JPM20: Tenet outlines plans to ‘aggressively’ scale outpatient surgery unit

By | January 16, 2020

Tenet outlined its long-term strategy to investors Tuesday during the annual J.P. Morgan Healthcare Conference in San Francisco, with plans to aggressively expand its outpatient surgery unit by allocating at least $ 175 million each year to buy ambulatory surgery centers throughout the country.

United Surgical Partners International “is tightly tied to our overall strategy,” Tenet CEO Ron Rittenmeyer told investors. “We are committed to thoughtfully and aggressively [scaling] this aspect of our business.” 

The market is highly fragmented, he said, noting a robust pipeline of opportunities. About 60% of the nation’s surgery centers are operated independently. Tenet through USPI controls 5% and the rest are run by other national players, hospitals and smaller chains, he said.     

Tenet’s long-term vision comes as hospital operators attempt to adapt to shifting demographics and demand at the same time payers and regulators are looking to change reimbursement to pay for quality. The landscape is also changing as more care is being delivered outside of hospitals in lower-cost settings. 

The Dallas-based firm has broad reach across the country, operating 65 hospitals, 296 ambulatory surgery centers, 107 urgent cares, 77 imaging centers and more. 

Facing these headwinds, Rittenmeyer said the company will continually examine how it can trim its hospital portfolio and invest in high-acuity lines of care for its remaining facilities.​ “I think it’s fair to say we’re a completely different company than we were in 2017,” he said Tuesday, citing the elimination of past processes and lax accountability.  

Tenet has continued to divest hospital assets, most recently announcing a deal to off load its Memphis hospitals. The company reported a net loss of $ 245 million from continuing operations for the first nine months of 2019, a significant decline from net income of $ 113 million the year prior. The company attributed the decline to paying off debt earlier.​

So far the strategy is working, he said, noting admissions gains over the past three quarters. The company has relied on real-time data and predictive analytics to make informed decisions faster. 

In one example, Rittenmeyer touted the use of predictive mid-month reports that allow the chain to take action in staffing by comparing what Tenet expected to what it’s actually experiencing.

Harnessing all this data has led to a more informed organization. “We now have a much richer view of our own consumer base in each market based on data and research,” he said.

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