HCA, KKR reportedly make bid for Envision amid deal frenzy
- HCA Healthcare and private equity firm KKR & Co. have made an offer to purchase physician services company Envision Healthcare, Reuters reported.
- Confidential sources told Reuters that HCA is interested in acquiring Envision's ambulatory surgery business. KKR would take control of the rest of the business, according to the report. Nashville, Tennessee-based Envision currently owns more than 255 surgery centers across the U.S.
- Envision, with a market capitalization of $5.09 billion, has been an acquisition target this year. The company requested potential buyers present final offers in May, and Carlyle Group and TPG Global were among those vying for Envision, according to Reuters. In March, Bloomberg reported UnitedHealth Group was interested in purchasing Envision for its ambulatory surgery business.
The Envision deal, if it comes to be, would add to a wave of healthcare merger activity in 2018. Companies such as Cigna and CVS Health have been making bids for healthcare properties to build market power.
In 2016, Envision merged with ambulatory surgery center company Amsurg, creating a large physician-staffing company. The latest deal could build out HCA's outpatient surgery presence of 120 such centers across the country.
The hospital operator reported "mostly flat" patient volumes in its hospital-based and freestanding ambulatory centers in the first quarter of 2018. Still, surgery admissions accounted for 26% in total admissions for the quarter, which executives on an earnings call said was consistent with last year.
HCA remains committed to adding more outpatient surgery centers to its portfolio.
"We're continuing to add physicians as investors in many of these centers," HCA President and COO Samuel Hazen said on an earnings call in May. "[W]ithin our hospitals, we're able to create a very efficient outpatient environment for our surgeons who want to also operate on inpatients at the same time. ... [W]e think the combination of those offerings is very competitive and very responsive to our different constituents."
HCA isn't the only company interested in such business. Hospital operators face an environment focused on ease of patient access and lower-cost, lower-acuity settings and are making investments in services that can bring in patients and provide healthy ROI. One analysis, for example, predicts outpatient surgery admissions will increase 11% from 2017 to 2022.
The ambulatory surgery business is ripe for consolidation, as about half of 5,500 such centers are not owned by chains, an analysis last year found. UnitedHealth Group last year purchased ambulatory surgery chain Surgical Care Affiliates for $2.3 billion to add 205 facilities to its Optum business.
HCA had not responded to a request for comment by the time of publication. Envision's stock on Monday opened at $43.28 per share, a 3% increase over the previous business day's close.
- Reuters Exclusive: HCA, KKR team up for Envision bid - sources
- Healthcare Dive Surgery centers seeing lots of consolidation
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