This article was originally published by Becker’s ASC Review.

The ambulatory surgery center (ASC) industry experienced another transformative year in 2024, marked by accelerated growth, evolving case complexity, and continued regulatory shifts. Strategic consolidation remained a key theme, with established ASC platforms and new private equity–backed entrants expanding their footprints through acquisitions and partnerships. The migration of higher-acuity procedures to the outpatient setting gained momentum, supported by CMS’ previous additions of orthopedic and cardiovascular procedures to the ASC Covered Procedures List. Simultaneously, regulatory reforms—most notably the ongoing rollback of Certificate of Need (CON) laws in several states—further reduced barriers to ASC development, creating new opportunities for expansion and market entry. As cost pressures and demand for specialized outpatient care continue to rise, ASCs have further solidified their position as a vital, adaptable component of the healthcare system, delivering high-quality, cost-effective surgical care.

Ambulatory Surgery Center Market Overview

As of December 31, 2024, the largest operators (in terms of number of ASCs) are United Surgical Partners International (USPI, whose parent company is Tenet Healthcare), Surgical Care Affiliates (SCA, whose parent company is Optum), and Amsurg Corporation, with ownership in approximately 520, 320, and 250 ASCs, respectively. As noted in the chart below, the number of total centers under partnership by a national operator, as a percentage of total Medicare certified centers, saw an increase from 2011 to 2024 growing from approximately 1,339 centers to 2,140 centers, which represents a compound annual growth rate of 3.7%. Additionally, the top five management companies have increased the number of centers under management by approximately 617 centers since 2011, which represents a compound annual growth rate of 4.7%.

Public Market Insights in the ASC Industry

Publicly traded companies such as HCA Healthcare, Tenet Healthcare (THC), Surgery Partners (SGRY), and Medical Facilities Corporation (DR) provide valuable insights into the ASC industry’s evolving trends, challenges, and transactional dynamics. Their valuation multiples, depicted in the figure below, act as benchmarks for assessing market performance and sector-wide trends. However, interpreting these multiples requires a nuanced perspective, as larger organizations often have diversified operations that extend beyond ASCs, influencing both their valuations and risk profiles. To gain a more complete understanding of the ASC sector, it is useful to review the financial disclosures of these companies, including investor presentations and SEC filings, which provide deeper insights into their strategies and performance beyond what valuation metrics alone can convey.

Surgery Partners

In Q3 2024, Surgery Partners reported $770.4 million in net revenue, a 14.3% year-over-year increase, and $128.6 million in adjusted EBITDA, reflecting 22% growth and a 100-basis-point margin expansion to 16.7%. Surgical case volumes rose 3.7% to 163,000, driven by a 53% increase in total joint replacements and sustained growth in musculoskeletal procedures. The company added five new centers and acquired two multi-specialty orthopedic ASCs in Chicago through a partnership with Duly Health, bolstering its presence in high-acuity service lines. Additionally, over 230 new physicians joined its network, focusing on orthopedics, spine, and cardiology. Despite minor hurricane-related disruptions, CEO Eric Evans highlighted strong recruitment efforts, strategic acquisitions, and a robust M&A pipeline as key drivers of future growth.

Tenet Healthcare: United Surgical Partners International

During Tenet Healthcare’s Q3 2024 earnings call, the company highlighted exceptional performance in its ASC operations through its subsidiary, United Surgical Partners International (USPI). USPI reported $439 million in adjusted EBITDA, representing a 19% increase compared to the same period in 2023, driven by an 8.7% rise in same-facility revenues and robust margins of 38.5%. The subsidiary also saw a 19% year-over-year increase in total joint replacements, alongside sustained growth in urology and GI procedures. In Q3, USPI expanded its portfolio by adding six new de novo centers, including a flagship partnership with Synergy Orthopedics to establish the largest musculoskeletal outpatient surgery center in San Diego. With nearly 20 additional centers in syndication or under construction, USPI’s focus on high-acuity, specialized care aligns with Tenet’s broader strategy to tap into high-growth, high-margin healthcare services. According to CEO Saum Sutaria, these initiatives reflect USPI’s commitment to long-term growth and its role as a cornerstone of Tenet’s ambulatory care strategy.

HCA Healthcare

In Q3 2024, HCA Healthcare highlighted the performance of ASCs, showcasing a strategic focus on expanding its outpatient capabilities. While outpatient surgery volumes declined by 2%, the revenue from these services increased by 5% due to growth in acuity and payer mix. HCA continued to invest in its ASC network, adding six new outpatient facilities during the quarter, contributing to its portfolio of over 2,400 sites of care. CEO Sam Hazen emphasized the company’s commitment to enhancing its ASC operations through greenfield development, targeted acquisitions, and operational improvements in hospital-based outpatient surgery centers. These initiatives aim to meet rising patient demand for high-value outpatient care while driving profitability through strategic expansion and increased specialization.

Medical Facilities Corporation

In Q3 2024, Medical Facilities Corporation reported $103.6 million in facility service revenue, with total surgical case volumes increasing by 3.1%, including a 6.5% rise in outpatient procedures and a 13.4% growth in pain management cases. While inpatient volumes declined, the company emphasized its focus on outpatient and high-value cases to drive growth and profitability. Arkansas Surgical Hospital, part of its network, was ranked by the Centers for Medicare & Medicaid Services (CMS) as one of the top 10 hospitals nationwide for low readmission rates, highlighting the quality of care provided at its facilities. Operational efficiencies reduced expenses by 1.1%, contributing to an 8.3% increase in EBITDA to $19.1 million. The company also demonstrated disciplined financial management, repurchasing over 1.2 million shares and reducing corporate debt by $12 million year-to-date.

Expansion of High-Acuity Procedures & Strategic Growth in ASCs

The trend of shifting higher-acuity procedures from inpatient or hospital outpatient department (HOPD) settings to ASCs accelerated throughout 2024. Specialties such as orthopedics, cardiology, and advanced spine procedures continued expanding their presence in ASCs, driven by technological advancements and increasing demand for cost-effective care. Surgery Partners CEO Eric Evans highlighted during their Q3 2024 earnings call that, “total joint cases in our ASCs continue to grow at a disproportionate rate, with just over 50% increase in case volume in the quarter,” and emphasized that this growth is expected to continue as hip, knee, and shoulder surgeries increasingly migrate to ASC settings​. Similarly, during their Q2 2024 earnings call, Tenet Healthcare CEO Saum Sutaria noted that orthopedic volumes in USPI centers grew 23% year-over-year, reinforcing Tenet’s focus on expanding high-acuity service lines. HCA Healthcare also reinforced this shift, with CEO Sam Hazen reporting consistent growth in high-acuity services, such as cardiac surgeries, across their outpatient network, positioning their ASCs as a key growth driver within their broader care model.

At the same time, 2024 also saw a growing trend of lower-acuity procedures transitioning out of ASCs and into office-based procedural settings. Driven by advances in minimally invasive technologies and cost-containment strategies, specialties like ophthalmology, dermatology, pain management, and minor orthopedic/hand procedures are increasingly being performed in office environments. Office-based surgeries, such as cataract removals and minor hand procedures, have become more common due to streamlined protocols and reduced reliance on general anesthesia. Payers have supported this shift by offering favorable reimbursement rates for office-based procedures, reflecting the broader push for more cost-effective care. This transition allows ASCs to focus more heavily on higher-acuity procedures, while office-based settings provide patients with convenient and efficient care for lower-risk treatments.

The 2025 ASC Covered Procedures List (CPL) marked a notable shift in CMS policy, with a stronger focus on dental and regenerative therapy procedures rather than expanding high-acuity offerings. This change reflects CMS’ effort to diversify the range of services available in ASCs, broadening access to lower-acuity procedures while balancing patient safety and cost-efficiency. This contrasts with prior years that emphasized adding more complex procedures like total joint replacements and cardiovascular services. While the inclusion of these lower-acuity procedures broadens the scope of ASC services, industry leaders continue to advocate for expanding the CPL to include more high-acuity surgeries, aligning policy with ASCs’ capabilities and market demand. The shift toward higher-acuity procedures continues as ASCs become better equipped to handle them. As centers enhance their technology and capabilities, procedures added to the CPL in previous years are increasingly migrating to the outpatient setting, further solidifying ASCs’ role in delivering complex, cost-effective surgical care.

CMS Expands ASC Procedure List for 2025

CMS noted in their fact sheet that, “in addition to finalizing payment rates, this year’s rule includes policies that align with several key goals of the Biden-Harris Administration, including responding to the maternal health crisis, addressing health disparities, expanding access to behavioral health care, improving transparency in the health system, and promoting safe, effective, and patient-centered care. The final rule advances the agency’s commitment to strengthening Medicare and uses the lessons learned from the COVID-19 public health emergency (PHE) to inform the approach to quality measurement, focusing on changes that would help address health inequities.”

CMS has approved 21 new medical and dental surgical procedures to be added to the ASC CPL for CY 2025, outlined in the table below. These include 16 dental and two regenerative cell therapy codes that were included in the proposed rule, and three dental codes that were recommended during the comment period. These codes correspond to procedures that have few to no inpatient admissions and are widely performed in outpatient settings. Importantly, CMS did not include any of the surgical procedures proposed by Ambulatory Surgery Center Association (ASCA). ASCA CEO Bill Prentice expressed his disappointment, stating, “This final rule is a step sideways in a time when millions of Medicare beneficiaries need CMS to advance policies that expand access to the safe, convenient, and efficient care that surgery centers provide.”

Medicare Reimbursement Updates for ASCs

On November 1, 2023, CMS finalized the Medicare reimbursement fee schedule for ASCs in 2024. Consistent with prior years, CMS continued using the hospital market basket update to calculate payment adjustments, rather than the Consumer Price Index for All Urban Consumers (CPI-U). For CY 2024, CMS implemented an overall expected payment growth of 3.1%, determined by a projected inflation rate of 3.3% less the multifactor productivity (MFP) reduction of 0.2% mandated by the ACA. While this adjustment was lower than the previous year, it remains elevated compared to historical increases, reflecting the sustained impact of labor and supply cost pressures on ASCs. Nonetheless, ASC leaders voiced concerns that rising operational costs continue to outpace reimbursement growth, highlighting the financial challenges of maintaining high-quality, cost-effective care.

Effective January 1, 2025, the CY 2025 ASC payment system final rule introduces a 2.9% increase in payments, reflecting a 3.4% projected market basket increase, offset by the 0.5% MFP adjustment. This represents a slight increase from the proposed rule. Many healthcare industry leaders think the payment hike is too modest given the ongoing cost pressures on ASCs, including rising labor and anesthesia expenses. How ASCs adapt to these challenges in the current economic climate will remain a critical area of focus in the coming years.

The chart below summarizes the historical net inflation adjustments for CY 2016 through CY 2025, factoring in additional adjustments such as the MFP reduction outlined in each year’s final rule. While the CY 2025 adjustment is slightly lower than CY 2024, it remains elevated compared to pre-2023 increases. This reflects sustained challenges like labor, supply, and anesthesia costs, alongside emerging concerns such as cybersecurity threats. These pressures highlight the evolving financial and operational complexities ASCs face in delivering efficient, high-quality care.

The table below reflects a summary of the estimated Medicare ASC payments for 2024 and 2025 for the top 10 CPT codes performed in ASCs in 2024. As shown below, total Medicare payments for these top procedures are projected to increase by 3.4% from 2024 to 2025. While the overall growth is modest, certain procedures are seeing more notable changes, including a 7% increase for EGD biopsies and a 5% increase for spinal neurostimulator procedures. Most other high-volume procedures, such as total knee and hip arthroplasties, are projected to see steady 3% growth in reimbursement.

CMS has projected total ASC payments in 2025 to increase to approximately $7.4 billion, an increase of approximately $308 million compared to estimated CY 2024 Medicare payments.

Transaction Activity

In 2024, the ASC market continued its consolidation trend, with significant transactions involving both established platform players and emerging private equity (PE)–backed entities. Despite ongoing consolidation, approximately 67% of ASC facilities remained independent as of 2024, indicating substantial potential for further consolidation at the individual-facility level.

While private equity interest in ASCs persisted throughout 2024, activity appeared to have slowed from prior years. PE interest has often been linked to physician practice portfolio companies, allowing investors to capture additional revenue streams. That said, direct ownership in ASCs by PE groups has ramped up over the last few years. Notably, SurgNet Health Partners, a Nashville-based ASC development and management company, expanded its footprint in 2024. In August, SurgNet acquired Tuscaloosa Endoscopy Center in Alabama, marking its first partnership in the Southeast U.S. following earlier acquisitions in Ohio and Michigan. Similarly, Spire Orthopedic Partners, backed by Kohlberg & Company, formed a strategic partnership with Ortho Rhode Island and its affiliated ASC in June 2024, further expanding its presence in the orthopedic specialty space. These transactions highlight how private equity firms are actively scaling ASC platforms to capitalize on the growing demand for outpatient surgical services, driving expansion through strategic partnerships, targeted acquisitions, and investments in specialized care delivery.

In line with the growing private equity interest in the ASC market, significant consolidation conversations emerged in August 2024 involving major industry players. Reports surfaced that TPG Inc. and UnitedHealth Group were exploring a potential acquisition of Surgery Partners, one of the largest ASC operators in the country. While no definitive agreement has been reached and the outcome of these discussions remains uncertain, the potential deal highlights consolidation trends within the outpatient surgical space. For UnitedHealth Group, which already owns SCA Health through its Optum subsidiary, acquiring Surgery Partners would further solidify its presence in the outpatient market by expanding its ASC footprint and enhancing its ability to deliver cost-effective, high-quality surgical care. This development reflects the strategic moves by major healthcare players to strengthen their market position amid rising demand for outpatient surgical services.

USPI remained a dominant force in the ASC space, significantly increasing its footprint. Throughout the year, USPI acquired an estimated 45 new centers, including the purchase of Covenant Physician Partners, further solidifying its position as the largest ASC operator in the United States. In Q2 2024, USPI added 11 new ASCs, notably through a strategic partnership with the Florida Orthopedic Institute, which contributed three high-volume orthopedic surgery centers performing over 15,000 cases annually. Additionally, USPI opened six new ASCs in the third quarter, including a collaboration with Synergy Orthopedics to develop San Diego’s largest dedicated musculoskeletal outpatient surgery center.

AmSurg continued expanding its ASC portfolio through strategic acquisitions and partnerships in 2024. In June, AmSurg and Comprehensive EyeCare Partners jointly acquired Alta Rose Surgery Center in Las Vegas, marking their fourth collaborative facility. Additionally, AmSurg entered a joint venture with Palomar Health to manage Poway Surgery Center in San Diego County and acquired a stake in River Road Surgery Center in Salem, Oregon, further strengthening its presence in key outpatient markets.

Surgery Partners actively expanded its ASC network through strategic acquisitions and partnerships in 2024. In February, the company entered a joint venture with Parkview Health to develop ASCs across Indiana, marking its entry into the state’s outpatient surgery market. In October, Surgery Partners, in collaboration with ValueHealth, completed a new ASC in The Villages, Florida, offering a range of specialty services. Additionally, in November, the company announced a long-term strategic partnership with Duly Health and Care, acquiring a 26% stake in Duly’s Lombard and Westmont surgery centers in Illinois.

In March 2024, TriasMD, the parent company of DISC Surgery Centers, acquired Thousand Oaks Surgery Center in California, expanding its data-driven ASC model and enhancing its complex spine and orthopedic service offerings.

Bon Secours Mercy Health and Compass Surgical Partners expanded their joint venture by opening multiple ASCs, including the Springfield Regional Outpatient Surgery Center in Ohio and the Millennium Surgery Center in South Carolina. These developments are part of their broader strategy to establish over 30 ASCs.

In July 2024, Atlas Healthcare Partners partnered with MultiCare Health System to expand outpatient surgical services across the Pacific Northwest, focusing on developing cardiovascular, gastrointestinal, and general practice ASCs to meet growing regional demand. Building on this momentum, in August, Atlas formed a joint venture with ChristianaCare to create a major network of ASCs across Delaware, Maryland, New Jersey, and Pennsylvania, with plans to develop over 10 centers in the next five years. These strategic partnerships highlight Atlas’ continued efforts to strengthen its national presence in the ASC market.

Certificates of Need

In 2024, several states continued the trend of reforming or repealing CON laws, significantly impacting the ASC landscape. North Carolina advanced its phased repeal by passing legislation to eliminate CON requirements for ASCs in counties with populations over 125,000, effective November 21, 2025. These ASCs must meet specific charity care obligations and submit annual data reports to maintain compliance. Tennessee is set to repeal its CON laws for ASCs by December 1, 2027. Once implemented, independent ASCs will be required to participate in TennCare and provide comparable levels of care to TennCare enrollees and charity care patients, similar to hospital-affiliated ASCs. Additionally, the Tennessee Health Facilities Commission is tasked with developing a six-year assessment plan to monitor the impact of these changes.

Georgia also introduced reforms, exempting certain single-specialty ASCs from CON requirements if they are owned by a single physician or practice and stay below specified capital expenditure and operating room thresholds. The reforms now allow non-owner physicians within the same specialty to operate in these ASCs and permit joint ventures with hospitals, including the use of external management. Further recommendations from the Georgia Department of Community Health are expected, signaling potential future changes. These ongoing reforms reflect a broader movement to ease regulatory barriers for ASC development, promoting competition and expanding access to outpatient surgical care.

The ASC sector saw continued tailwinds in 2024, fueled by consolidation, the growing transition of higher-acuity procedures to outpatient settings, and shifting regulatory dynamics. Major ASC operators expanded their networks through acquisitions and partnerships, underscoring the rising demand for specialized outpatient care. With CMS adding more procedures to the ASC Covered Procedures List, the sector further solidified its role in delivering cost-effective, high-quality surgical care. Regulatory changes, particularly the relaxation of CON laws in various states, have opened additional opportunities for growth. As we look ahead, the ASC market remains well-positioned to continue its trajectory of expansion, serving as a cornerstone of the healthcare delivery system by offering increased access and efficiency for patients nationwide.

The VMG Health Advantage

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With unmatched expertise and a commitment to excellence, VMG Health remains the go-to resource for driving success and innovation in the ASC industry. Contact VMG Health to learn more about how our experts can support your organization.