ASCs in 2017: A Year in Review

Published by: Becker's Hospital Review Written by: Colin Park & Genevieve Gerten Throughout 2017 there were numerous changes in the healthcare industry, with large events such as the inauguration of a new president and significant shift in political control and Hurricanes Harvey and Irma impacting the industry. As it relates to ambulatory surgery centers (“ASCs”), there were a few trends to note: continued consolidation, changes to reimbursement, continued migration of higher acuity procedures to the ambulatory setting, and approval of additional Current Procedural Terminology (“CPT”) codes permitted in ASCs.

Transaction Activity for ASCs

In 2017, there were a number of transactions announced involving large, national operators. This continued trend of consolidation in the market mirrored the healthcare industry at large, and is summarized in the chart on the following page. Notable, large transactions in 2017 included:
  • In January 2017, UnitedHealth Group (“UNH”) announced its plans to acquire Surgical Care Affiliates, Inc. (“SCA”), which will be combined into its OptumCare platform. The deal was valued at approximately $2.3 billion and was funded through cash and stock. As of the fiscal year ended 2016, SCA had approximately 205 surgical facilities (inclusive of surgical hospitals and other facilities), $1.3 billion in revenue, and $148.7 million in EBITDA.
  • National Surgical Healthcare (“NSH”) was acquired by Surgery Partners, Inc. (“SGRY”), which was announced in May 2017. The approximate transaction size was $760 million. At the time of the transaction, NSH had approximately 21 surgical facilities.
  • The consolidation of the ASC market has been further fueled by private equity capital, as was the case in the NSH acquisition. In conjunction with SGRY’s acquisition of NSH, which closed on August 31, 2017, Bain Capital Private Equity (“Bain”) acquired H.I.G. Capital’s 54% equity stake in SGRY for approximately $503 million. Bain also partially funded capital for the acquisition in exchange for preferred equity in SGRY.
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