Becker's ASC Review

25 TRANSACTIONS 10 trends fueling the physician acquisition boom By Patsy Newitt Physician acquisitions shied in 2024, as independent practices struggled to keep up with rising operation costs and stagnating reimbursements. Here are 10 key trends in this boom, according to VMG Health's 2025 Healthcare M&A Report, released on April 22. 1. Physician group transactions have historically been impacted by large regulatory changes — passage of the Affordable Care Act in 2010 and the passage of MACRA in 2015 — as physicians opt to align with larger groups rather than face the burden and expense of increased requirements alone, according to VMG Health. 2. Independent practices continue to struggle to keep pace with the capital requirements of transitioning to value-based payments and increased competition from health systems, private equity firms and payers. 3. M&A activity in healthcare was strong in 2024 but declined slightly from 2023, especially in physician medical group deals. e number of physician group transactions dropped about 20% year-over-year due to high interest rates, rising labor costs, market saturation and political uncertainty, according to VMG Health. 4. Around 25% of 2024 physician group deals took place in Florida, Texas and California, correlating with their large populations and growth potential. Several states introduced or expanded regulations that may limit private equity partnerships with physician practices through management services organizations. 5. Some specialties saw higher transaction volumes, including 29 internal medicine deals and 242 dental deals in 2024. Dental consolidation continues to gain momentum, with rising interest in primary care, cardiology and orthopedics heading into 2025. 6. Eyecare deals dropped sharply from 101 in 2020 to just 26 in 2024, indicating a significant pullback. In contrast, dental deals rose significantly, led by major players like MB2 Dental Solutions, while other active specialties included cardiology, plastic surgery, ENT and OB-GYN. 7. e fragmented nature of physician medical groups suggests continued M&A interest in diverse specialties. Specialties with strong commercial reimbursement and cash-pay models, such as dermatology and med spas, remain particularly attractive to investors. 8. In 2024, 37 PE-backed med spa platforms made 45 acquisitions, reflecting strong market interest. However, aggressive expansion and marketing have made organic growth more challenging for individual med spa locations. 9. To enhance same-store growth, many traditional med spas, both PE- backed and independent, are broadening their offerings to include wellness services like hormone replacement therapy. ese services cater to aging populations seeking improved energy, cognition, and weight management, aligning with the growing trend of personalized wellness. 10. e explosive popularity of GLP-1 medications for weight loss has drawn investor attention. However, concerns about supply chain disruptions and regulatory scrutiny create uncertainty. PE firms remain divided on the long-term viability of GLP-1s and weight loss services as a growth category. n Tenet's ASC playbook continues to evolve By Patsy Newitt D allas-based Tenet Healthcare, the parent company of ASC giant United Surgical Partners International, is planning to invest at least $250 million annually in mergers and acquisitions in the ambulatory space, executives shared during the company's April 29 earnings call. Here are seven notes to know on Tenet's USPI strategy: 1. "The pipeline looks good," CEO Saum Sutaria, MD, said on the call, noting that although $250 million is the company's baseline goal for M&A, Tenet has averaged nearly twice that amount in annual spending over the past five years. 2. In addition to M&A, Tenet is bullish on de novo ASC development. Dr. Sutaria noted that USPI has a healthy pipeline of new centers under development, particularly those structured as syndications. USPI is targeting facilities with strong potential for service- line diversification — particularly in orthopedics and other high-growth specialties. 3. "Our focus is a little bit more on centers that have the potential for USPI to deploy its service-line diversification capabilities," Dr. Sutaria said. 4. In the first quarter, USPI added six new ASCs to its network, including a new partnership with Choice Care Surgery Center in Midland, Texas. The 16,000-square-foot, multispecialty facility emphasizes orthopedic surgery and urology, among other service lines. 5. Dr. Sutaria also reiterated that USPI has minimal exposure to Medicaid, which helps insulate the organization from any potential reimbursement cuts. 6. Dr. Sutaria also pointed to three key drivers of revenue-per-case growth at USPI: its robust contracting platform, an emphasis on higher-acuity procedures, and strategic shifts in case volume. During Tenet's third-quarter 2024 earnings call, he noted that USPI is actively identifying opportunities to "migrate certain lower-acuity, higher-volume types of activities out of the ASCs" to free up capacity for more complex, higher-margin cases. 7. USPI continues to prioritize the transition of total joint replacements to the outpatient setting, which Dr. Sutaria described as an "ongoing march forward." While he acknowledged that the percentage growth in joint procedures is beginning to taper — a typical trend as a platform scales — he emphasized that overall volume remains strong and that joint replacements continue to represent a major growth opportunity for USPI throughout the decade. n

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