Three ASC leaders shared their predictions on mergers and acquisitions in ASCs over the next 12 months with Becker's ASC Review.
Note: Responses have been edited for style and length.
Lynne Mercadante, administrator at The Cardiac and Vascular Institute Ambulatory Surgery Center (Gainesville, Fla.): Mergers and acquisitions are a way of life in the medical community these days. As we see more expectations for meaningful use, interoperability, quality measures, etc., smaller groups are forced to either accept penalties or seek partners, as the cost of compliance with mandates is so great. While we typically think of mergers with medical practices, we expect that this will also be the case with ASCs, especially as CMS approves more procedures for these facilities.
Meredith Warf, administrator at Mississippi Sports Medicine and Orthopaedic Center (Jackson): On the heels of a global pandemic, surgery centers are looking for strategy, especially in the higher-risk areas of specialties like orthopedics and cardiology. These risk areas also present areas of potential value — strategic partnerships represent a way to both capitalize on the future value as well as mitigate the risks in the next few years.
These partnerships may look several different ways: national surgery center companies may come in as a management company, ASCs may look to partner with the bigger hospital systems for the contract rate "lifts" that are likely short-lived and compliance/regulatory help or referral sources, or practices can partner with private equity-backed platforms.
Those platforms are equipped with the capital needed to drive insightful, robust data capabilities, benchmarking [and] leverage with payers, while continuing to provide the same quality service to patients that ASCs can offer at such a reduced cost. With value-based care here to stay, ASCs are held responsible for more data collection and patient follow-up than ever before. Capital needs to maintain the cutting-edge treatment options like robotics and spine surgery are cumbersome and mitigated with strategic partnerships.
Raghu Reddy, administrator at SurgCenter of Western Maryland (Cumberland): Hospitals and private equity groups are acquiring ASCs at a faster pace than before. The catalyst here is the CMS approval of total joints, spine and cardiovascular procedures. The pandemic certainly helped to migrate the ASC-eligible procedures from [hospital outpatient departments] to ASCs. The insurers are also playing an instrumental role in migrating the cases to the ASC due to all the obvious advantages that ASCs provide. The national ASC management companies [are] also increasing the joint-venture partnership with hospitals and private equity groups. Shrinking reimbursement and threat of survival, especially in difficult or competitive markets, have also accelerated the M&A activity.
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