Issue link: https://beckershealthcare.uberflip.com/i/1532645
19 TRANSACTIONS Where hospitals, health systems fall short in ASC joint ventures By Francesca Mathewes e ASC industry is facing increased consolidation as some ASCs look to partnerships with hospitals and health systems to stay afloat in a challenging economic climate. ese partnerships are increasingly popular as ASCs may benefit from the shared resources from hospitals or larger systems, and those larger systems may see ASCs as an effective way to achieve cost savings and add valuable services for patients. However, power imbalances can also lead to strife in these relationships, and some ASCs remain wary of involvement with larger provider organizations. According to L.E.K. Consulting's "2024 ASC Insights Study," there are several common ways that provider organization ASC strategies "fail to meet [the] expectations" of ASCs. Here are the chief pitfalls among provider organizations that the consulting firm identified in its report: 1. Blind to local market dynamics: ASCs may feel that hospital or health system partners develop a plan based on anecdotal or state-level intelligence, as opposed to more local market dynamics. 2. Blind to physician perspectives: ASCs reported that larger partners may be designing development plans based on hard volume and supply data, but without the perspectives and desires of physicians and patients. 3. Too hypothetical: Development timelines may not be based on the experiences of those operating the ASC or not "cognizant of regulatory, financing or other approval needs." 4. At odds with legacy business: Hospitals or health systems may not be considerate of or communicative about the impact that a possible partnership will have on the legacy business or the ASC, which can drive resistance to the partnership. 5. Too centered on legacy organization design: According to the study, health systems oen apply hospital cost structures to ASCs, rather than adapting to ambulatory best practices. n Optum earned $253B in 2024 By Patsy Newitt U nitedHealth Group's Optum, parent company of ASC chain SCA Health, earned $253 billion in total revenue in 2024 — an 11.7% increase year over year, according to a fourth-quarter 2024 financial report. Here are five more notes on the company's financial performance: 1. Optum's fourth-quarter revenue was $65.1 billion and earnings were $4.8 billion. 2. Optum's total earnings from operations in 2024 were $16.7 billion. 3. The company's operating margin in 2024 was 6.6% and 7.4% in the fourth quarter. 4. Health services arm Optum Health's 2024 were $105.4 billion, up 10.5%. Data analytics arm Optum Insight's 2024 revenues were $18.8 billion, down 1%, and pharmaceutical services arm Optum Rx revenues in 2024 were $133.2 billion, up 14.8%. 5. Value-based care patients served by Optum grew by 600,000. n Hospital execs see growth potential in ASC JVs By Patsy Newitt A growing number of hospital leaders are exploring ASCs as a pathway for growth, with 63% open to joint ventures in outpatient surgery ventures, according to a report from VMG Health published Jan. 9. The survey includes responses from 73 health system executives, including CEOs, CFOs and COOs, among other executive titles. Here are six more findings: 1. Ninety percent of hospital leaders anticipate financial performance in 2025 will be similar to or better than 2024, driven by factors such as increased patient utilization (77%) and success in commercial contracting (56%). 2. Eighty-four percent of respondents foresee reduced merger and acquisition activity in 2025, citing challenges like misaligned buyer-seller expectations and regulatory barriers. 3. Only 28% of hospital executives are considering partnerships with private equity firms. 4. Just under half (49%) of hospital executives identified clinical staffing shortages as a concern, a significant drop from 77% in the previous year. However, issues such as physician enterprise losses and supply chain disruptions remain critical. 5. Sixty-four percent highlighted increasing physician subsidies as a pressing challenge, while 41% noted difficulties in redesigning compensation models. 6. A third (33%) of hospital executives plan to expand participation in value- based care models, with 23% expecting more Medicare Advantage contracts. n