve efficiency and participate in risk plans, have started partnering with us.”
Many private equity firms and healthcare megagroups view direct ASC investment as a potential “distraction,” Mr. Flynn said, primarily due to private equity’s investment model.
“With most private equity, they’re in it for five or 10 years, and then they jump to the next,” he said. “They’ve found it’s not really going to enhance what they’re looking to do overall.”
Despite their efficiency and profitability, ASCs do not always fit within the short-term investment cycles of private equity firms. Historically, ASCs were considered highly lucrative before widespread payer contract negotiations and increased regulatory scrutiny changed the landscape.
“The joke is that in the ’90s or early 2000s, they used to say, ‘An ASC prints money,'” he said. “But now, we all take Medicaid, we all take Medicare, we have to do our charity. While ASCs are efficient and profitable, they’re not printing money.”
Mr. Flynn pointed to Summit Health as an example of this evolving model. Initially designed to funnel patients from its CityMD urgent care centers to specialty hubs, the system ensured rapid specialist access. Primary care providers and urgent care centers could directly schedule specialty consults, boosting case volumes for orthopedics, ENT and urology practices.
This shift reflects a broader trend: rather than investing heavily in ASCs, large healthcare groups are optimizing patient flow and specialty care within existing networks. While this approach has streamlined referrals and increased case volumes, national-scale ASC investments are not a top priority for megagroups.
For ASCs partnering with these megagroups, preparation for increased patient volumes is crucial.
“It takes time, as they bring on each provider, to start and boost this up,” he said.” But then it’s like the floodgates open.”
This type of partnership differs significantly from ASCs aligning with hospitals, he said, as they often “can’t get out of their own way, or their own bureaucracy.”
“Medicine is still always very local, but when a doctor gets taken into the hospital, they want to make it that the doctor is faceless at this point,” he said. “I think that’s where it’s interesting, where private equity saw that in the for-profit aspect of medicine, they can deliver more efficient care.”