Becker's ASC Review

5 ASC MANAGEMENT USPI has 30 de novo ASCs in pipeline, sees 'consistently positive' M&A environment By Laura Dyrda D allas-based United Surgical Partners International, part of Tenet Healthcare, had a successful third quarter with continued service line and revenue growth. Same-facility revenues were up nearly 8% and case volumes grew right around 4% year over year. Saum Sutaria, MD, CEO of Tenet Healthcare, said he is proud of USPI's continued strength and financial performance as Tenet aims to grow in the coming year. "We remain focused on attracting high-quality physicians who choose to practice in our low-cost, high patient satisfaction setting of care," said Dr. Sutaria during the third quarter earnings call Oct. 30, as transcribed by Seeking Alpha. "is, coupled with tailwinds from increased patient demand for ambulatory surgery care, will support continued organic growth." USPI added six new ASCs to its portfolio in the third quarter, most of which focused on orthopedic surgery. e new centers are in Nevada, Maryland, Texas and Florida in partnership with regional musculoskeletal specialists. Dr. Sutaria said the company has a pipeline of more than 30 de novo ASCs at various stages of maturity. "Notably, de novo centers have effective EBITDA multiples in the low single-digits, making them a very attractive use of the capital that further advances the site of service value-based care, which USPI uniquely delivers," said Mr. Sutaria. USPI's growth rates are above the long-term projections for the business at 2% to 3% organic growth. e company aims to add more high acuity procedures to the case mix to improve the average net revenue per case at its ASCs. USPI has added 103 new service lines to its centers so far and aims to keep growing. "e Q4 ramp for USPI is real and it's something that we're really interested in seeing and we're well-prepared for as the first post- pandemic Q4 to see how that goes," he said. Dr. Sutaria also said the merger and acquisition environment for ASCs is "consistently positive" and he hasn't seen higher multiples as ASCs recover from the pandemic. He sees a lot of opportunities in acquiring new centers, but also noted high interest rates forced USPI to raise the bar on its assessment process for financial returns and the ability to drive post-synergy multiples down. "We work to maintain our USPI margins based upon longer term business decisions we make around service lines that we choose to be in, what we think the mix will be with the physicians that we work with, et cetera," said Dr. Sutaria. "But make no mistake about it; there are many things we could do to grow the business within that range that may move the margins up or sometimes down a bit, but they're still highly accretive to the business, given the types of post-synergy multiples that we deliver." USPI's full year margin is around 40%, based on business performance. n This leader went from ASC CEO to Congressional candidate — here's how By Patsy Newitt A ustin Cheng, CEO of New York City-based Gramercy Surgery Center, is running to represent New York's 3rd Congressional District. Mr. Cheng joined Becker's to discuss how his role leading an ASC has prepared him for this undertaking. Question: How has being an ASC CEO prepared you to run for Congress? Editor's note: This response was edited lightly for brevity and clarity. Austin Cheng: Running a small business has really given me a very comprehensive understanding of managing a team but also managing a full operational budget. So I bring that up in two parts because when you're running a small business, you've got to know all the ins and outs of the actual business. I believe that really prepares me to understand the management of budgets. But it also gives me a pretty intricate and unique understanding of how small businesses are run. Small businesses are the lifeblood of the American economy. At the same time, in addition to managing the business and the budget, it also gives me a very strong understanding of how to manage the people and the teams, especially during the COVID-19 pandemic. I had, and have, a very close tie to the members of the team and making sure that they are able to support themselves and their family. There was a time where we all had to face certain decisions in terms of budgeting and expenses, so I think that that has given me a very good insight into how to help manage the people and the individuals. And as a plug for the ASC industry, I think ASC administrators, they're all effectively CEOs. They're running these little corporations, companies, and so every single ambulatory surgery center administrator is very prepared to deal with running a small business. n

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