ASC industry leaders expect more consolidation in the coming years as the cost and risk of owning independent centers increases. How often will the buyer be a payer?
Naya Kehayes, principal at ECG Management Consultants, expects more payer investments in the future. Payers with ownership in ASCs have access to the center's data and can directly funnel patients into the surgery center.
"Optum, a part of the UnitedHealth Group, owns SCA. Kaiser definitely has ownership in surgery centers, and there are other payers across the country that maintain ownership in surgery centers," she said during a session at the Becker's ASC Virtual Event in October 2020. "You're going to see more payers taking equity in a lower-cost delivery platform, because it creates alignment to reduce costs and influence further migration."
Optum acquired Surgical Care Affiliates in 2017 for $2.3 billion. At the time, SCA owned or operated 205 surgical facilities in partnership with about 3,000 physicians. Since then, the company has grown to operate more than 230 surgical facilities, and it added 1,000 more physicians to its network last year. The company also added more than 40 new service lines in 2020, doubling the number added in 2019.
Ms. Kehayes also mentioned that in 2020, UnitedHealthcare began requiring preauthorization for 65 musculoskeletal procedures in a hospital setting, but not in the ASC. The company already had the policy in place for some gastroenterology and ophthalmology procedures.
"If the hospital does these cases, and it's not preauthorized, the hospital will not get paid, and the hospital cannot pursue payment from the patient," she said. "They're actually redirecting those cases to the ASC setting. There are some states that this does not apply to, but these are some very bold new policies in place."
In 2020, Pinnacle III sold its chain of ASCs to Surgical Care Affiliates amid the COVID-19 shutdown, and former Pinnacle III CEO Rob Carrera told Becker's that Surgical Care Affiliates was able to boost its analytics efforts and brought additional resources for partnering centers. Mr. Carrera is now a vice president of operations at Surgical Care Affiliates.
Surgical Care Affiliates also recently purchased Practice Partners in Healthcare, an ASC chain. In December, former Practice Partners CEO Larry Taylor became vice president of business development for Surgical Care Affiliates.
"When we reached the end of our fund with our private equity firm, we began looking for a new home. I wanted the best company for our team, facilities and physician partners," Mr. Taylor told Becker's. "We spoke with a high number of companies in the industry. Over the years, I developed strong contacts with the SCA team that facilitated our transaction."
Other payers have also begun investing in medical clinics and practices.
For example, in February 2020, Humana and private equity firm Welsh, Carson, Anderson & Stowe entered into a joint venture agreement to spend $600 million on expanding Humana's primary care centers for Medicare beneficiaries. The company had 47 existing centers and aimed to double that number over three years. Humana also has a primary care clinic company, Conviva.