Increased Merger & Acquisition Activity in the ASC Market. What Does It All Mean?

Increased Merger & Acquisition Activity in the ASC Market. What Does It All Mean?

High Profile Acquisitions Show That Analysts Believe Strongly In The Growth Prospects Of The ASC Market

Merger and acquisition activity in the ambulatory surgery center (ASC) arena has drastically increased in the past two years. This flurry of activity has left many in the ASC market wondering what this might mean for their centers, as well as what it might mean for the broader ASC market, in the upcoming years.

In 2015, Tenet Healthcare Corp. acquired United Surgical Partners International (USPI) in a joint venture transaction. In 2016, AmSurg Corp. merged with Envision Healthcare Holdings Inc., a provider of facility-based physician, population management, and medical transportation services, to form Envision Healthcare Corp. In January of 2017, Optum, a healthcare services division of the payer UnitedHealth Group (UHC), announced it was acquiring Surgical Care Affiliates Inc. In addition to these high profile acquisitions, there have been numerous other ASC related deals during this timeframe.

It is interesting to note that, while USPI, Amsurg, and SCA are all ASC management companies, their acquirers were all very different types of organizations, so these were hardly copycat transactions. The first acquirer was a large health system, the second was a physician staffing company, and the third was a large healthcare payer.

This begs the question … what drove the acquisitions of the three largest ASC management companies by three very different and distinct buyers? The short answer is that these acquirers, as well as numerous Wall Street analysts, believe strongly in the growth prospects of the ASC market.

There has been a major movement in procedures shifting from hospital inpatient, to hospital outpatient, and now to ASCs. This shift has been driven by numerous reasons, including high-quality outcomes, convenience for patients and providers, technology that has enabled more sophisticated procedures to be performed in ASCs, and significant cost savings for payers and patients alike. So, Tenet, Envision, and Optum/UnitedHealthcare were all determined to gain access to this very important component of the healthcare delivery market. It’s a safe bet to assume that many others will be finding creative and aggressive methods to access the highly attractive ASC market in the near future. According to a 2017 Capitol One survey, 38 percent of healthcare executives said that merger and acquisition transactions are powering their growth plans for this year.

The surgery centers that will best capitalize on the positive momentum of the industry are the ones that can grow rapidly and maintain strong financial margins while maintaining high-quality outcomes, with extremely satisfied patients, at cost competitive rates. The centers that can master these fundamentals will significantly benefit from the migration of procedures to ASCs and will put themselves in a leadership position amongst the other ASCs.

By doing so, these centers will be in a tremendous position to control their own destiny, whether that be to remain independent, become an acquirer of other ASCs, partner with the local hospital to drive growth, or sell to one of the many types of organizations that are hoping to gain a foothold in the rapidly growing ASC market.

Regardless of the path chosen, successful ASCs will have numerous excellent options in the years to come.

Written by Nader Samii, Chief Executive Officer

Source: Becker’s ASC Review

ASC Mergers and Acquisitions

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