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panies would seem to indicate a grow- ing demand for consolidation of ASC operators, says Joan Dentler, president and chief executive officer of Avanza Healthcare Strategies, a provider of consulting services focusing on out- patient services and population health management based in Austin, Texas. “When you consider the transac- tions from the past few years—such as the Tenet Healthcare Corporation and United Surgical Partners International merger in 2015 and Surgery Partners’ acquisition of Symbion in 2014—it is evident that the market is demanding consolidation of these larger ASC enti- ties,” she says.

Consolidation in the ASC Market

To be successful, be proactive in pursuing alignment strategies BY ROBERT KURTZ


nder the federal budget adopted last November, hospitals and health systems are no longer able to buy ASCs, convert them to hospital outpatient departments (HOPD) and charge HOPD prices in those facilities. Even without that option, the trend toward consolidation in the US health care marketplace continues. Many are trying to determine how consolidation is affecting individual ASCs through- out the country, but the only definitive answer seems to be “It depends.” “From the perspective of an indi-

vidual ASC, the impact of consoli- dation will be market-specific,” says Kevin McDonough, managing direc- tor for health care valuation and trans- action advisory firm VMG Health in Dallas, Texas. “In some markets, we have observed a significant dearth of independent physicians and narrowing networks between hospital providers,


Drivers of In-Market Consolidation In individual markets, many factors might contribute to ASC consolidation. “The ASC industry is a mature

industry,” says John Wilson, Jr., chief executive officer for ASC management and development company Meridian Surgical Partners in Brentwood, Tennessee.

“As a result, in many

From the perspective of an individual ASC, the impact of consolidation will be market-specific.”

—Kevin McDonough, VMG Health

affiliated physicians and insurers. This will likely force the hand of indepen- dent ASCs toward alignment.” Colin Park, director at VMG Health, adds, “In other markets, in which hospitals, physicians and insur- ers are less aligned, independent ASCs can likely still thrive and look to align more closely with hospitals and insur- ers on their own terms.” On a broader scale, recent mergers and acquisitions involving large ASC management and development com-

markets, you now have situations where there are ASCs with excess capacity. Having that excess capacity provides an opportunity to merge two ASC partnerships into one location and realize operational synergies.” Such partnerships can provide new

opportunities in areas where an ASC might have struggled in the past, Dentler says. “More and more ASCs are align- ing with others in their market in order to take advantage of economies of scale that can come with combining support services, strengthening buying power with vendors and possibly improving negotiating power with payers.” “Rising costs also are encouraging

ASC owners to look at ways to reduce expenses and share the cost of support services, such as billing and regulatory compliance oversight,” she adds. Markets with many ASCs can cre- ate challenges that encourage consoli- dation, McDonough says. “In markets with an oversaturation of ASCs, centers

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