2023 was transformative for ASC sector: Growth, regulatory changes, strategic consolidations

Editor's Note

Becker’s ASC Review on February 13 published an in-depth overview of the ambulatory surgery center (ASC) sector's growth and activity in 2023. It highlights the ongoing trends, market dynamics, regulatory changes, and notable company performances within the industry. Here are some takeaways:

• Growth and consolidation: The ASC sector saw steady growth, with significant consolidation driven by investments and acquisitions from both established platforms and new market players. United Surgical Partners International (USPI), Envision Healthcare/Amsurg Corp, and Surgical Care Affiliates (SCA) were the largest operators in terms of ASC ownership, “with ownership in approximately 476, 320, and 250 ASCs respectively.”
• Shift to higher-acuity cases: There was a continued trend of higher-acuity procedures moving to outpatient settings, partly due to the Centers for Medicare & Medicaid Services (CMS) adding total shoulder arthroplasty to the ASC Covered Procedures List (CPL).
• Regulatory changes: 2023 had notable regulatory changes, especially the loosening of Certificates of Need (CON) requirements in certain states. Experts say these changes should accelerate ASC development opportunities and their capacity to meet growing outpatient surgical care demand. CMS's final rule for 2024 also added 37 surgical procedures to the ASC CPL.
• Market valuation: Financial disclosures from public companies such as HCA Healthcare, Tenet Healthcare, Surgery Partners, and Medical Facilities Corp provide insights into the ASC industry's financial health and growth prospects. According to Becker’s, examining financial disclosures from these companies, including investor presentations and SEC filings, leads to a “comprehensive understanding” of the ASC sector.
• Performance highlights: Companies like Surgery Partners and Tenet Healthcare reported significant growth and expansion after focusing on high-acuity procedures and strategic acquisitions to boost their competitive positions and market footprints.

Notable transactions and partnerships were also highlighted; some of the merger and acquisition activity that expanded service offerings and geographic presence includes:

• In October 2023, SurgNet Health Partners, a newly founded multispecialty ASC development and management company, announced the acquisition of two ASCs in Michigan and Ohio.
• In the same mounth, TriasMD, the parent company of DISC Surgery Centers, acquired Pinnacle Surgery Center.
• United Musculoskeletal Partners partnered with two orthopedic practices in Dallas-Fort Worth–All-Star Orthopaedics and OrthoTexas Physicians and Surgeons–adding clinics and a surgery center to its platform. UMP also acquired Pinnacle Orthopaedics, an ortho-focused ASC.
• Hartford HealthCare acquired two outpatient surgical centers in Connecticut.
• Covenant Physician Partners merged its St. Vincent Eye Surgery Center and Wilshire Center for Ambulatory Surgery and added another surgical facility.
• Surgery Partners and NorCal Orthopedic Surgery Center have partnered in San Ramon, California, which signals a strategic move toward consolidation.
• Regent Surgical Health acquired majority ownership in Oregon Surgical Institute, showing a focus on complex spinal and total joint replacement cases.

The ASC sector in 2023 was filled with growth and adaptation, and 2024 is poised to include further activity as ASCs continue to position themselves as key players in the healthcare ecosystem.