Image by WOKANDAPIX from PixabayAs the ambulatory surgery center (ASC) landscape grows more saturated – especially in a handful of key hotspots – standing out requires more than scale. It takes specialization, savvy joint ventures and operational agility.
Sovereign Healthcare is making its mark across Arizona and California by focusing on all three.
With a multi-specialty footprint that spans orthopedics, GI, ophthalmology, oncology and more, the company is leaning on hospital partnerships and thoughtful service line expansion to grow its presence.
ASC News caught up with Lynn Dugan, senior vice president of ASC operations and clinic services at Sovereign Healthcare, during the Arizona Ambulatory Surgery Center Association’s 2025 Annual Conference in Scottsdale. During the conversation, Dugan shared her take on ASC development challenges, why younger physicians are hesitant to invest, and how Sovereign is navigating workforce dynamics and long-lead construction timelines – all while keeping an eye on what’s next for the sector.
Highlights from the interview are below, edited for length and clarity.
ASC News: What are some of the biggest challenges and opportunities you see, both with your existing ASCs and when it comes to opening new ones?
Dugan: I would say that some of the challenges we face here in Arizona, in particular, which is the market we’re trying to grow, are just related to the fact we already have a lot of surgery centers.
There’s Sovereign Healthcare, but also many other management companies, as well as independent surgery centers. So to find physicians who are interested – and who wouldn’t be restricted by non-competes – in developing a surgery center can be a challenge. We rely heavily on our hospital partners to work with their surgeons to develop surgery centers, and that’s really where we get our business.
One of the challenges is the business development part of it and being able to find a group of physicians who want to invest in a surgery center and partner with a smaller management company versus a bigger one.
I’ve done some reporting on why younger physicians aren’t as interested in buying into surgery centers. What’s your view on this as a potential roadblock?
A lot of it could just be that they’re not sure of the investment or the return on the investment. They’ve got to make an initial investment into the surgery center, and it could take two years before they see any return, just because of the growth period.
You’ve got to build the surgery center and go through all the regulatory pieces – state license, accreditation, Medicare number, etc., and then after you have the Medicare number, you get contracted. That whole process takes about 12 months. I think that can be a little daunting.
It’s the experienced physicians who are bringing in younger partners. That’s usually how they get them in.
I know Sovereign has a focus on endoscopy, but also some multi-specialty work. Can you share some basic background on your focus?
ASCs are really multi-specialty. We have a total joint-accredited center in Scottsdale. We have a spine-only surgery center. We have a multi-specialty center that has everything, including total-joint programs. We have ophthalmology here in Arizona, and oncology in Orange County.
So I would say GI is not our only specialty. We’re really well-rounded. We can do anything. We just haven’t gotten into bariatrics yet.
Are there any service lines you’re looking to expand into?
We would like to get into the bariatric space.
Why?
Now that there’s more reimbursement for the codes, that’s something I think would be a great opportunity for us, like other companies are doing.
I also wanted to get your thoughts on joint ventures. What makes a successful relationship between an ASC and a hospital system?
In our situation, working with HonorHealth as our joint venture partner, there’s a lot of collaboration. They’re very involved. They’re on our board for all our different surgery centers. We participate in several operations meetings where we review ASC data, and they move with the hospital.
Compared to a lot of other hospital systems, we have a really cohesive relationship with HonorHealth. They’re very focused on growth as part of their strategy, and that’s where we come in. We’re their partner, so if they’re interested in an ASC, we get involved.
Have labor shortages and rising supply costs impacted your network?
It ebbs and flows. Right now, we’re building a couple of surgery centers, and there are things, because of tariffs, that are long lead items. If you want a generator, it might take 18 months to get one. But I think our person who oversees supply chain management really has it figured out. Our surgery centers support each other, too. If we need something, we can share between centers.
I imagine that it must be helpful – having your centers work together.
Yes, and we do that with staff too. If one center is really slow or just ramping up, the staff can work at another center. It’s not exactly a float pool because they’re employed at one center, but they’re able to float.
Do staff generally like that flexibility?
Yes. Staff who really want their hours and don’t want to be affected by low census like having that option. They can go work at another center. They know the EMR system, they know our policies and procedures; it’s all consistent. That helps us avoid bringing in contract staff who don’t know our system.
One last big-picture question: where do you see the ASC industry going over the next five years?
I think the ASC industry is on a path of continued growth. More and more procedures are getting approved every year for the ASC payable list. More physicians want to be part of something like that. We’re not quite at California’s numbers in terms of ASCs, but we have a lot here [in Arizona].
I don’t think ASCs are going anywhere. We’ll still be fighting for reimbursement, but business will keep growing.
