Large health systems are forming partnerships and joint ventures for the development or management of ASCs as care continues to shift from inpatient to outpatient settings.
"Historically, health systems didn't always embrace surgery centers because of the financial impact and perceived competition. But now, a lot of health systems view ASCs as an important part of their delivery network and want to be involved in a bigger way," Aric Burke, CEO of Phoenix-based Atlas Healthcare Partners, told Becker's.
At the beginning of 2024, 60% of health system leaders expressing interest in outpatient surgery joint ventures.
Here are five major health systems looking to ASCs to drive growth:
Ascension (St. Louis)
Ascension is looking to ASCs for its growth plans amid a $3 billion operating loss in fiscal 2023. Ascension has added 21 ASCs over the last three years and aims to grow that number to more than 100 in the next few years, President Eduardo Conrado told Becker's in an interview.
The health system has "set capital aside for investing in the ambulatory front, and that includes ASCs, the pharmacy component, imaging, outpatient [physical therapy], mental health components," Mr. Conrado told Becker's. "So we ended up setting up multiple strategic business units that have grown over the last couple years."
Ascension saw a $3 billion operating loss in fiscal 2023 and has since taken action to sell a number of facilities across the country to recover, including more than six hospitals in 2024.
Bon Secours Mercy Health (Cincinnati)
Bon Secour Mercy Health System, a 48-hospital Catholic system, is also looking to ASCs through a joint venture to build out more than 30 ASCs with Raleigh, N.C-based Compass Surgical Partners.
The joint venture will develop ASCs across Compass' reach in Kentucky, Ohio, South Carolina, Virginia, Maryland, New York and Florida. Compass has already built a network of more than 250 ASCs over the last 30 years.
"We are focused on ensuring we have proper pacing and prioritization of projects that allow us to scale efficiently," David Cannady, chief strategy officer of Bon Secours Mercy Health, told Becker's. "We are also committed to developing solid physician partnerships and securing managed care contracts. Compass brings significant experience and expertise in each of these areas, and we are already seeing the value of our partnership in accelerating our ambulatory footprint."
The partnership with Compass is also crucial in the financial viability of Bon Secours' ASC growth and strategic expansion, Mr. Cannady added. And for other systems looking to expand into the ASC world, Mr. Cannady says that "speed to market" is vital, alongside balanced decision-making.
HCA Healthcare (Nashville, Tenn.)
Healthcare is one of the largest ASC operators in the country with its Surgery Ventures arm.
HCA's revenue and profitability grew in the ASC and hospital outpatient surgery increased in the quarter despite the volume decline, HCA Healthcare CEO Sam Hazen explained in a July 23 earnings call transcribed by Seeking Alpha.
"I think it's important to understand that the revenue growth — the service level growth that we've seen in our outpatient surgery business — has been solid and produced a good financial outcome for the company," Mr. Hazen said.
HCA finished 2023 with 124 ASCs and 24 endoscopy centers, which saw 1,044,415 total surgery cases — a 2.1% increase year over year. Outpatient procedures accounted for 38.3% of patient revenues.
On Aug. 13, HCA Healthcare won certificate-of-need approval to develop an ASC in Hanover, Va., after two consecutive rejections by state health authorities. Also this year, HCA Surgery Ventures announced the opening of Silicon Valley Surgery Center in Campbell, Calif., through a JV deal with more than 50 physicians.
MultiCare (Tacoma, Wash.)
MultiCare Health System and ASC development company Atlas Healthcare Partners inked a deal to create a JV ASC network in the Pacific Northwest.
Through the partnership, Atlas and MultiCare will develop, manage and scale the health system's ASC network. MultiCare is the third health system to form a joint venture with Atlas since 2019.
"ASCs are essential for us to provide the highest quality and highest value healthcare to our communities," Mark Mariani, MD, vice president of MultiCare Surgery Centers, said in a July 16 news release. "We are committed to maintaining and expanding access to surgical care in the region with an outstanding partner that helps us deliver on our vision and mission. Partnering with Atlas provides the team and expertise to develop, manage, and scale our ASC network quickly and effectively."
Tenet Healthcare (Dallas)
Tenet Healthcare is transforming its portfolio as it rapidly selling hospitals while simultaneously adding ASCs.
Tenet is selling hospitals in certain high-growth markets at attractive EBITDA levels and is investing $450 million into its ambulatory business, United Surgical International Partners, which acquired 45 ASCs in the first quarter.
"Tenet is entering a new era with a greater proportion of our performance coming from our highly efficient ambulatory surgical business and a reduced debt profile," CEO Saum Sutaria, MD, said during the company's fourth-quarter earnings call. "We will have significant financial and capital flexibility to increase shareholder value over the long-term."
Tenet's United Surgical Partners International is the largest ASC chain in the country with 520 ASCs and 24 surgical hospitals across 38 states. It is also showing no signs of slowing down, with plans to have 575 to 600 facilities by the end of 2025.