The ASC industry is historically fragmented, with approximately 68% of facilities operating independently as of 2023. However, as consolidation gains traction, industry leaders are voicing concerns about the potential negative effects on administrators, physicians and patients.
The ASC industry is relatively young, with the first center opening in Phoenix in 1970. Over time, as the healthcare sector has become increasingly consolidated, more ASCs have turned to chain or private equity ownership. According to VMG Health, the number of ASCs partnered with a national operator grew from 1,339 in 2011 to 1,941 in 2023, reflecting a shifting ownership landscape.
Consolidation in the ASC industry accelerated between 2015 and 2018, driven by a series of megamergers.
In 2015, Tenet Healthcare purchased 50.1% of Dallas-based United Surgical Partners International for $425 million. USPI has since grown to the largest ASC chain in the country. In 2020, Tenet further solidified its market position when it acquired more than 90 ASCs from SurgCenter Development for approximately $1.2 billion, paving the way for USPI to market dominance.
Another significant merger occurred in 2017, when Deerfield, Ill.-based SCA Health, then known as Surgical Care Affiliates, was acquired by Optum. The company has grown from 186 ASCs in 2019 to 320 in 2023.
Now, USPI controls 7.1% of the ASC market share, followed by SCA Health, with 5.3%.
Earlier this year, Optum set its sights on acquiring Brentwood, Tenn.-based ASC operator Surgery Partners, sparking apprehension among ASC leaders.
"I have seen over and over the effect of oligopoly in the ASC industry," Shakeel Ahmed, MD, CEO of Atlas Surgical Group in St. Louis, told Becker's. "A dominant group takes over the local market and edges out smaller businesses. That is not a healthy model, and I remain nervous about that with these future mergers. We need a level playing field. The ASC industry stands as a bulwark of fairness against large healthcare institutions. These mergers go against the dogma that we stand for."
Through SCA Health, Optum also quietly purchased at least two cardiovascular providers in 2023, National Cardiovascular Partners and Pivotal Healthcare.
ASC leaders are eyeing other industries that have seen care shifts with large-scale consolidation. As the physician workforce has consolidated, for example, independent entities have struggled to compete, and communities have been left with fewer care options and often increased costs.
Meanwhile, physicians have seen a decline in autonomy, rising costs for patients and potential effects on care quality. In 2022, just 44% of physicians owned their practices, compared with 76% in the early 1980s, according to a report from the American Medical Association.
Optum operates the largest physician network in the country, with more than 90,000 employed or affiliated and more than 40,000 advanced practice clinicians. The company has inked $31 billion on acquisitions in the last two years and added 20,000 physicians in 2023.
The company's dominance over physician employment has spiked in recent years as the COVID-19 pandemic made it more difficult for independent practices to meet margins. More than 108,700 physicians left private practice for employment opportunities from 2019 to 2021, according to a report from Avalere.
"Efforts by Optum to dominate physician markets is a concern generally with consolidation of the insurance market. The two go hand-in-hand and it's got to be of some concern to consumers and patients," Chip Kahn, president and CEO of the Federation of American Hospitals, told Becker's last year. "From our standpoint, we think a lot of the criticism in terms of hospital consolidation is unfounded, but it's partly driven by the tremendous consolidation on the part of insurers."
Like physician practices, independent ASCs face mounting challenges, including rising operational costs and declining reimbursements. ASCs have long struggled with lower reimbursement rates for the same services as hospital outpatient departments, and CMS recently finalized a 2.83% physician pay cut in its 2025 Medicare Hospital Outpatient Prospective Payment System and ASC Payment System.
"It's forcing independent ASCs to be bought out by larger entities because they can't sustain themselves," Bill Rhoades, COO of Harrisburg (Pa.) Endoscopy & Surgery, told Becker's. "Their return on investment is lower than expected."
As consolidation continues to shape the ASC landscape, many leaders hope that independence can be preserved.
"In an independent ASC, there's more of a doctor-patient relationship and more emphasis on the patient experience," Mr. Peluso said. "Independent physicians might come in early or stay late to see a patient because they have more at stake. I think you'll see better quality care, better access, and lower costs with independent ASCs."