Becker's ASC Review

17 Nueterra Acquires 3rd-Party Administrator: 5 Things to Know By Carrie Pallardy and Laura Dyrda ASC Turnarounds E arlier this year, Tenet Healthcare and United Surgical Partners International formed a joint venture ambulatory busi- ness that became the largest ASC company in the market today. The company will own interests in 244 ASCs, 20 imaging centers and 16 surgical hospitals in 29 states. This new ASC industry powerhouse, though a strategic leap forward for both partners, can be traced back to a single word: culture. "Brett Brodnax and I have gotten the opportunity to talk about our companies," said Kyle Burnett, Tenet's senior vice president and, following clos- ing, USPI's ambulatory services president and chief integration officer. "We found the compa- nies have a similar culture and could be combined to develop a first class ambulatory platform." Private equity firm Welsh, Carson, Anderson & Stowe, along with USPI's other investors, will own 49.9 percent of the venture, while Tenet will own 50.1 percent. Over the next five years, Tenet is on track to acquire 100 percent of the company through a put/call structure. The first goal of the newly-formed partnership will be to focus on expanding its ASC business. USPI has been very active in markets with health system partners, and both have a national foot- print in the ASC market. Combined, the compa- nies will be able to pursue opportunities neither would have been able to take on as single entities. Additionally, the partnership hopes to expand its surgical hospital portfolio. But, the company's ambitions doesn't stop at the surgical market. "To continue to grow, we are going to need to increase our scale and capabilities," says Brett Brodnax, president and chief development officer of USPI. "We want to transition from a pure surgical facil- ity company to an enterprise ambulatory solution for our health system partners." USPI has built its business on the three-way partner- ship model with health systems and physicians, but now many of its competitors are offering the same model. In response, the USPI and Tenet joint ven- ture is looking to broaden its scope. Tenet has con- tributed its imaging business to the partnership, and leadership is already looking to expand further. "We are going to evaluate multiple sectors. Other outpatient services such as urgent care centers and freestanding emergency departments are at- tractive. We are going to talk to our health system partners and see where they see the opportunity for us to help," says Mr. Burnett. Leading companies in the ASC space are demon- strating commitment to consolidation and diver- sification. Surgery Partners absorbed Symbion last year. AmSurg acquired Sheridan and swept up two radiology services groups. Now, USPI and Tenet have stepped up. "We will have the nation's largest ambulatory platform," says Jason Cagle, chief financial officer of USPI. "Everyone is trying to better themselves. This move transforms us and gives us broader scale and capabilities." n Nueterra acquired the third-party administrator Benefit Management Inc. of Great Bend (Kan.). "Right now, Nueterra is drawing physicians and facilities together, unit- ing them clinically and financially into integrated networks across the country," said Nueterra Chairman Dan Tasset. "As we do that, we'll be in a unique position to offer bundled payments for medical conditions for commercial populations." Here are five things to know about the acquisition: 1. Nueterra, based in Leawood, Kan., has been in talks with BMI for approximately six months. "What's critically important in health- care is to align values and incentives that make sense to both pro- viders and payers," said Steve Garver, Nueterra Innovations COO. "With BMI, we'll create new offerings that align incentives for the healthcare value chain. Ultimately, we want to bring high quality healthcare services with lower costs for everyone." 2. The acquisition was final on May 1, according to the report. 3. Nueterra's strategic move toward value-based care is the driv- ing force behind this acquisition. Nueterra has been focused on partnering with both facilities and physicians; BMI will allow the company to offer value-based reimbursement strategies, such as bundled payments. 4. BMI will remain at its current location. There are no large struc- tural changes planned at this time, and leadership will remain in its place. 5. In addition to providing health plan administration for nationwide clients, BMI will offer employers the ability to use Nueterra's value- based reimbursement models. "This move is good for our self-funded health plan employers and broker partners," said Chad Somers, CEO and president of BMI. n The Next Move in ASC Industry Consolidation: An Inside Look at the Tenet, USPI Joint Venture By Carrie Pallardy "To continue to grow, we are going to need to increase our scale and capabilities. We want to transition from a pure surgical facility company to an enterprise ambulatory solution for our health system partners." — Brett Brodnax, president and CDO of USPI.

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