Dive Brief:
- HealthSpan Partners, an affiliate of Bon Secours Mercy Health, announced on Monday that it will take outpatient surgery provider Surgery Partners private in a transaction valued at about $5.7 billion.
- Catholic nonprofit Bon Secours would absorb Surgery Partners’ footprint of over 200 ambulatory surgery centers, urgent care facilities and multi-specialty practices in 30 states to operate one of the country's largest outpatient footprints, the health system said.
- The deal is expected to close by the first quarter of next year. Private equity firm Bain Capital, which owns 39% stake in Surgery Partners, will roll over its shares in exchange for equity interests in HealthSpan Partners.
Dive Insight:
The deal would cement Bon Secours’ outpatient surgery strategy and add Surgery Partners' capabilities in key specialties, such as orthopedic and spinal care, cardiology, gastroenterology and ophthalmology.
HealthSpan Partners plans to fully finance the company's acquisition with cash on hand and newly borrowed funds. Following the deal's close, Surgery Partners intends to retain its name, brand and headquarters in Brentwood, Tennessee. The company will also continue to be a secular organization while complying with Bon Secours' Catholic-based core values.
Health systems are continuing to invest in outpatient surgical care, hoping to capitalize on growing patient interest and shift care into lower-cost settings.
Medical and technological advancements are making more treatments eligible in outpatient settings, which don’t require pricey inpatient expenses like room and board, round-the-clock nursing and facility overhead. Regulations have also allowed more procedures to be performed to outpatient facilities. Outpatient services now account for the majority of hospital revenues for most facility types.
Joint replacements and spinal fusions are especially lucrative procedures in healthcare, with Surgery Partners reporting a 22% increase in joint replacements alone last year. Patients like the convenience of undergoing these complex surgeries in outpatient settings, but Medicare and many commercial payers have also steered their members to these locations to cut costs.
“As healthcare continues to evolve, it is important to grow in ways that allow us to serve more people, in more communities and through a broader range of care settings,” John Starcher Jr., Bon Secours’ president and CEO, said in a press release.
Surgery Partners is a fast-growing company in outpatient surgery – the company nearly doubled the number of its facilities it operates this year compared to 2021. That growth has largely been backed by private equity firms, which have invested in Surgery Partners since 2010. H.I.G. Capital owned a majority interest in Surgery Partners before selling its stake to Bain in 2017.
Still, its expansion efforts have contributed to losses. The company reported $77.9 million in losses last year.
Other leading health systems have inked multi-billion dollar outpatient deals in order to meet burgeoning demand. This summer, Ascension closed a $3.9 billion acquisition of AmSurg, which owned over 250 ambulatory surgery centers across dozens of states.
