For the first time in healthcare industry history, health systems are motivated to enter the ambulatory surgery center (ASC) space, due to the industry’s move toward value-based care.

According to Chris Bishop, chief executive officer at Regent Surgical Health, this shift to new reimbursement methodologies is driving rapid evolution among ASCs: toward hospital-physician joint ventures and consolidation.


“Hospital joint ventures are the fastest growing segment in the surgery center space and it’s because all health systems in some form or fashion are working on value-based care reimbursement methodologies,” Bishop says. “Historically, hospitals were motivated to perform cases in the hospital where they earned 100% of the fee-for-service payment. Now, with value-based-care, health systems are really attempting to transition patient care to the least expensive, clinically appropriate setting.”

Bishop says health systems once looked at physician-hospital joint ventures as a ‘proactive-defensive’ strategy: a pre-emptive move to align with the best orthopedic groups in their markets rather than having them form independent ASCs. But now, he explains, the joint venture trend serves physician alignment needs, as well as, value-based care strategy.

“Those two strategies are really coming together and driving this increase in activity around the three-way, hospital-physician joint venture,” Bishop says. “Sometimes it’s just the hospital and physicians, but I say ‘three-way’ because oftentimes it’s the hospital, the physicians, and a third party like Regent that brings operational expertise. The traditional relationship between physicians and hospitals can be complex, but a third party like Regent can advise on what’s best for the surgery center entity.”

Along with the trend toward hospital partnership in ASCs, Bishop cites an evolution in the way ASCs operate. He predicts that, like the dialysis industry which started out as a mom-and-pop industry and is now dominated by two large players, major consolidation lies on the horizon for the ASC industry.

“I don’t think we’ll ever have two players that own and control 80% of the industry (like the dialysis industry), but you will see a continued trend toward consolidation because the margins are becoming tighter in the ASC space,” Bishop says. “As it becomes more difficult to manage these surgery centers and it requires greater resources to maintain an attractive margin, more surgery centers will partner with hospitals, with Regent, and with publicly traded companies so they can continue to thrive under new reimbursement rules.”


ASC consolidation also is being driven by changes on the payer side, including rapid emergence of employer-owned health plans. Bishop cites Amazon’s recent partnership with Berkshire Hathaway and JPMorgan Chase to form such a plan, and similar approaches in the works at Walmart and Apple. “If you’re a standalone surgery center, you likely don’t have the resources to negotiate with seven to ten new payers – like Amazon and Walmart,” he says. “So, surgery centers will continue to move towards joining larger groups.”

Another development driving ASC consolidation is the continued shift of higher acuity cases to the outpatient setting. “As today’s surgeons see professional fees decline, even as their clinical practice and techniques continue to improve, it’s driving them to seek out alternative sources of income,” Bishop explains. “For example, you may see six urology groups merge into a single practice so that they can then set up a urology surgery center plus their own dialysis center, resulting in ancillary sources of income that their combined practices can then harvest.”

For information on ASC evolution and Regent’s role in physician-hospital ASC joint ventures, contact Thomas Crossen at