USPI's 2-year growth trajectory: 7 details

Dallas-based Tenet is actively scaling up United Surgical Partners International, its ASC business, to become a larger part of the company's business.

Saum Sutaria, MD, president and COO of Tenet, and Dan Cancelmi, executive vice president and CFO of Tenet, discussed the progress of recent ASC acquisitions and where the business line is headed over the next two years during the Raymond James Institutional Investors Conference March 2.

Seven takeaways from the discussion:

1. In 2019, Dallas-based USPI comprised 33 percent of Tenet's adjusted EBITDA and the company expects that to reach 50 percent by 2023. Over the same period, Tenet expects hospitals to drop from 53 percent of the company's adjusted EBITDA to 35 percent.

2. Tenet's goal is to become a leader in orthopedic surgery across the U.S. The company closed its acquisition of 45 orthopedics and spine focused centers from Towson, Md.-based SurgCenter Development, announced in the fourth quarter of last year. Dr. Sutaria said the acquisition is on target and delivering well per expectations.

3. The pandemic limited ASC cases last year. USPI surgical cases were down 80 percent compared to 2019 volumes last April but then recovered to 95 percent of 2019 volumes by December.

4. Tenet anticipates 2021 EBITDA will reach $3 billion at mid point, and USPI will see a 56 percent increase in EBITDA. USPI's adjusted EBITDA is expected to hit $1.2 billion in 2021.

5. Tenet anticipates $40 million to $50 million in synergies from acquiring the SurgCenter Development ASCs and plans to leverage USPI's business development team to expand the centers and potentially add new service lines.

6. Dr. Sutaria said around 15 percent to 20 percent of total joint replacements performed at Tenet's hospitals could be performed at ASCs, and expects to see those procedures move to the outpatient setting in the coming years.

7. The USPI platform includes pre-surgery strengthening, surgical procedures and accelerated rehabilitation from home. Dr. Sutaria said he expects the number of total joints performed on 45 to 64 year olds will increase because the procedure and recovery are simpler in the ASC than the hospital. He also anticipates more Medicare beneficiaries will have total joints in the ASC.

"I don't think the industry has figured out the amount of value creation that exists from moving into an ambulatory setting in this space," Dr. Sutaria said during the presentation. "We view the USPI platform as a value-based care play. The payers and Medicare should be all over supporting that business as opposed to worried about that business and the growth that we have there. All we're doing is reducing medical loss ratios. It's a third to a half of the cost in one of our ASCs than the hospital anywhere in the country, and we are often surprised at how little people understand about that benefit to the payer and the government side."

Click here to view the full presentation.

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Articles We Think You'll Like

 

Featured Whitepapers

Featured Webinars