Five Healthcare Merger And Acquisition Trends Ambulatory Surgery Centers Should Know

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Mergers, acquisitions and consolidation are a pivotal part of healthcare operations, particularly at Ambulatory Surgery Centers (ASCs).

It can be helpful for independent practices to be aware of trends to compete with ASCs backed by private equity firms and large health systems and to stay up to date with where investors are interested.

Here are emerging trends in healthcare merger and acquisition activity, as laid out in an article by Ankura, a global expert services and advisory firm, and published Oct. 18 in JDSupra:

1. Expanding Outpatient Networks

Reduced cost of care, patient convenience, technology advancement and the pandemic accelerated health system interest in expanding outpatient care offerings. ASCs are experiencing an increase in demand and thus are increasingly attractive to investors.

Big names such as Nashville-based HCA Healthcare and Dallas-based United Surgical Partners International have used acquisitions to expand their outpatient care networks and are producing a growing share of overall company revenue.

2. Rise In Private Equity And Investor Interest

Nontraditional investors such as retail giants, technology companies and private equity firms are expanding their investments into healthcare services. Several physician specialties, including dermatology, orthopedics, gastroenterology, dentistry and ophthalmology, are key targets for private equity.

3. Expansion Of Care Offerings

Many healthcare groups have placed an emphasis on vertical integration — or having a role in various aspects of the care continuum. By acquiring groups along the care continuum, organizations can achieve greater coordination, improved patient outcomes and cost efficiencies.

4. Increased Use Of Digital Health Technology

Healthcare companies have been acquiring digital health startups and technology companies to accelerate innovation, increase operational efficiency and expand service offerings.

5. Health System Consolidation

Healthcare company mergers continue to play a key role in the industry, such as rural hospitals partnering with larger health systems to continue operations. Despite this, healthcare remains highly fragmented and has the potential to further consolidate, according to the article.

 

Source: Becker’s ASC Review

Florida And Chicago Investors Team Up To Buy Baylor Scott & White’s Frisco Medical Campus

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Two investors have teamed up to buy a Frisco hospital complex.

Chicago-based Remedy Medical Properties and Kayne Anderson Real Estate of Florida have purchased the Baylor Scott & White Frisco Medical Center.

The 161,264-square-foot, 68-bed specialty hospital is at 5601 Warren Parkway, west of the Dallas North Tollway. The medical center is near The Star, the headquarters and training facility of the Dallas Cowboys.

The 7.4-acre campus is fully occupied by Texas Health Ventures Group, a joint venture between Baylor Scott & White and United Surgical Partners International.

Built in 2001, the medical center was previously owned by Nashville-based Healthcare Realty Trust.

“This was an attractive opportunity to secure a fully leased medical center that has a strong growth trajectory in one of the hottest markets in the country,” Joe Magliochetti, chief investment officer for Remedy Medical, said in a statement. “The BSW Frisco Medical Center is performing very well, and is benefiting from a notable increase in outpatient and ambulatory services, with orthopedic care as the primary driving force. In addition, Remedy has existing relationships with Baylor Scott & White and USPI, and we are pleased to be able to further strengthen those relationships through this acquisition.”

The Frisco medical complex includes 11 operating rooms, an emergency department, onsite pharmacy, private rooms and a two-story parking garage. Terms of the purchase were not disclosed.

“The Dallas-Fort Worth region is growing rapidly, and the Frisco market area is the epicenter of that growth,” Antonio Minchella, senior managing director with Kayne Anderson Real Estate said. “Baylor Scott & White is committed to serving the Frisco area through this location. They entered a long-term lease extension prior to the purchase, and are investing in the building to both improve the patient experience and upgrade and enhance surgical capacity.”

Remedy Medical Properties owns almost 30 million square feet of medical real estate in 43 states. The company’s holdings include the Healthcare Associates of Texas medical center in Irving.

Kayne Anderson Real Estate is based in Boca Raton and manages more than $14.5 billion in real estate assets.

 

Source: The Dallas Morning News

Senior Housing Demand Continues To Outpace New Supply

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The senior housing market appears set for a steady and ongoing recovery, with occupancy levels in 2024 expected to meet or exceed pre-pandemic levels, provided no unforeseen difficulties occur.

That is the conclusion of an analysis of 3Q 2023 data by the National Investment Center for Seniors Housing and Care (NIC).

Senior housing occupied stock is now 2.6% or 15,026 units above the pre-pandemic 1Q 2020 level, NIC found. Demand continued to outpace new supply for the ninth consecutive quarter. In primary markets, net absorption rose 1.3%, or 7,583 units, from the previous quarter and 4.3%, or 24,627 units, over the prior year. The stock of senior housing in these markets rose 0.4% from 2Q 2023, and 1.3% above the prior year, NIC stated.

However, construction remained below pre-pandemic levels, and the 11,133 units under construction in the year ended 3Q 2023 amounted to less than half the starts reported during all of 2019. A new measure of senior housing, the Absorption-to-Inventory Velocity ratio, stood at 28:10 for primary markets, which implies that for every 10 newly added units, 28 were absorbed. This indicates that the senior housing market has been able to absorb a significantly higher number of units than were added during the third quarter of 2023.

The senior housing all-occupancy rate rose to 84.4% in 3Q 2023. It remained below the 87.1% rate of 1Q 2020. However, it is expected to reach or exceed that level in 2024, NIC predicted. Risks remain in the form of economic uncertainty and the possibility of a future threat to public health.

However, current capital market conditions and the resulting lending environment, today’s relatively limited construction pipeline, and elongated delivery times of new projects suggest that supply growth is manageable and is not expected to outpace demand through 2024, the report noted.

It also pointed to differences in the all-occupancy rate between independent and assisted living facilities in primary markets. It stood at 86% for majority independent living properties, a 0.7% increase from 2Q 2023. For assisted living, it stood at 82.6%, up 0.9%. Though occupancy for both was above pandemic lows, in neither case did it reach pre-pandemic 1Q 2020 levels.

In secondary markets, though, the occupancy rate for majority assisted living facilities reached 84.3%, slightly above its 1Q 2020 level of 84.2%, indicating a full recovery explained by limited inventory growth and restrained supply pipelines. The one good thing that did emerge from the pandemic, NIC commented, is increased recognition of the value proposition that senior housing offers. It also highlighted the resilience and adaptability of senior housing operators.

 

Source: GlobeSt.