Image by Andreas from PixabayThe migration of surgical volume into outpatient settings doesn’t feel like a slow drip anymore. For many hospital and ambulatory surgery center (ASC) operators, it is becoming a steady stream – with potential of turning into a raging river.
At Tenet Healthcare Corp. (NYSE: THC), that shift is translating into double-digit growth in joint replacements, expanding spine and urology capabilities, and a torrent of ASC acquisitions and de novos.
“USPI continues to deliver attractive results,” Chairman and CEO Saum Sutaria said during a Wednesday mornings earnings call on Q4 and full-year 2025 financial results, referring to Tenet’s ambulatory care arm. “Volumes were strong and mix was good.”
Dallas-based Tenet is a diversified health care services company whose network includes United Surgical Partners International (USPI), as well as acute care and specialty hospitals, other outpatient facilities and employed physicians. Its Conifer Health Solutions subsidiary provides revenue cycle management and value-based care services to a range of health care stakeholders.
During Wednesday’s call, Sutaria and other Tenet leaders described 2025 as another year of strong financial execution, yes. But the star of the show was USPI, which has – in many ways – become Tenet’s growth engine.
“USPI continues to be a high growth, capital efficient business that delivers high returns on capital expenditures,” Sutaria continued.
By the numbers: Tenet’s 2025
Overall, Tenet reported fourth-quarter net operating revenues of about $5.5 billion, up from about $5.1 billion in the same period a year prior. For the full year, net operating revenues reached $21.3 billion, compared with slightly less than $20.1 billion in 2024.
“Our results represent a continuation of a multi-year track record of strong same-store revenue growth, improved margins and disciplined execution by our management team,” Sutaria said. “We remain focused on driving further organic growth, supplemented by a creative M&A at USPI.”
Again, USPI’s financial and operating performance stood out.
Specifically, USPI generated about $1.4 billion in fourth-quarter net operating revenues, up 13.8% year over year. For the full year, ambulatory revenues reached more than $5.1 billion, compared with $4.5 billion the year before.
“Same-facility revenues grew 7.5%, highlighted by double-digit same-store volume growth in total-joint replacements in our ASCs over prior year,” Sutaria said. “This performance was, once again, well above our long term goal of 3% to 6% organic top line growth.”
The growth is increasingly acuity-driven, the CEO explained. Sutaria pointed to robotics capabilities, urology expansion and spine procedures as areas of opportunity, in addition to ongoing success around total-joint programs.
Can’t stop, won’t stop
Tenet’s ambulatory scale is steadily expanding. As of Dec. 31, 2025, USPI had interests in 533 ASCs, 401 of which were consolidated, along with 26 surgical hospitals
In 2025, Tenet invested several hundred million dollars in M&A and de novo activity while adding dozens of facilities, Sutaria said on Wednesday’s call.
“We had an active year in the M&A and de novo activity lines as well, investing nearly $350 million in 2025 and adding 35 facilities to the portfolio,” he said. “And the pipeline for both M&A and de novo development remains strong as we look into 2026.”
CFO Sun Park underscored that ambulatory expansion remains the top capital priority.
“Turning to our capital deployment priorities, we are well positioned to create value for shareholders to the effective deployment of free cash flow, and our priorities have not changed,” Park said. “First, we will continue to prioritize capital investments to grow USPI through M&A and, as Saum noted, we see a strong pipeline to support our $250 million annual target for USPI M&A in 2026.”
Growth, of course, comes with integration risk.
Sutaria acknowledged that bringing new facilities into the fold and upgrading their service mix takes time.
“We had a big M&A year, and, you know, a lot of the value that USPI brings after they require the assets and get into those settings is the planning for service line diversification and whatnot,” he explained. “We have a big cohort this year. It usually takes about a year to start to work on new physician entry and restructuring of the operating schedules, … where possible, to bring some of that higher acuity in. Sometimes, as we’ve talked about in the past, it removes lower-acuity procedures in the context of doing that.”
Macro-level trends, challenges and opportunities
A key theme mentioned during the call was the beginning phaseout of Medicare’s Inpatient-Only List.
“We see this as a gradual tailwind for USPI that will play out over several years,” Sutaria said. “In this first year, we see opportunities in areas such as high-acuity spine and urology procedures. We have detailed tactical plans to capitalize on the opportunity, and are actively operationalizing our capabilities to serve patients in 2026.”
In part, Sutaria believes Tenet and USPI are capitalized to take advantage of the ongoing shift due to USPI’s reputation as a forward-looking, technology-centric operator.
“I think USPI is well known to be kind of at the leading edge of the innovation in higher-acuity procedures in that area,” Sutaria said. “We continue to build on our urology platform … , [and we are] looking forward to doing more spine work there. A lot of the robotics capabilities that we have brought into the ASCs continue to allow us to find new avenues of expansion.”
A challenge for many health care operators that often isn’t discussed enough is the elimination of Affordable Care Act (ACA) subsidies, which could leave millions of Americans with reduced access to health care.
ACA subsidies going away will result in lower volume growth and less favorable payer mix for Tenet, mostly for the hospital segment, according to the company. Currently, Tenet projects a $250 million impact toward 2026 adjusted EBITDA.
