FEATURE
solidation, existing companies remain interested in growing their number of affiliated centers. “They are out en masse to acquire interest in ASCs and create joint-venture relationships. Those companies see an opportunity to leverage their expertise in areas including contracting and purchasing for these centers.”
Health systems are not pursuing ASC strategy and development alone. “We are seeing a lot of activities involving national ASC firms work- ing with health systems as an acquisi- tion or development partner,” Eisen- berg says. “This can accelerate the pace of transition from hospital- to ASC-based outpatient surgery.” Meanwhile, Boore says she has seen an increasing amount of money coming into ASCs via private equity- backed platforms. While activity lev- els are down from what she describes as a “frenzy” in late 2019, ASCs with certain specialties are currently receiving significant attention. “A few years ago, activity was largely cen- tered around dermatology, gastroen- terology and ophthalmology. Now we are seeing firms interested in urology, orthopedics and cardiology.” For private equity companies look-
ing to build up a strong presence in a market or region, certificate of need (CON) laws become an important factor, says Brinegar. Iowa, where her ASC is based, is a CON state. “CON laws would seem to reduce the ability for private equity to execute such an investment strategy given the lower number of ASCs in these states. In non-CON states where you have quite a few ASCs, private equity likely has more options.” Private equity firms and platforms
looking to add ASCs typically take one of two approaches. The first con- cerns buying into physician prac- tices. “Through those practice acqui- sitions, private equity then develops an ASC strategy either through con-
ment experiences downward pressure, it will be interesting to see if underuti- lized ASCs can survive or if they will consider merging with another under- utilized ASC.”
Brinegar says the merger of ASCs
ASCs can deliver on the ‘quadruple aim’ better than any other delivery platform. They can optimize performance, reduce costs, improve the patient experience and increase the wellbeing of the workforce.”
—Robert Eisenberg
version of existing ASCs or via de novo projects,” Eisenberg says. The second approach is essentially
a reverse. “When private equity has struggled to grab a number of physi- cian groups, some have redirected their strategy by starting with acquiring an ASC,” McCaslin says. “This can serve as a way into the affiliated physician group. We have seen this more in the orthopedics arena as of late.”
Other Developments to Watch One trend likely to affect transac- tions going forward is the develop- ment of new ASCs. Boore says she is surprised by how much new ASC development is occurring. “There are definitely markets in the country that seem to be saturated with centers. As costs continue to rise and reimburse-
can deliver valuable efficiencies. “The consolidation of services, pro- viders, staff and equipment seems to make sense from a financial stand- point. If done right, this looks like a great way for ASCs to lower costs.” The merging of multiple physi- cian groups is a trend likely to impact ASCs in some markets. Eisenberg says independent practices are form- ing supergroups to stay independent and leverage buying and negotiating power to achieve economies of scale. “These supergroups are often creating their own outpatient surgical strategy around developing, acquiring or part- nering with ASCs or surgical hospi- tals. I expect to see some supergroups pursue partnerships with health sys- tems to tap into the system's operating and contracting strength while still being able to remain independent.” In the coming years, Eisenberg says he also expects to see more hos- pitals considering whether to con- vert hospital outpatient departments (HOPD) to ASCs. “Think about how much more consumer facing health- care is becoming. People are increas- ingly shopping around for surgical care and one of the factors they are researching is price. If you can only offer the HOPD or inpatient experi- ence, you will not be able to compete. You need a platform that can deliver an exceptional patient experience and outcomes at a competitive price point. You cannot do that without an ASC.” With the transition of surgical care
out of the inpatient setting and into the ASC showing no signs of slowing down, McCaslin expects transactions involving surgery centers to continue at a fast pace. “I think the next 10 years may be the best 10 years to ever own an ASC.”
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