Image by Edar from PixabayTenet Healthcare Corp. (NYSE: THC) has been an enthusiastic purchaser of ambulatory surgery centers (ASC).
At the same time, its CEO says the health system has seen such success with its ASC arm – United Surgical Partners International (USPI) – in part because it is judicious about which centers are worthy of investment.
“Our diligence processes are robust,” CEO Saum Sutaria, M.D., said during Tenet’s first-quarter 2026 earnings call on April 30. “We still say ‘no’ to more centers than we say ‘yes’ to, and that’s fine, because we still think that the opportunity for high-quality ASCs supports USPI’s growth algorithm.”
As of the end of March, USPI had an interest in 541 ASCs, making it one of the largest ASC operators in the country. In addition to USPI, Dallas-based Tenet’s business includes acute care and specialty hospitals, other outpatient facilities and employed physicians.
“Fundamentally, what’s working is that USPI has just got a multi-year track record of acquiring assets, adding value to them both clinically [and operationally],” Sutaria said.
On the operational side, USPI’s supply-chain expertise helps to reduce costs and create efficiencies, and its business development team is skilled at transforming single-specialty centers into multi-specialty facilities, he explained.
And from a clinical perspective, partnerships with prominent health systems such as Baylor Scott & White Health and Memorial Hermann help to boost USPI’s quality-improvement agenda, Sutaria said.
“All of those things [have] created a nice virtuous cycle of reputation enhancement as … we deliver on what we say we’re going to do,” he added.
Selective as it may be about ASC acquisitions, USPI still has been saying “yes” to a lot of M&A.
During his prepared remarks, Sutaria said Tenet has a “robust pipeline” of assets interested in joining USPI and had a “particularly strong start to the year” that saw the health system invest $125 million to acquire seven ASCs. USPI also commenced patient care at three de novo centers.
“This represents half of our targeted full-year spend already completed in the first quarter,” Sutaria said.
CFO Sun Park added that Tenet “will continue to prioritize capital investments to grow USPI through M&A.”
In response to an analyst’s question about Tenet’s views on the regulatory environment, Sutaria said Tenet is eagerly awaiting the release of the next proposed ASC payment rule from the federal government. He said the company is encouraged by the Trump administration’s rhetoric supporting lower-cost sites of care.
“From our perspective, we’re just trying to stay on the right side of the value equation, having efficient health systems being accessible at all times, … and obviously, providing surgical care at scale at … half the cost, sometimes, of what it is to do the same work in a hospital,” Sutaria said.
The ongoing move to higher acuity
Tenet has also been focusing on steadily moving toward higher-margin, complex procedures – also known as higher-acuity services – across both its hospital and ASC portfolios.
“Given our focus on acuity, same-facility revenues grew 5.3% at USPI, highlighted by double-digit same-store volume growth in total joint replacements in the ASCs over [the] prior year,” Sutaria said.
During the question-and-answer portion of the call, Sutaria added that for USPI “there’s no question about the increase in acuity.” He noted that USPI is a leading provider of outpatient joint replacements and is still seeing double-digit growth in that space.
“If you create the right operating environment for these surgeons and give them an efficient, safe way to do the work, the demand is out there,” Sutaria added.
Sutaria also remarked that service lines like urology are fast growing, as are USPI’s robotic surgery programs in its ASCs.
“The only services that are declining are the high-volume, low-acuity areas,” he added.
Storm, cyberattack hurdles
The quarter also presented challenges for USPI.
Sutaria acknowledged that Tenet’s ASCs felt a negative impact from two major winter storms and “uncertainty from vendor cyberattacks,” but he added that USPI’s operational teams managed through those headwinds and were able to lessen the impact by rescheduling many procedures.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the USPI segment reached $484 million, up from $456 million in the first quarter of 2025. Tenet attributed that to “strong growth in same-facility net patient service revenues, disciplined expense management and contributions from acquisitions.”
First quarter 2026 net operating revenues for USPI increased 10.6% to $1.32 billion compared to $1.19 billion the prior-year quarter, driven by strong growth in consolidated same-facility net patient service revenues, acquisitions of facilities and increased service lines.
Tenet also said that same-facility, system-wide net patient service revenues increased 5.3% year over year for its surgical business, with cases down 0.3% and net revenue per case up 5.6%.
The company said net revenue per case growth was driven by higher acuity and favorable service mix.
For Tenet’s overall portfolio, first-quarter adjusted EBITDA was down slightly year over year, from $1.16 billion to $1.16 billion.
The company said that result reflected strong growth in same facility revenue and disciplined expense management, offset by unfavorable payer mix due to lower admissions from people covered by Affordable Care Act exchange plans. The expiration of enhanced ACA subsidies has lowered enrollment in those plans, representing a headwind across the health system sector.
Net operating revenues for Tenet grew from $5.22 billion in the first quarter of 2025 to $5.37 billion in the most recent quarter.
