Becker's ASC Review

6 ASC MANAGEMENT SCA Health's shifting growth strategy By Riz Hatton and Patsy Newitt SCA Health seems to be taking a different approach to growth than other ASC chains in 2023. SCA Health, affiliate of healthcare disruptor Optum, is one of the largest ASC chains in the country, with more than 320 surgical facilities and 9,200 physicians in its network. It serves 1.43 million patients annually. What SCA has done in 2023 so far SCA Health hasn't been nearly as active in the ASC industry as its competitors, but it has made some updates to its leadership. SCA Health's CEO Caitlin Zulla was promoted to CEO of Optum Health's east region in March. Now SCA Health is led by its former president Jason Strauss, who has been with the company for 15 years. SCA Health's lack of activity in the ASC space adds up. Since the company's rebrand last May, it has expanded its focus beyond ASCs. "When I joined the organization in 2015, we were an ambulatory surgery center company singularly focused on partnering with surgeons in their ASCs," Ms. Zulla told Becker's in 2022. "Since then, we've evolved to support physician specialists more holistically across the specialty care continuum." With this shi, Optum and SCA Health are looking at growth not just through the number of ASCs but also "the quality of care we provide, the proportion of spend in value-based care arrangements, [and] our increased connectivity to practices and health systems." Most recently, Optum snagged Middletown, N.Y.-based Crystal Run Healthcare, a multispecialty physician group with more than 400 providers. It also acquired Houston-based Kelsey-Seybold for $3 billion, Dallas-based Healthcare Associates of Texas for $300 million, and Auburndale, Mass.-based Atrius Health for $236 million in the last year. What competitors are doing Surgery Partners is looking to another growth strategy. e company has been on a megadeal spree in April and May. In just six days, the healthcare services company acquired Kansas Spine & Specialty Hospital in Wichita, signed a collaboration agreement with Salt Lake City-based Intermountain Health, and formed a new company with Columbus-based OhioHealth. ASC giant United Surgical Partners International is also looking to a more aggressive growth strategy. USPI said in 2022 that they plan to have more than 600 ASCs by the end of 2025. In 2023, the chain's parent company Tenet Healthcare plans to invest $250 million into ASC mergers and acquisitions. USPI is also changing up its leadership, announcing in January that its current CEO Brett Brodnax will be retiring at the end of 2023. In February, USPI expanded its partnership with Renton, Wash.- based Providence to develop additional ASCs. e two organizations first partnered in 2004 on five joint-venture ASCs and built two more in 2022. ough HCA Healthcare has been less active in the ASC sphere than its competitors, it has made a few notable moves. In January, LCMC Health finalized its $150 million purchase of three of the company's hospitals. In April, HCA Healthcare named Jyric Sims, PhD, president of its West Florida division. n The pros and cons of consolidation By Paige Haeffele M ichael Davis, MD, surgical director and chief of urology at the University of New Mexico Health Sciences Center in Albuquerque, joined Becker's to evaluate the benefits — and downsides — of the growing trend of consolidation in healthcare. Editor's note: Responses have been lightly edited for length and clarity. Question: What is the "dark side" of consolidation? Dr. Michael Davis: The dark sides of healthcare consolidation are varied. The reason healthcare systems are using consolidation is to capture economies of scale and to be able to stay profitable in an industry that is seeing various challenges including decreasing value of investment, increasing costs of capital, increasing labor costs, inflation and supply issues that adversely affect costs. By having economies of scale, this helps offset costs. Data can be shared and this can help with negotiation with payers and value-based care. The issues with consolidation are that it decreases competition in healthcare markets, potentially causing loss of revenue for smaller community hospitals. This decreases access to care in these areas. Decreased competition allows large healthcare organizations to increase reimbursement rates from payers. This can increase healthcare costs for patients and payers. Staffing challenges in large organizations can lead to strategies to cut costs which can adversely affect care. This can cause issues with patient satisfaction and experience. Finally, integrating multiple healthcare providers and organizations into one brand can be challenging due to lack of coordination and systems that are easily blended. This can lead to delays in care and frustration felt by providers. The downstream effect is loss of skilled labor that is expensive to replace and loss of patient confidence due to decrease in quality of care. n

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