The Service Line

Surgery Partners’ board turned down a reported $28 per share, higher than the $25 it agreed to take, because the bidder looked slower and riskier to close. The surgery center operator’s amended merger agreement with HealthSpan Partners, an affiliate of the nonprofit Bon Secours Mercy Health, now values the company at about $6 billion, or $25.00 per share in cash, up from $5.7 billion and $23.50, according to ASC News’ report on the amended deal. ASC News reports that Bloomberg identified the rejected bidder as UnitedHealth at $28 per share, and that the board turned it down over deal complexity and closing risk. The amended terms raise the termination fee to about $149.1 million, and shareholders other than Bain Capital, which owns about 39 percent and will vote in favor, get a ticking fee if closing slips past March 1, 2027. We covered the first deal on October 26 and the raise on November 13. The so-what for operators is the signal on regulatory risk: the board judged a bid about 12 percent higher (our calculation) worth less than a nonprofit buyer’s cleaner path, which tells every independent center owner that who is buying matters as much as the multiple. We did not retrieve the company’s filing this run, so the terms rest on the trade report. Confidence: Medium on the terms, Low on the bidder’s identity, which neither company has confirmed.

Reimbursement

The final 2027 payment rule gives surgery centers 2.3 percent, and the clinical families leaving the inpatient-only list skip joints and the heart. The Centers for Medicare & Medicaid Services (CMS) final rule fact sheet sets the ASC update at 3.2 percent market basket less a 0.9 point productivity adjustment, for about 6,400 centers, and removes 637 services from the inpatient-only list in the second year of a three-year phase-out. The listed families are auditory, digestive, endocrine, female genital, hemic and lymphatic, integumentary, male genital, maternity, mediastinum and diaphragm, respiratory and urinary. The fact sheet does not say how many codes join the ASC Covered Procedures List. ASC News reports 618, as proposed, and says the final rule approved two device pass-through applications CMS had planned to deny: the Altius nerve stimulation system for amputee pain and the TIDAL fusion cage for salvage ankle and hindfoot fusion, per ASC News’ rule summary. We covered the headline update on November 4; the new detail is the code-level read. A Jefferies analyst note cited by ASC News puts knee and hip replacement at plus 4 and plus 5 percent, spine at plus 13 percent and colonoscopy at minus 1 percent, but on proposed rates, not final ones. For a center pro forma, spine and joint programs look better than the headline and screening endoscopy worse. Confidence: High on the update and removals (CMS), Medium on the pass-through approvals and code-level effects (trade reporting, proposed-rate basis), Low on the final list count, which we could not confirm in the addenda.

Enforcement

A Tennessee pain clinic and its managers will pay $1.5 million over medically unnecessary testing, and the August audit of sacroiliac joint injections is still the larger exposure for pain-focused centers. The U.S. Attorney’s Office for the Middle District of Tennessee announced the False Claims Act settlement November 12 with two companies that ran the Clarksville pain clinic and two managers, alleging they billed Medicare and the Department of Veterans Affairs for diagnostic testing that was not medically necessary, per the HHS Office of Inspector General (OIG) enforcement listing. The listing excerpt we read does not name an ambulatory surgery center, and we did not retrieve the full press release. The open item for ASCs remains the OIG audit report on sacroiliac joint injections, which found 72 of 100 sampled sessions noncompliant and an estimated $15.2 million improperly paid. We found no new Department of Justice action naming an ASC in the November 6 to 14 window, though the Justice Department’s own search page returned an access error, so we cannot rule one out. Confidence: High on the settlement amount and date (OIG), Medium on relevance to ASCs.

Who’s Buying

Community Health Systems’ chief executive says the hospital chain will invest “a little heavier” in surgery centers. Chief Executive Kevin Hammons said on November 10 at the UBS Global Healthcare Conference that growth is “in the outpatient ambulatory space with site-neutral payment continuing to get more traction in D.C.,” that CHS has about 12 to 13 ambulatory locations per hospital, and that it “invested in surgery centers a little more heavily recently,” per ASC News. He said CHS will keep pursuing ASC acquisitions and physician partnerships, with recruiting focused on cardiology, orthopedics and general surgery. No deal size or ASC count was given. The pattern matters for sellers: with Tenet’s USPI, Optum’s SCA, Ascension’s AmSurg and now a nonprofit-backed Surgery Partners all inside health systems or insurers, hospital operators are the bidders and surgeon-owners hold the leverage. Confidence: Medium, executive remarks as reported by trade press, not a filing.

Clinical Policy

CMS proposed to move surgery centers to the 2024 fire safety codes and asked whether physicians should still have to supervise nurse anesthetists. The Cutting Administrative Requirements for Excellence in Patient Care (CARE) proposed rule, released November 5, would update ASCs from the 2012 to the 2024 editions of the National Fire Protection Association’s Life Safety Code and Health Care Facilities Code, allow quiet coded announcements instead of horns and strobes during fire drills, end annual inspections of fire doors in areas that need no fire rating, and require carbon monoxide detection in newly built centers with fuel-burning equipment, per ASC News’ summary of the rule. It also classifies sterile operating room areas as hazardous areas needing smoke barriers or automatic suppression. CMS separately seeks comment on whether to keep, revise or change the Medicare requirement that physicians supervise certified registered nurse anesthetists in hospitals and ASCs, which ASC News says could ease anesthesia staffing if loosened. That bears on the anesthesia stipend pressure we tracked this summer. The article gave no cost estimate or comment deadline, and we did not retrieve the Federal Register text. Confidence: Medium, secondary summary of a proposal.

The Operator Metric

Multiply each of your top 10 procedures by the 2027 ASC payment weight scalar, 0.814, down from 0.872 this year, and see which ones fall. ASC News reports the final scalar is 0.814 against 0.809 proposed and 0.872 in 2026, a drop of about 6.7 percent (our calculation), and that the Ambulatory Surgery Center Association (ASCA) says it will cut payment for 85 of the top 100 ASC procedures by Medicare volume, with its top 10 codes by volume, including ophthalmology, gastroenterology and pain, all declining, per ASC News’ rule summary. ASCA President Todd Currier said the group is “deeply concerned on the reimbursement effects for many high-volume procedures.” The scalar is a budget neutrality adjustment, so the 2.3 percent headline and your own rate change can differ in sign. Take your top 10 codes by Medicare volume, pull the 2027 addendum rate for each, and weight by case count. Confidence: Medium, figures are ASCA’s and ASC News’ reading of the addenda, which we did not retrieve.