Health systems are increasingly pursuing joint venture partnerships to improve care quality and expand access. Joint ventures centered around the development, acquisition or operation of ambulatory surgery centers are gaining significant traction as healthcare continues to migrate from hospitals to outpatient settings.
Outpatient surgery is the top service line for joint venture partnerships this year, according to a VMG Health survey of health system executives, including CEOs, CFOs and COOs. Survey results have been backed up by news of multiple health systems partnering with one of the many ASC chains vying for market growth.
Tacoma, Wash.-based MultiCare Health is the latest system to form a joint venture in the ASC space. The system partnered with Atlas Healthcare Partners "to develop, manage and scale our ASC network quickly and effectively," according to Mark Mariani, MD, vice president of MultiCare Surgery Centers.
Atlas also has ASC joint ventures with Grand Rapids, Mich.-based Corewell Health and Phoenix-based Banner Health, which has expanded its ASC network from eight to 30 centers over the last five years.
Banner, a 30-hospital system, invested in Atlast in 2022 and aims to grow the number of ASCs in its network to 50 by the end of 2025.
The investment was "a logical next step… to help the company scale and grow into a larger national partner for other health systems as well," Banner Chief Strategy and Growth Officer Scott Nordlund said. "Banner's decision to invest in Atlas aligns us at the management company level in addition to the regional joint venture and local ASC levels and creates a unique surgery center management company focused on creating strategic partnerships with health systems including ASC network development, investment and operations."
Brentwood, Tenn.-based Surgery Partners — which owns and operates more than 180 ASCs, surgical hospitals, multispecialty practices and urgent care facilities across 33 states — has partnered with several health systems over the last 18 months to build and acquire ASCs.
In February, the company entered the Indiana market through a joint venture with Fort Wayne, Ind.-based Parkview Health. Surgery Partners and Parkview aim to "work with physicians to build and acquire ASCs with a focus on increasing access outside of Parkview's core service area," according to a Feb. 20 news release shared with Becker's.
Other health systems Surgery Partners has ASC joint ventures include Salt Lake City-based Intermountain Health, Dallas-based Methodist Health and Columbus-based OhioHealth.
Another ASC company, Compass Surgical Partners, plans to launch a joint network of ASCs with Jacksonville, Fla.-based Baptist Health and partnered with Cincinnati-based Bon Secours Mercy Health to develop more than 30 ASCs across multiple states.
"Our view, over time, is that more complex procedures will come out of the hospitals," Sean Rambo, president of Compass, told the Triangle Business Journal in a May 2023 interview. "Health systems are wanting to catch up and use this strategy to expand outside of hospital walls."
Health systems are skating to where the puck is going.
Commercial payers are revamping policies to push providers and patients out of the hospital and into ASCs, where procedures can be performed at a lower cost, and, arguably, at a higher quality. Patients also prefer ASCs over hospital outpatient departments for reasons including reduced cost, improved patient experience, faster access and shorter stays, according to a survey conducted by The Leapfrog Group.
United Surgical Partners International, a subsidiary of Dallas-based Tenet Healthcare, has been bullish on outpatient growth and is the largest ASC chain in the country, with 512 ASCs and 25 surgical hospitals spanning 38 states.
In the first quarter, Tenet sold nine hospitals while USPI acquired 45 ASCs. Tenet has reduced the number of hospitals it operates to 49, while USPI aims to have more than 600 ASCs by 2025.
"The transactions that we have executed on have established the dawn of a new era for Tenet," CEO Saum Sutaria, MD, said during the health system's April 30 earnings call.
Tenet's biggest competitors in the ASC arena are Optum's SCA Health and AmSurg, which have about 320 and 256 ASCs, respectively. Nashville, Tenn.-based HCA Healthcare follows further behind with more than 150 ASCs.
Most nonprofit health systems are still working on improving their operating margins after a tumultuous few years. Systems with larger outpatient care networks are faring better than those with smaller footprints, according to Kaufman Hall. Outpatient and ASC growth is expected to be a top priority for health systems for the foreseeable future as financial recovery continues and growth plans get back on track.
"Our biggest growth is in outpatient care. Some think we are only a hospital system, but only about 46 percent of our business is from our hospital sector today," New Hyde Park, N.Y.-based Northwell Health CEO Michael Dowling told Becker's. "The more you expand ambulatory and grow in the right locations, the more you increase market share, which brings more of the necessary inpatient care back to your hospitals."