Issue link: https://beckershealthcare.uberflip.com/i/1527167
38 TRANSACTIONS The ASC algorithm driving Tenet's growth By Patsy Newitt T enet Healthcare's ASC arm United Surgical Partners International has seen skyrocketing growth in the last five years, becoming the largest ASC chain in the U.S.by number of centers and physicians. Tenet has added 56 ASCs so far in 2024, and has sold nine hospitals for proceeds of $4 billion to invest in the ambulatory space. In 2023, it added 31 ASCs for $149 million — nine of which were acquired and 11 were previously unconsolidated centers in which USPI inked controlling ownership interest. e company also opened nine de novo ASCs in 2023 with more than 30 ASCs in development. Tenet CEO Saum Sutaria, MD, broke down key features of the company's ASC algorithm in a July 23 second quarter earnings call transcribed by Seeking Alpha. Here are five things to know: 1. e company's "algorithm" with ASC organic surgical growth volumes is 2% to 3% for 2024, Dr. Sutaria said, adding that the driver of expansion is USPI's strategy to take on single-specialty ASCs and make them multispecialty through scale and expertise. 2. USPI's strategy also includes getting ahead of the recruiting challenge and potential volume declines as centers mature, allowing them "to renew their … ability to build and grow," he added. Paired with favorable reimbursement and regulatory trends for ASCs, Dr. Sutaria said USPI feels "confident in the revenue growth range." 3. USPI is also focused on high-acuity procedures — with orthopedics being the "No. 1 growth vector in this segment" for the next five to 10 years. e company also inked a partnership with Tampa, Fla.-based Orthopedic Institute in the second quarter. 4. Dr. Sutaria added that they are in the early innings of focusing on urology as procedures migrate to the ASC setting. "ere's a lot of room for … expansion of the range of services that can be offered in the [ASC] setting," Dr. Sutaria said. 5. rough mergers and acquisitions, USPI aims to integrate ASCs into Tenet's operating platform "as quickly as possible." n AmSurg acquires ownership stake in Oregon ASC By Claire Wallace A SC management services provider AmSurg has acquired ownership interest in Salem, Ore.-based River Road Surgery Center. The facility specializes in ear, nose and throat procedures, according to a July 30 news release from AmSurg. River Road Surgery Center is a freestanding outpatient facility accredited by The Joint Commission. It has three operating rooms and offers a full-service center for the diagnosis, treatment and repair of head and neck conditions including ear infections, hearing loss, snoring, sinusitis, tonsillitis, sleep apnea, voice disorders, and neck or throat cancer, the release said. n ASCs a 'top capital priority' for Tenet By Patsy Newitt T enet Healthcare's ASC powerhouse United Surgical Partners International is a "top capital priority," CEO Saum Sutaria, MD, said July 23 during the company's second quarter earnings call transcribed by Seeking Alpha. Tenet's top capital priority "remains the expansion of low-cost, high- quality ambulatory surgical centers for the communities around the country," Dr. Sutaria said during the call. Tenet will use its "disciplined approach" to improve patient care and physician performance in ASCs' "fragmented" marketplace, Dr. Sutaria added USPI's second quarter revenue hit $1.14 billion, a 21.1% increase from the same quarter last year. Adjusted EBITDA jumped 20.8% from $370 million in the second quarter of 2023 to $447 million in the most recent quarter. With 520 ASCs and 24 surgical hospitals spanning 38 states in its portfolio, USPI is the largest ASC chain in the country. In a first quarter earnings call, Tenet said it is investing $450 million into its ambulatory business in 2024. Additionally, Tenet acquired 45 ASCs across the nation in the first quarter that focus on several specialties, including orthopedics, ophthalmology and GI. "As we fully emerge from the pandemic, our repositioned portfolio of businesses is generating stronger results with attractive margins and strong free cash flow generation," Dr. Sutaria said in the second quarter call. "e mix of businesses can thrive in any variety of political and regulatory environments as the fundamental tailwinds in the ambulatory demand for USPI, the high acuity program needs for our hospitals in growing markets and the need for efficient, effective healthcare services…are strong in the marketplace." n