Dallas-based United Surgical Partners International became the biggest ASC chain by far in December when it closed on a deal to acquire Towson, Md.-based SurgCenter Development.
SurgCenter Development, an ASC chain focused on orthopedic and spine centers across the East Coast and Midwest, added 86 ASCs to USPI's portfolio and will make an immediate impact on the company's bottom line. USPI already had ASCs and partnerships dotting the West Coast and Southern U.S., and truly became a national chain.
USPI now has more than 430 ASCs, with its closest competitors — Nashville, Tenn.-based AmSurg and Deerfield, Ill.-based Surgical Care Affiliates — reporting around 250 centers in their networks. The company also has a comprehensive growth plan of a mix between acquisitions and organic growth in the next few years to hit more than 600 surgery centers by 2025.
The deal was approved quickly by both sides and the federal government. The two signed a definitive agreement for the deal Nov. 8, 2021, and closed Dec. 22.
Given how much USPI has expanded, can the other chains keep up?
The quickest way to grow is through acquiring another ASC chain, as USPI did. It takes considerable time and effort to develop new ASCs or acquire them one by one. But that's what Brentwood, Tenn.-based Surgery Partners' strategy is.
Surgery Partners spent $325 million in transactions last year and deployed $34 million in acquisitions during the first two months of 2022; by the end of the year, the company plans to spend $200 million on new centers. By comparison, USPI spent $1.2 billion on SurgCenter Development.
Eric Evans, CEO of Surgery Partners, emphasized acquisitions as well as partnerships as being core to the company's growth strategy during the 2021 earnings call at the end of February. Surgery Partners also inked a deal with Privia Health, a Montana-based physician clinic technology company, earlier this year. Surgery Partners expects the deal to represent long-term value to the company and act as a springboard for other partnerships.
There are also several regional ASC companies with 20 to 50 ASCs within their network, which could be prime acquisition targets for the larger chains. Many of the midsized companies focus on a particular specialty, such as orthopedics or gastroenterology, and bring the value of hospital partnerships to the table.
The midsize chains are looking at growth avenues to increase value by taking on new partnerships and investments. Last year, Chicago and Nashville, Tenn.-based Regent Surgical Health partnered with St. Louis-based Ascension to develop its ASC chain, and received an investment from Ascension's venture capital arm.
PE GI Solutions has private equity backers and Compass Surgical Partners, a developer and manager of ASCs, said growth equity firm Health Velocity Capital became minority owner in the company March 11.