Tenet reported its ambulatory care segment revenue dropped 3.6 percent in the first quarter year over year, largely due to the sale of Aspen Healthcare in 2018.
During the first quarter, Tenet's ASC business, United Surgical Partners International, sold two facilities and merged two locations into one, which contributed to a dip in consolidated revenue for the quarter.
"When we think about the portfolio optimization for the company, that is a normal part of our process," said Brett Brodnax, president and CEO of USPI, during the first quarter conference call, as transcribed by Seeking Alpha. "We sell facilities from time to time that we don't view as strategic to the company. We also merge facilities where we think we can capture synergies. And that's exactly what happened in this situation."
In 2018, Tenet invested $240 million in the ambulatory space and added 27 facilities. Mr. Brodnax said the company's pipeline is still very strong. "We expect the latter quarters of the year to be very fruitful from an M&A perspective," he said.
The company also reported 3 percent increase in revenue per case and higher case volume. The results were driven partially by patients with high deductible health plans. In some cases, patients that didn't meet their deductibles in 2018 may opt to undergo surgery in the first quarter and then spend the rest of the year with their deductible met.
"As we alluded to in Q4 of last year, what we're seeing is the consumer being a little bit more rational as to how they deal with our high-deductible health plan," said Mr. Brodnax. "We saw that as a nice tailwind in Q1. We're not expecting that to continue through the remaining part of the year, but it certainly helped us for this quarter."
More stories on surgery centers:
What percentage of ASCs are physician-owned?
Ambulatory revenue for Tenet/USPI drops 3.6% in Q1: 5 things to know
18 new ASCs in April