The Service Line

HCA Healthcare’s surgery centers did 5.4 percent fewer cases in the third quarter than a year earlier, and Universal Health Services missed its profit expectations on “softer-than-expected surgical trends,” so the volume growth that buyers are paying up for did not show up in the biggest operators’ latest numbers. On HCA’s October 27 earnings call, Chief Financial Officer Michael Marks said ambulatory surgery center (ASC) volumes fell 5.4 percent, hospital outpatient surgery fell 2.9 percent and total surgical volume fell 1.4 percent, and he blamed “the exchanges in our ASC book,” meaning patients who lost Affordable Care Act marketplace coverage, with Medicare and the inpatient-only list a second pressure, according to ASC News’ report on the call. Universal Health Services (UHS) reported third-quarter adjusted EBITDA net of noncontrolling interests of $624.6 million, below its own expectations, per ASC News’ account of the October 28 call. We did not retrieve HCA’s or UHS’s own releases or transcripts. For operators, the so-what is payer mix: a case lost to a coverage gap is revenue the new owners cannot buy back with scale. Confidence: Medium, both figures come from trade-press accounts of earnings calls.

Reimbursement

The final 2027 payment rule for surgery centers has not been published as of today, so every pro forma still rests on a proposal. We found no final CY2027 Hospital Outpatient Prospective Payment System (OPPS) and ASC rule posted by October 31. The Centers for Medicare & Medicaid Services (CMS) proposed rule fact sheet proposed a 2.4 percent ASC update on the hospital market basket, about 618 additions to the ASC Covered Procedures List, removal of 638 services from the Inpatient Only list, and an end to the alternative device pass-through pathway. Comments closed August 31. We covered the proposal on October 17. What to check the day it posts: whether the 2.4 percent survives updated market-basket data, which joint, spine and cardiac codes land on the ASC list, and whether the spinal cord stimulator and epidural rate swings in the proposed addenda hold. Confidence: High that no final rule was posted when we checked, Medium on timing, since CMS usually issues it in early November but has announced no date.

Enforcement

A Missouri surgeon was sentenced October 22 for taking sham consulting fees from a spinal implant maker, a reminder that device-vendor money is still the live kickback theory around spine cases. The U.S. Attorney’s Office for Massachusetts says, per the HHS Office of Inspector General enforcement listing, that Jason Montone, a surgeon, received one year of supervised release and must forfeit $379,000 in consulting fees from SpineFrontier, Inc., after pleading guilty in October 2020 to conspiring to violate the Anti-Kickback Statute and to obstruction. A Kansas distributor was also sentenced to a year of probation, forfeiting nearly $1 million in commissions, according to KCTV5. The company’s former chief financial officer was sentenced in August to four months in prison. The releases do not name a surgery center. The practical lesson for physician-owned spine and orthopedic ASCs is to audit every consulting, royalty and speaker payment between owner-surgeons and implant vendors against fair market value. We found no new Department of Justice settlement naming an ASC in this window. Confidence: High on the sentences (government), Medium on ASC relevance.

Who’s Buying

Tenet’s chief executive says the $5.7 billion sale of Surgery Partners to a Bon Secours Mercy Health affiliate does not threaten USPI, but a Tenet analyst-call exchange shows who is setting the price. HealthSpan Partners, an affiliate of Bon Secours Mercy Health, will pay $23.50 in cash per share for Surgery Partners, an enterprise value of about $5.7 billion, with Bain Capital rolling its roughly 39 percent stake into the buyer and signing a voting agreement, per the Surgery Partners press release filed with the Securities and Exchange Commission. Closing is expected in the first quarter of 2027, subject to shareholder and regulatory approvals. We covered the announcement on October 26. New this week, on Tenet’s October 29 call, UBS analyst A.J. Rice noted that nonprofit buyers are paying higher premiums than the market gives USPI, and Chief Executive Saum Sutaria said most USPI acquisitions in the quarter were non-competitive, with sellers approaching USPI directly, per ASC News. The price is about 49 percent above the $15.75 prior close ASC News reports (our calculation), yet below Bain’s rejected $25.75 offer from January 2025. The release gives no earnings multiple. Confidence: High on terms (filing), Medium on the premium math.

Clinical Policy

Operators in two of the biggest procedure lines are watching the same shift from opposite chairs: UHS says orthopedics and gastroenterology are moving to ASCs and offices, and HCA says the inpatient-only list is already denting its numbers. UHS Chief Executive Marc Miller said procedures continue to move out of hospitals, calling the weaker surgical mix “an acceleration of existing trends,” while doubting the Medicare inpatient-only list phase-out is the main cause, and said UHS has at least one ASC in every market it serves, per ASC News. HCA’s Marks said “we are seeing some impact of the inpatient only list.” The proposed 2027 rule would take that phase-out into year two of three. For an independent ASC, the opening is volume that used to be inpatient-only. The constraint is surgeons: UHS also said gastroenterologists are hard to recruit for emergency coverage. Confidence: Medium, trade-press accounts of earnings calls.

The Operator Metric

USPI’s same-facility surgical cases fell 1.5 percent in the third quarter while net revenue per case rose 6.1 percent, and that spread is the number to compute for your own centers this week. Tenet’s third quarter 2026 earnings release reports Ambulatory Care adjusted EBITDA of $537 million, up 9.1 percent, a 39.2 percent margin, and same-facility system-wide net patient service revenue up 4.5 percent to $2.224 billion. Tenet’s full-year outlook still calls for same-facility revenue growth of 3.0 to 6.0 percent. Cases were up 2.1 percent in the same quarter a year ago. Pull your own same-facility cases and net revenue per case for the quarter, split by payer class and by commercial exchange versus other, and compare. If cases are falling and revenue per case is not rising, the gap is mix, and the exchange numbers at HCA say where to look first. Confidence: High on Tenet’s figures (filing), Medium as a benchmark since USPI skews to higher-acuity cases.