Tenet Healthcare plans to spend $150 million to acquire between 25 to 40 ambulatory surgery centers in 2021 as the hospital system continues its pivot to more higher acuity facilities and away from urgent care.
Tenet CEO Ronald Rittenmeyer detailed the 65-acute hospital system plan Tuesday during the annual J.P. Morgan healthcare conference, which is being held virtually this year.
At the end of the year, the system closed the acquisition of up to 45 ambulatory surgery centers to add to its subsidiary United Surgical Partners International (USPI), Rittenmeyer said. The acquisition grows USPI’s portfolio to as many as 310 ambulatory surgical facilities and 24 surgical hospitals.
Meanwhile, the sale of Tenet’s urgent care business “reflects a strategic move to rely on high-demand specialties,” Rittenmeyer said. “We don’t see urgent care business as important feeders to our hospitals.”
Tenet is expecting major growth from its ambulatory surgery business. The earnings before interest, taxes, depreciation and amortization (EBITDA) for ambulatory surgery is expected to grow from 4% in 2014 to 45% by the end of 2021, Rittenmeyer said.
The system is expected to grow its portfolio more in 2021. Rittenmeyer said they plan to spend $150 million to acquire 25-40 facilities and he expected annual same-store surgical revenue growth of more than 6%.
Tenet expects its surgery business to represent a larger share of the business over the next three years. It estimates USPI to increase its share of the company’s EBITDA portfolio mix to grow from 33% to 50% over the next three years and its hospital EBITDA mix to decline from 53% to 35%.
He added that USPI has a large portion of musculoskeletal services.
“It is growing more quickly in the ambulatory environment than the hospital environment,” Rittenmeyer said.
The pivot from urgent care centers to ambulatory surgery centers comes as the system is seeing much more high acuity or severe illness care due in part to the pandemic. Rittenmeyer speculated that the decline in lower acuity care is due to patients foregoing care due to hesitation from the pandemic.