UnitedHealth Group, parent company of Optum, has set its sights on acquiring Brentwood, Tenn.-based ASC operator Surgery Partners, leaving industry leaders concerned about the potential effects.
Sources told Bloomberg that private equity firm TPG is also an interested buyer, along with other private equity firms. The deal is in its early stages and is not confirmed, according to the report.
"When two large companies merge, that naturally creates a buzz," Shakeel Ahmed, MD, CEO of Atlas Surgical Group in St. Louis, told Becker's. "What makes me apprehensive is how this will create another step towards monopolization of our industry. Consolidation stifles competition. It creates higher pricing and limits choices for consumers."
Optum is the parent company of Deerfield, Ill.-based ASC chain SCA Health, which has a portfolio of more than 320 ASCs and 9,200 physicians. The company quietly purchased at least two cardiovascular providers in 2023, National Cardiovascular Partners and Pivotal Healthcare.
Surgery Partners is the third-largest ASC operator in the U.S., with more than 160 centers and 4,600 affiliated physicians. After going public in 2015, it merged with National Surgical Healthcare in 2017, and Bain acquired HIG Capital’s stake in Surgery Partners.
The ASC industry is largely fragmented, with roughly 68% of ASC facilities operating independently as of 2023, according to a 2024 report from VMG Health. But the industry is consolidating, albeit slowly. Nearly 2,000 ASCs are now partnered with a national operator — indicative of a shifting ownership landscape in the outpatient space.
Due to the cost-saving potential, independent physician-led surgery centers have been "targeted for acquisition" by private equity groups, large integrated delivery networks, hospital systems and ASC chains, Joe Peluso, administrator at Aestique Surgical Center in Greensburg, Pa., told Becker's.
As acquisition activity intensifies, ASC leaders are increasingly recognizing the necessity for strategic and deliberate approaches to navigate this consolidation effectively.
"Independent ASCs need to systematically evaluate products, services, technologies and practices to attain clinical efficacy, cost effectiveness, and overall value to make informed decisions regarding their need to be acquired," Mr. Peluso said. "The acquirer’s mission and goals need to align for the betterment of patient care in the ASCs respective communities served with a customized patient experience."
Mr. Peluso added that there is concern about how large-scale consolidations that have shifted other industries, "with the promise of improved efficiencies, financial stability, personalized care, and regional dominance," have taught that "we shouldn't be sold on the notion that organizations become too big to fail or that bigger is better."
With large-scale consolidation, he added, independent entities have struggled to compete, and communities have been left with fewer care options and often increased costs.
As the physician workforce has consolidated, for example, there has been an increased concern about a decline in autonomy, rising costs for patients and potential effects on care quilty. In 2022, just 44% of physicians owned their practices, compared with 76% in the early 1980s, according to a report from the American Medical Association.
Another ASC giant is Dallas-based United Surgical Partners International, owned by Tenet Healthcare. With 7.1% of national ASC market share, the company is the largest ASC chain in the U.S.
"I have seen over and over the effect of oligopoly in the ASC industry," Dr. Ahmed said. "A dominant group takes over the local market and edges out smaller businesses. That is not a healthy model, and I remain nervous about that with these future mergers. We need a level playing field. The ASC industry stands as a bulwark of fairness against large healthcare institutions. These mergers go against the dogma that we stand for."