Image by Pawel Grzegorz from PixabayAmbulatory surgery centers (ASCs) continue to face swift and significant consolidation trends, which will likely pick up even more in the coming year.
Both private equity firms and health systems are intensifying their involvement in the outpatient surgical market, creating new challenges and opportunities for independent ASCs.
Smaller, physician-owned ASCs have historically thrived on agility, personalized service and cost efficiency, Todd Currier, CEO and administrator of Bend Surgery Center, said during a recent Ambulatory Surgery Center News webinar.
For this reason, he advocated a cautious approach to PE involvement and consolidation.
“We need to make sure that we don’t turn into a health system,” he said. “We’re smaller entities, small businesses. We’re more agile. We can make adjustments on the fly. And, you know, that’s what’s helped create our industry.”
Oregon-based Bend Surgery Center is a 44,000-square-foot multi-specialty ASC with several operating rooms.
However, some centers are seeking partnerships for financial security and expanded resources, Currier said, and deals involving large management companies can offer administrative support, staffing solutions and broader negotiating power with payers.
“I’ve always pushed consolidation in my surgery centers from a strategic point, because you know that that allows you to be more competitive,” Danilo D’Aprile, VP of business development for Merritt Healthcare, said during the webinar. “As long as vendors are not using these consolidations to to price gouge and hold you to the fire, I think they work.”
Connecticut-based Merritt Healthcare is a management and advisory firm that specializes in ASCs.
Adding another layer to the consolidation equation, health systems are increasingly exploring joint venture models with ASCs. Hospitals often bring name recognition, a more extensive referral network and the potential to ease staffing or anesthesia constraints, two of the biggest pain points for surgery centers, D’Aprile said.
“I think there’s a tremendous amount of opportunity with joint joint ventures and health systems, and how that’ll start to shift and mold the ASC industry going forward,” he said.
Yet both speakers cautioned that if a health system’s hospital-like policies and bureaucracy seep into the ASC, it could undermine the center’s core advantages and efficiency.
“When you’re developing the joint venture, it’s important to navigate through those idiosyncrasies, because we need to make sure that operationally ASCs remain efficient,” D’Aprile said.
There are plenty of recent examples of consolidation in the ASC space, whether that’s through acquisition of JV.
For example, SCA Health, the ambulatory surgery center arm of Optum, acquired OrthoAlliance, an orthopedic management services organization.
Additionally, in North and South Carolina, OrthoCarolina acquired Matthews Surgery Center.
CHRISTUS Health and Kerrville Surgery Center also finalized a joint venture to provide specialized surgical care to the Texas Hill Country as CHRISTUS Surgery Center.
Even though some administrators worry about losing control or independence, well-structured JVs can be a “win-win,” helping centers stay competitive by adding higher-acuity procedures and accessing advanced technology, D’Aprile said.
“I think aligning goals is probably the most important, and making sure that you’re including physicians as the equity partners is key,” he said. “Operationally speaking, let the experts manage the surgery centers.”
While consolidation is real and likely to accelerate, centers that stay active and engaged with industry coalitions and associations can preserve their autonomy and agility, Currier added.
“I think that there are challenges, but there are challenges that we just need to take head on and face, whether it’s anesthesia shortages, whether it’s supply chain issues, whether it’s regulatory issues and/or these consolidation [trends]. They’re all opportunities,” he said. “You just have to look and find them.”
