The ASC industry is largely fragmented, with roughly 68% of ASC facilities operating independently as of 2023.
Much of healthcare is consolidating at a rapid rate by comparison — the number of physician practices owned by hospitals, health systems and other corporate entities in 2024 jumped 46% from 2012, according to the Physician Advocacy Institute data.
Payers and health systems are also consolidating. In the first half of 2024, Becker's reported on 16 hospital mergers and acquisitions.
According to a recent report from the Association of American Colleges Research and Action Institute, North Carolina's largest health systems — Charlotte-based Atrium Health, Chapel Hill-based UNC Health and Winston-Salem-based Novant Health — have a 49.6% combined market share in the state.
Payers are an even larger looming force. The largest — Blue Cross Blue Shield of North Carolina, UnitedHealth Group and Cigna Health Group — have a combined 95.5% of North Carolina's market share, according to the report.
UnitedHealth Group's Optum Is the largest employer of physicians with 90,000 affiliated, and is growing at a rapid pace, inking deals with physicians groups, health systems and even Uber.
Joe Peluso, administrator at Aestique Surgical Center in Greensburg, Pa., was a health system CEO for more than 30 years, and saw the consolidation occur first hand.
Mr. Peluso said he saw "community and rural hospitals being turned into … 'band-aid stations,' and the community lost a lot," he told Becker's.
This transition took around 25 to 30 years, he said, but he predicts the ASC industry will consolidate much faster. Because most ASCs are independent and founded by physicians, accessing economies of scale is becoming more difficult as industrywide consolidation continues.
The ASC 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, according to the VMG Health report.
With 7.1% of national ASC market share, Dallas-based United Surgical Partners International, owned by Tenet Healthcare, is the largest ASC chain in the U.S. The company has a portfolio of 520 ASCs and 24 surgical hospitals spanning 38 states.
The company has experienced explosive growth in the last five years. Tenet added 56 ASCs in 2024, and sold more than nine hospitals for proceeds of $4 billion to invest in the ambulatory space. In 2023, it added 31 ASCs for $149 million — nine of which were acquired and 11 were previously unconsolidated centers in which USPI inked controlling ownership interest.
Optum's ASC arm, SCA Health, also is experiencing a lot of growth. The company quietly purchased at least two cardiovascular providers in 2023, National Cardiovascular Partners and Pivotal Healthcare.
Mr. Peluso expects this ASC shift to continue more quickly.
"What's starting to happen is many of these physicians are mature now, some are getting ready to retire, and I think some would like to cash out or bring in new surgeons," he said.
With more than 77% of U.S. physicians now employed by hospitals, health systems or corporate entities, there's not many independent physicians left to take over the ASCs.
"Unfortunately, many surgeons are now employed by health systems or private equity groups, so there isn't the potential to bring in many new doctors to take over. As a result, I think many are cashing out," he said.
Instead, independent ASCs are being bought by private equity, health systems or hospitals. The number of ASCs under partnership by a national operator jumped to 1,941 in 2023 — up from approximately 1,339 centers in 2011.
A January survey of health system executives by VMG Health found that 60% of leaders were considering pursuing outpatient surgery joint ventures in 2024 — the highest area of interest of any potential specialty partnerships. In 2023, Becker's reported on 55 hospitals and health systems opening ASCs.
Additionally, the fragmentation of the ASC market is primed for acquisitions at the individual facility level, according to a report from VMG Health. The ASC market has seen continued private equity activity, most often tied to physician practice portfolios, which allows investors to capture additional revenue streams.
It's important for ASCs to remain independent, Mr. Peluso added, because of the quality of care independence lends itself to.
"In an independent ASC, there's more of a doctor-patient relationship and more emphasis on the patient experience," he said. "Independent physicians might come in early or stay late to see a patient because they have more at stake. I think you'll see better quality care, better access, and lower costs with independent ASCs."