Becker's ASC Review

26 TRANSACTIONS Tenet's big bet on ASCs pays off By Patsy Newitt D allas-based Tenet Healthcare is doubling down on ambulatory growth, with its subsidiary United Surgical Partners International driving expansion amid rising demand for outpatient care. "2024 was an outstanding year for Tenet characterized by robust revenue growth, efficient operations, high levels of patient satisfaction and clinical quality, and a portfolio transformation that drove substantial balance sheet deleveraging," Saum Sutaria, MD, chair and CEO of Tenet said during the Feb. 12 earnings call. "Our focused strategy, disciplined operating management, and the strong demand for acute care and ambulatory surgical services provide us with momentum as we begin the year and confidence to achieve our full year 2025 expectations." With an eye on continued expansion, Tenet plans to invest $250 million annually in ambulatory mergers and acquisitions, reinforcing its position as the largest ASC operator in the U.S. Tenet has reshaped its business model in recent years to focus on USPI. In 2024, Tenet sold 14 hospitals across California, South Carolina, and Alabama for more than $4.8 billion. Operating cash flows for the year included $855 million in income tax payments related to gains from these sales. USPI now holds an 8.1% share of the ASC market, with interests in 518 ASCs (375 consolidated) and 25 surgical hospitals (seven consolidated) across 37 states. In 2024, the company added at least 57 new ASCs, with another 10 to 12 standalone centers planned for 2025. De novo facilities are a growing focus alongside acquisitions. "Consistent with our move into more high-acuity ambulatory surgical work, de novos also represent a significant value shi in markets," Tenet Executive Vice President and CFO Sun Park said in the call. "By building from the ground up, we're moving procedures into a lower- cost setting, which benefits consumers and payers." De novo ASCs, he added, come with lower build costs and quicker turnaround times once partnerships are syndicated. "ere's work upfront in syndicating the partnership that takes time, but that's not a capital-intensive activity," Mr. Park added. "...We also focus on measuring and following our overall return on invested capital within the organization. And obviously, the more we shi into this ambulatory segment, the more that gets better." Despite investor concerns over potential Medicaid cuts, Tenet remains confident because of USPI's strong ASC positioning. Since the company's centers utilize freestanding rates and maintain a low Medicaid mix, they are less vulnerable to reimbursement fluctuations. Tenet's revenue reached $20.7 billion in 2024, up from $20.5 billion in 2023. e company projects operating revenues between $20.6 billion and $21 billion for 2025. USPI reported $4.5 billion in net operating revenue for 2024, a 15.4% increase from $3.9 billion in 2023. For 2025, USPI anticipates revenue between $4.9 billion and $5 billion. e company's ASC case mix involved more total joint cases, and it is continuing its strategy of reducing high-volume, low reimbursement procedures. n Physicians and cash-based payment: 5 things to know By Francesca Mathewes A s reimbursement challenges and administrative burdens continue to squeeze physicians, some have embraced cash-only or direct primary care models. Here are five things to know about cash-based payment for physicians: 1. Cash-based models supply "a more predictable revenue stream that can be quite lucrative," and the industry is thus seeing an evolution in their favor, Sam Patel, MD, founder of medical consulting firm Astra Culture, told Medscape in a Dec. 23 report. 2. A Medscape survey from 2020 suggests they are used by less than 20% of clinicians, but there is overall little confirmed data on the prevalence of direct pay models among medical professionals. 3. Patients often pay an annual or monthly fee for access to a set menu of care services in these arrangements. This differs from concierge medicine, where practices still bill insurers for certain services and use the membership fees to enhance access and convenience. 4. Medical school debt, burdensome paperwork and declining reimbursement are the primary factors driving more physicians to consider cash-based models, according to the report. 5. Having access to their physician is a central draw to this practice model for patients. "Patients want direct access to care, and they want price transparency," Dr. Patel said. "For some, paying a doctor $300 for an appointment – and being able to secure one within a day – is well worth it." n

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