The Cleveland Clinic is the latest to partner with a developer of ambulatory surgery centers to take minimally invasive procedures out of the hospital.

Health systems are taking a step toward the hospital of the future by outsourcing minor surgeries.

The latest to do so is the Cleveland Clinic, which announced a partnership this week with Tennessee-based Regent Surgical to build a number of ambulatory surgery centers across the country. These centers are designed to handle minimally invasive procedures, which require little to no hospital stays and shorter recovery times, much of which can be handled at home or in clinics.

As hospitals struggle with workforce shortages and look to reduce costs and their patient census, leadership is looking for alternatives to expensive and resource-intense hospital care, with the idea of saving the hospital for those who need acute care services and will spend several days there.

As a result, the ambulatory surgery market is growing. Fortune Business Insights reports the market size was valued at almost $44 billion in 2022 and projected to grow to more than $75 billion by 2030. There are currently more than 6,000 such centers in the U.S.

Arizona-based Banner Health joined forces with Select Medical in 2018, and now has a network of four private rehabilitation hospitals and outpatient physical therapy programs and services at dozens of Banner Physical Therapy Centers. Mark Garvin, the health system’s SVP of Partnership & Venture Development, says the partnership is part of Banner’s strategy to grow beyond its extensive hospital footprint and provide value-based care where it’s most convenient.

“These are people that wake up every single day and this is what they worry about,” he said in a recent HealthLeaders interview. “They’re experts. They know how to operate. They know how to develop. They know how to grow. It is their wheelhouse.”

Garvin says health systems and hospitals have the advantage over disruptors because of the name brand and the expertise in providing healthcare services.

“We can play in this space differently than the Amazons, differently than other retail organizations, simply because we’ve created these clinically integrated networks,” he says.

Cleveland Clinic, which is internationally known for outsourcing second opinions through The Clinic by Cleveland Clinic, a partnership with telehealth provider Amwell, is banking on new efficiencies with the Regent Medical deal.

“Ambulatory surgery centers provide an important setting for health systems to expand access to surgeries, and to be more efficient in the delivery of services,” Cleveland Clinic CEO and President Tom Mihaljevic, MD, said in a press release. “Regent's capabilities in managing and operating ambulatory surgery centers will enable us to focus on continuing to provide the highest quality care for our patients and will enhance our ability to grow and offer that care to more patients.”

A bill introduced in both the Senate and House would Improve Medicare reimbursement for rural providers using RPM technology.

While adoption rates are growing for remote patient monitoring (RPM), rural and remote providers are holding back, due in large part to low Medicare reimbursement. A new bill before Congress aims to change that.

The Rural Patient Monitoring Access Act, introduced this week by U.S. Senators Marsha Blackburn (R-Tennessee) and Mark Warner (D-Virginia) in the Senate and by U.S. Reps. David Kustoff (R-Tennessee), Mark Pocan (D-Wisconsin), Troy Balderson (R-Ohio) and Don Davis (D-North Carolina) in the House, would set a geographic payment floor for RPM reimbursement, enabling rural providers to recoup expenses from Medicare at the same rate as their urban and suburban counterparts.

Supporters say the bill would also ensure that providers are capable of responding to health concerns detected by RPM and that the RPM technology can promptly transmit biometric data at the EHR. It would also give the Centers for Medical & Medicaid Services (CMS) a pathway for reporting data to the Health and Human Services Department (HHS) to evaluate costs savings generated by RPM.

The proposed legislation has a number of supporters, including Marshfield Clinic, Lifepoint Health, SSM Health, Ascension, the University of Virginia Center for Telehealth, the American Telemedicine Association (ATA), the National Rusal Health Association, HIMSS, and the Alliance for Connected Care.

According to a summary of the bill, RPM reimbursement via Medicare is lowest in areas where the prevalence of heart disease, hypertension and diabetes are above average and where access to care providers is problematic.

“Patients in rural and underserved communities deserve the same opportunity to manage their health as those in more resourced areas,” Christ Frost, Lifepoint Health’s CMO and Chief Quality Officer, said in a press release. At Lifepoint, we’ve seen firsthand how high-quality remote patient monitoring can help bridge long-standing access gaps and drive meaningful clinical improvement, especially for chronic conditions like hypertension and diabetes.

The bill comes just two weeks after the Peterson Center on Healthcare released a study that called for improvements to RPM reimbursement, including coverage that aligns with specific services that have shown the most value, improved access to high-impact RPM services and improved data collection from RPM devices.

The study also found that hypertension, diabetes and heart failure are the most common conditions being monitored through RPM.

“As we adopt exciting, new technologies that extend care beyond the walls of the doctor’s office, we need to design payment models that align with clinical benefits for patients,” Caroline Pearson, executive director of the Peterson Center on Healthcare, said in a press release. “That means ending ‘forever codes’ that incentivize long-term billing of ineffective care and instead designing payments that reimburse providers for the periods of time they should be actively monitoring and managing their patients’ diseases.”

The Arizona-based health system's new SVP of Partnership and Venture Development sees the value of collaboration and being proactive instead of reactive.

As healthcare adapts to a changing landscape and the presence of disruptors, the idea of “traditional” healthcare is being replaced by a network of collaborations and partnerships focused on the consumer’s care journey.

To Mark Garvin, Banner Health’s new Senior Vice President of Partnership and Venture Development, that’s fertile ground for the value-based care system of tomorrow. And it’s his job to steer the Phoenix-based health system in the right direction.

“We can play in this space differently than the Amazons, differently than other retail organizations, simply because we’ve created these clinically integrated networks,” he says.

Garvin has a background in ambulatory care—as chief operating officer for United Surgical Partners International from 2001 until 2020, he oversaw the company’s evolution from a start-up to the nation’s largest developer of short-stay ambulatory surgery centers and hospitals. Now he’s guiding the six-state, 33-hospital network toward a future where care is accessed in many locations.

Banner wants to expand its service offerings and geography “beyond just the acute [care] side,” he says. “What we want to do is grow the diversification as a percentage of the overall business in things that are outside of the traditional acute” care spectrum.

Expanding that footprint means looking beyond “traditional” healthcare to new ideas. Garvin says Banner should not only be open to innovation—they should be leading the way.

Mark Garvin, SVP of Partnership & Venture Development at Banner Health. Photo courtesy of Banner Health.

“Why wait for someone else to come to the table?” he asks. “Why not be part of the creation, either [as] an owner or a partner or in a joint venture?”

One example of the joint venture is Banner Health’s partnership with Select Medical, which began in 2018 and has led to the development of four private rehabilitation hospitals and outpatient physical therapy programs and services at dozens of Banner Physical Therapy centers. The hospitals, which are run by Select Medical under the Banner name, address a growing need for inpatient rehabilitative care for patients who are recovering from strokes, traumatic brain injury and other medical conditions.

“These are people that wake up every single day and this is what they worry about,” Garvin says of Select Medical. “They’re experts. They know how to operate. They know how to develop. They know how to grow. It is their wheelhouse.”

Garvin sees more of those types of arrangements in the future, as health systems and hospitals look beyond their own walls to transform care delivery. He says Banner has to be strategic, as the health system attracts a lot of innovators and start-ups that are looking for Banner to “put them on the map.”

“Is there something real here that we think makes a material difference?” he says. “Does it give us the ability to do things that perhaps in the in the past took a lot more labor and time to get accomplished? We have to ask those questions.”

“We have to do due diligence,” Garvin adds, noting that a good idea now might very well be outdated in 12 months. And while the pace of innovation (think AI) might force healthcare leaders to rush into things, he wants to slow it down a bit.

“Don’t get in too much of a hurry,” he says. “That’s where the mistakes will come in.”

PPEC programs like Spark Pediatrics give healthcare providers a resource to manage and coordinate care for children with complex care needs. They also give parents a chance to relax a bit, and enable these children to be kids.

Health systems and hospitals play an important role in coordinating care for small children with complex medical needs, who often transfer out of the NICU and into a chaotic and uncertain world.

A model of care called PPEC (Prescribed Pediatric Extended Care) aims to make that process easier for providers, patients and their families.

A concept that’s been around for roughly 40 years, PPEC centers are gaining momentum as the number of “medically complex” children surpasses 3 million in the U.S., straining the resources of both healthcare providers and families. The center-based model, likened to a day care, aims to give these children the care they need alongside the childhood they’re often missing out on.

“We’re helping kids [with complex medical conditions] get access to skilled nursing care,” says Jeffrey Soffen, CEO of Spark Pediatrics, a Florida-based PPEC provider that is working with more than a dozen health systems across three states. “We promote socialization. We promote respite for the families so that they can either have time to themselves or time to go to work or whatever it might be. I'd say right now that's really important.”

There are roughly 180 PPECs in the U.S., located in the 15 states whose Medicaid programs permit the centers (Medicaid requires a prescription for care from the child’s primary pediatrician). Several states, including Missouri, are debating amending their Medicaid program to permit PPECs, but the path forward is slow and uncertain, especially considering the current political climate.

Earlier this year Spark Pediatrics raised $15 million in new investments, with funding from Pittsburgh’s UPMC Enterprises and the Houston’s Memorial Hermann Health System. Soffen says the funds will enable Spark to establish new partnerships in Pennsylvania and Texas, the next step in a plan to expand across the country.

“Spark is creating a new model of care delivery for children with medical complexities that is aimed at improving quality of care and the family experience for this often-overlooked population,” Mary Beth Navarra-Sirio, Vice President of Market Development at UPMC Enterprises, the innovation, commercialization, and venture capital arm of UPMC, said in a January 2025 press release on the funding round. “This aligns well with our focus on creating innovations that impact the lives of patients in meaningful, lasting ways.”

Soffen says medically complex children often begin their lives in the hospital NICU, move through other departments in the hospital, then need care from a wide range of doctors, nurses and specialists when they go home—tasks that often fall on stressed parents. On top of that, there are often delays, some as long as a year, in accessing specialists.

"We Should Be Locking Arms"

That’s where care coordination becomes a necessity.

“Our kids are born in their NICU, they're going back to their hospitals, they're seeing their pediatricians,” Soffen says. “It feels like we should be locking arms, right?”

Spark uses a patient-centered medical home strategy at about half the cost of in-home care, he says. Through a care team that collaborates with specialists, the center offers up to 12 hours of care seven days a week, with a patient-to-staff ratio of 1:3.

“My biggest thing that I want to do is make these kids’ lives easier,” Soffen says. “If you think about a child that we serve, they might have 12-13 specialists. They might have an appointment every week with a different doctor. [Parents] also have to coordinate therapies. So if you have a feeding tube, you've got to be working on swallowing in order [to make] progress and eventually get this feeding tube out.”

“We need to do as many of those things in our center as possible, but we also need to understand who we are and who we are not,” he adds. That means the center focuses on a small care team and coordinates specialist visits, taking the pressure off of parents who would otherwise be scheduling specialist visits at home or transporting their children to doctor’s offices and clinics.

For that reason, Spark Pediatrics—like most PPEC providers—needs to be located near large population centers.

“The more kids that we serve in a center, the more we can do for them, and that's the really powerful thing,” Soffen says. “So if I have 30 kids in my center instead of 10, my ability to attract providers to do virtual visits or come into the center to do a wellness check is a totally different scenario. If they can see 20 kids instead of five kids, that makes it worthwhile.”

That’s why Spark Pediatrics started in Florida and is targeting heavily populated states like Texas and Pennsylvania. Medicaid support is crucial, Soffen says, as almost all of their patients are on Medicaid, and Spark is working with legislators in states like Missouri to expand the number of states they can work in. They’re also talking to private payers about the value of the program.

The UPMC partnership, meanwhile, has an added benefit of an associated health plan, offering opportunities for innovative care arrangements like an ACO.

“An ACO is a is a way for providers to come together to produce better outcomes for their patients and to do it in a cost-effective manner than incentivizes them to do that,” Soffen says. “Why shouldn't we be a part of that if we're able to help them achieve that goal?”

"Why Shouldn't They Have That Chance to Just Be a Kid?"

Soffen says they’ve had good conversations with pediatric hospitals (their partners include Nemours, Joe DiMaggio Children’s Hospital, Orlando Health’s Arnold Palmer Hospital, Palm Beach Children’s Hospital, Baptist Health Jacksonville’s Wolfson Children’s Hospital and Texas Children’s Hospital). But the wider strategy is to partner with any health system that treats medically complex children.

“A big part of our job is to educate, in particular, the hospitals, the discharge coordinators, the care managers, the case managers, the pediatricians, the specialists, the pediatric specialists,” he says. “Those are who our kids are going to every day and they're the ones that put their trust in those institutions to recommend what is best for them.”

The biggest barrier, of course, is funding, and the ongoing chaos in Washington DC over Medicare and Medicaid sustainability casts a shadow over the growth of any PPEC.

That’s why Soffen wants healthcare providers and lawmakers to see not only the financial and clinical value to these centers, but what these facilities can offer to children and their parents.

“You want these kids to have the childhood that you dream about, where they come home from friend's houses or birthday parties or doing arts and crafts, and you put [their artwork] on your window and you're so proud of them,” he says. “Why shouldn’t they have that chance to just be a kid.”