Tenet Healthcare Corporation (NYSE: THC) closed out 2024 strong, partly propelled by growth in its large ambulatory surgery center (ASC) division, United Surgical Partners International (USPI).
Moving forward, the company is focused on ASC expansion and high-acuity case growth, CEO Saum Sutaria said during the company’s Q4 earnings call.
“We intend to invest approximately $250 million each year towards M&A in the ambulatory space,” Sutaria said. “And the pipeline of opportunities remains strong. We anticipate adding 10 to 12 de novo centers in 2025.”
Tenet is a diversified health care services company headquartered in Dallas, Texas. As of Dec. 31, 2024, USPI had interests in 518 ambulatory surgery centers (375 consolidated) and 25 surgical hospitals (seven consolidated) in 37 states.
“Our focused strategy, disciplined operating management, and the strong demand for acute care and ambulatory surgical services provide us with momentum as we begin the year and confidence to achieve our full year 2025 expectations,” Sutaria said.
Overall, Tenet’s net operating revenues for the fourth quarter of 2024 were about $5.1 billion, down compared to roughly $5.4 billion in the fourth quarter of 2023.
On the year, Tenet’s net operating revenues for 2024 totaled about $20.7 billion, up compared to the company’s $20.5 billion in net operating revenues in 2023.
USPI’s Q4 2024 net operating revenues totaled about $1.3 billion, up from roughly $1.1 billion during the prior year’s same quarter.
For the full-year 2024, USPI’s net operating revenues were $4.5 billion, a jump up compared to 2023’s $3.9 billion.
“Surgical business same-facility system-wide net patient service revenues increased 8.6% in fourth quarter 2024 compared to fourth quarter 2023, with cases up 0.1% and net revenue per case up 8.5%,” Tenet noted in its financial filings. “Net revenue per case growth was driven by higher acuity associated with favorable case mix as well as favorable payer mix.”
Adding ASCs, robotics and more
Tenet added nearly 70 ASCs to its portfolio in 2024 through acquisitions and new facility openings.
As part of its growth strategy, Tenet is also expanding the use of surgical robotics, Sutaria said.
“We now have robots in almost 150 of our programs around the country,” he said. “This is the direction in which we’re taking the organization.”
Despite regulatory uncertainties, Sutaria said that Tenet’s ASCs operate under freestanding ASC rates, insulating them from potential reimbursement changes tied to site-neutrality regulations.
“Our cost management agenda doesn’t change in terms of managing labor, managing supplies, managing purchase services,” Sutaria said. “Active vendor consolidation activities, scaling our service lines in which we’ve got a cost structure that we’re comfortable with, obviously, just that scale creates opportunity.”
Looking at broader industry trends, Tenet expects stable surgical case volumes and sustained higher patient acuity levels in 2025, with further growth in procedures such as total joint replacements and cardiovascular interventions, Sutaria said.
“[There are] important patient safety considerations and payer mix considerations, and also the capital required to build a cardiac center is very different from building other types of ASCs, given the equipment that you have to have in there,” Sutaria said. “So the upfront investment for the physician partners and other things is much higher, with potentially lower margin assets.”
Due to those factors, growth might be slow, Sutaria said.
“For economic reasons and patient safety reasons, I think this market will evolve, but I think it will evolve slower than people like to think,” he said.
Still, with a “robust” free cash flow position, Tenet plans to continue repurchasing shares while prioritizing strategic investments in the ASC market.
“We’re successfully, two years in a row, executing our strategy of increasing lower-volume, high-acuity cases,” Sutaria said. “Consistently, we’re exceeding what we expect from the standpoint of what we can do in same-store revenue growth in that environment. And so we’re pleased by that.”
