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October 29, 2019 03:23 PM

Universal Health Services, Regent Surgical Health form ASC joint venture

Alex Kacik
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    Universal Health Services and Regent Surgical Health signed a definitive agreement to form a new joint venture that will establish a national ambulatory surgery center network, the organizations announced Tuesday.

    Executives said that ASCs will offer more convenient access points, opportunities to expand risk-sharing payment models and more efficient settings for physician practices. The hope is that Regent's expertise will improve care quality and bottom-line results, they said.

    "Our outpatient business is continuing to grow like everybody else," Kyle Moore, vice president of ambulatory care services at UHS, told Modern Healthcare. "We can't be everywhere for everybody so partnerships are the best way to bring value to that growth."

    King of Prussia, Penn.-based UHS has traditionally focused on the acute and behavioral health space, with a network of 327 behavioral health hospitals, 27 acute hospitals and 40 outpatient facilities. The investor-owned integrated health system reported acute outpatient revenue of $4.48 billion in the third quarter, which was up 21% from the same period last year. It reported $257.7 million in behavioral health outpatient revenue, a 6.1% boost.

    Comparatively, UHS reported $7 billion of inpatient revenue in the third quarter, which increased nearly 17% from the same period prior. Its behavioral health hospitals produced $2.54 billion of inpatient revenue, up more than 3%.

    Many health systems have opted to wind down their acute care footprint to make way for more outpatient facilities, or looked to acquisitions or affiliations to bolster their ambulatory and physician networks. That push has accelerated as more care moves from the hospital setting, alternative payment models reward cheaper and more efficient care, and insurers implement strict emergency department prior authorization requirements.

    Meanwhile, the gap between U.S. hospitals' outpatient and inpatient revenue continues to shrink, according to American Hospital Association data.

    "We are seeing health systems look to decompress their main campus and look to move more services to an outpatient setting," Christopher Bodnar, vice chairman of CBRE Healthcare Capital Markets, told Modern Healthcare in December, following the commercial real estate firm's report that found that the number of outpatient facilities increased by 51% from 2005 to 2016.

    While the transition seems to meet consumers' expectations for more convenient and affordable care, not much is known about the quality of ASCs because there are few quality measures available. A recent report from the Leapfrog Group found 1 in 3 centers didn't have physicians or nursing staff who were all board-certified.

    Still, insurers, health systems and private-equity backed ventures are eying physician offices, ASCs and other lower cost providers so they can better direct care and secure revenue streams.

    "Most communities today are over-bedded," Stephen Wright, Christus Health's former senior vice president of group operations, told Modern Healthcare last year. "It's a more effective use of resources to build a smaller footprint via ambulatory facilities and then transferring them to other local facilities if there is a need."

    Westchester, Ill.-based Regent owns or operates 26 ASCs, 21 hospital joint ventures, 14 total joint replacement centers and three bundled payment entities.

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