Most importantly, freestanding surgical centers like AmSurg operates can provide the same surgeries at approximately half the cost if done in a hospital outpatient department.
AmSurg claims an uncatchable market position in gastrointestinal (GI) procedures. Currently, it performs over 1.5 million procedures and over one million of those are in the GI area. The company claims to perform between 10% and 15% of all colon cancer screens in the United States. Nevertheless, the company is evolving into other high-growth areas such as multi-specialty.
Currently, AmSurg operates in 35 states. Moreover, the company is already the market leader in freestanding ASC (Ambulatory Surgical Centers) with approximately a 10% market share, and in ophthalmology they command approximately a 5% market share. Therefore, although it is one of the largest players in the market, there remains a lot of room for future growth.
Moreover, Holden reported the vast majority of surgery centers are still independent today. Corporate owner managers like AmSurg have less than 30% market share. Therefore, he believes "corporatizing" and consolidation provide growth potential at a rapid rate.
The demographic opportunity of our aging population is no secret. However, health-care reform presents many challenges for delivering the surging demand for health-care profitably. AmSurg offers a low-cost surgical alternative.
At the time of publication the author had no position in any of the stocks mentioned.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.