Topics:

  • ASC ownership
  • Physician-owned outpatient
  • Business-owned ASCs
  • Physician-business joint venture
  • Legal and Regulatory Requirements for ASC Ownership
  • Financial Considerations for Owning an ASC
  • Risks and Challenges of ASC Ownership
  • Future Trends in ASC Ownership
  • Why own an ASC

Are you wondering who can own a surgery center? We will examine the different structures of ASC ownership and how they work.

First, let’s define ASCs. Ambulatory Surgery Centers (ASCs) are special medical facilities that provide outpatient care for surgeries or procedures. Patients do not stay overnight and are discharged the same day.

ASC ownership

There are seven common organizational structures of who can own a surgery center.

  • Hospital-corporate joint venture
  • Business-owned
  • Hospital-owned
  • Physician-hospital-corporate joint venture
  • Physician-hospital joint venture
  • Physician-owned

Physician-owned outpatient

Physicians are permitted to own surgery centers under the Ambulatory Surgical Center model, which includes several arrangements such as multispecialty, single-specialty, single-group, or multigroup centers. However, physician owners are required to perform at least a third of their operations in their owned ASC. In cases where an investor is involved, physicians must pay a fair market value for their ownership percentage or shares in the center, which is determined based on recent and projected future earnings. A standard formula calculates market values by accounting for earnings of similar centers in the market. Despite being unable to receive volume-based discounts, physicians are expected to pay a fair market price for ownership. As such, it may be advisable for physicians who wish to own an ASC to hire a management company or a solid management team to handle administrative duties and ensure smooth operations.

Business-owned ASCs

To establish a business-owned ASC model, it is necessary to utilize the managed care contracts of a business. This approach is practical for managing multiple ASCs, performing various tasks, and recruiting new physicians. If a company employs physicians, they become partners in the ASC. Alternatively, businesses can actively recruit doctors. Businesses and management assume responsibility for the associated risks in this model, but the benefits make it worthwhile. The potential profits of an ASC are increasingly recognized by companies, leading to a significant number of acquisitions and mergers.

Average income of owning a surgery center

Owning a surgery center has the potential to be lucrative, but the income is far from fixed. Several factors influence how much a surgery center brings in. The kind of surgeries it performs is a big one. Centers specializing in complex, in-demand procedures typically see more revenue than those offering common surgeries. The volume also matters – the more procedures a center performs, the higher the income. Location plays a role as well. Surgery centers in areas with strong insurance coverage and many patients tend to do better financially.

Instead of focusing on a single income number, a more useful metric is EBITDA, which stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. This figure reflects the core profitability of the surgery center before external factors and accounting decisions are considered. Industry sources suggest that EBITDA for a multi-specialty ASC can range anywhere from $350,000 to millions of dollars per year. The valuation of the surgery center itself is often a multiple of this EBITDA.

Physician-hospital joint venture

A physician-hospital joint venture is a business arrangement in which physicians and a hospital work together to jointly own and operate a healthcare facility, such as an ambulatory surgery center, imaging center, or diagnostic center. In this model, the hospital provides the resources and infrastructure, such as equipment, facility space, and administrative support. In contrast, physicians provide medical expertise, including clinical oversight and patient care.

Physician-hospital joint ventures can have several advantages, such as increased access to capital, improved patient care coordination, and increased physician involvement in decision-making. Additionally, these ventures may lead to better alignment between physicians and hospitals, which can enhance the quality of healthcare and patient outcomes.

However, physician-hospital joint ventures can also be challenging, including conflicts of interest, legal and regulatory compliance, and potential issues related to control and ownership. As such, it is essential for all parties involved to have a clear understanding of their roles, responsibilities, and expectations before entering into a joint venture agreement.

Physician-business joint venture

The model mentioned prioritizes the doctors’ experience in decision-making. In parallel, it leverages the business’ expertise in administrative parts of the process.

Additionally, the same regulatory matters apply to physician ownership as physician-owned ASCs. Similar challenges occur with relationships between partner physicians and physician ownership. If you are a new physician entering an ASC and wish to become an owner, you must buy some shares at fair market value. Note that the distributions to owners don’t rely on volume but on equity shares.

As a physician, you will be subject to the 1/3 rule, as mentioned before. ASC management companies add a wide variety of expertise to these ventures. Some of them may have contracts of nationally managed care. The latter have rates superior to the ones that a doctor can negotiate on his own.

How do you get out of this? Easy. An ASC management company takes over the administrative tasks for the basic setup. It can take care of daily management, new doctor recruitment, and multiple tasks that arise. Of course, they take a percentage of collections and potentially equity in the company.

Finally, we clarified who can successfully own an outpatient surgery center and tackled the many possible scenarios of each type of ownership. Now, the remaining question is: Which scenario works best for you? Remember the many benefits of ASCs, and remember there’s always a better solution for your endeavors.

Legal and Regulatory Requirements for ASC Ownership

ASC ownership and compliance with ASC documentation requirements come with numerous legal and regulatory requirements that must be met. Firstly, ASCs must be licensed and accredited by the appropriate regulatory bodies. Proper ASC documentation, which outlines the standards of care, policies, and procedures followed within the ASC, is a crucial part of accreditation and regulatory compliance.

Additionally, ASCs seeking reimbursement from Medicare must meet the Medicare Conditions for Coverage and comply with federal and state laws, including those related to healthcare fraud and abuse, HIPAA, OSHA, and ASC documentation requirements. These regulations mandate accurate record-keeping regarding patient care, surgical procedures, and staff credentials, among other things.

Secondly, ASCs must have a medical staff that is appropriately credentialed and privileged to perform procedures at the facility. Credentialing and privileging processes must be in place to ensure that all medical staff members meet the necessary qualifications and standards.

Thirdly, patient safety and quality of care must be a top priority. ASCs must have policies and procedures to ensure that patients receive appropriate care before, during, and after procedures. Quality improvement programs must also be in place to continually monitor and improve patient care.

Fourthly, ASC owners must comply with laws and regulations related to billing, coding, and reimbursement. They must also maintain accurate and complete financial records and operate their businesses ethically and transparently.

Lastly, ASCs must have appropriately trained staff competent in their roles. ASC owners must ensure their team receives ongoing training and education to maintain their skills and knowledge.

Owning an ASC requires compliance with various legal and regulatory requirements. ASC owners and operators must be knowledgeable about these requirements and take steps to ensure adherence to providing high-quality care to their patients while avoiding legal and financial penalties.

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Financial Considerations for Owning an ASC

Owning an ASC requires significant financial investments. The costs of building, equipping, and staffing an ASC can easily reach millions of dollars. Therefore, it is essential to consider the financial aspects of owning an ASC before deciding.

One significant consideration is the source of funding for the ASC. Owners may finance the ASC through personal savings, loans, or investor partnerships. It is crucial to assess the cost of borrowing money and determine if the interest rates and repayment terms are feasible.

Another financial consideration is the ASC’s revenue streams. Owners need to determine how the ASC will generate revenue, whether through insurance reimbursements, direct payments by patients, or other sources. It is essential to analyze the market and competition to determine the ASC’s potential profitability.

Moreover, owners need to consider the costs associated with running the ASC. These include salaries and benefits for staff, equipment maintenance and replacement, and overhead costs such as utilities, rent, and insurance. An effective financial plan should factor in these costs and estimate the ASC’s potential revenue to ensure profitability.

In addition, ASC owners need to understand the regulatory and legal requirements related to financial matters. Owners must comply with state and federal billing, coding, and documentation regulations. Additionally, ASCs are subject to audits and inspections to ensure compliance with regulations, which may result in fines and other penalties.

Risks and Challenges of ASC Ownership

Like any business venture, owning an ASC comes with its own set of risks and challenges. One of the main risks is the potential for financial losses. ASCs require a significant initial investment, including purchasing or leasing a facility, equipment, and hiring staff. In addition, ASCs are subject to fluctuations in reimbursement rates from insurance companies and government programs, which can impact profitability.

Another challenge is the regulatory environment. ASCs are subject to state and federal regulations, including facility and equipment standards, infection control, and licensing requirements. Compliance with these regulations can be time-consuming and costly, and failure to comply can result in fines or even the loss of operating privileges.

Another risk is the potential for malpractice lawsuits. While ASCs generally have lower rates of complications and infections than hospitals, adverse events can occur during a procedure. ASCs must ensure that their staff are well-trained and follow proper safety protocols to minimize the risk of patient harm.

Finally, ASC owners must also contend with the competitive landscape of the healthcare industry. ASCs compete with hospitals and other outpatient facilities for patients and must constantly strive to provide high-quality care and a positive patient experience to remain successful. This may require ongoing investments in staff training, technology, and patient amenities, which can be expensive.

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Future Trends in ASC Ownership

As healthcare delivery models evolve, several trends will likely shape ASC ownership’s future. One trend that experts anticipate gaining momentum is the development of larger, multi-specialty ASCs. Such ASCs can offer a broader range of services and benefit from economies of scale, making them particularly attractive to physician groups aiming to expand their practices.

Another trend involves leveraging technology and digital tools to enhance patient care and increase operational efficiency. For instance, telemedicine can enable ASCs to provide virtual consultations, post-operative follow-up visits, and other services that reduce the need for in-person appointments and enhance access to care.

In addition, electronic health records and other digital platforms can help streamline administrative processes, thus improving patient outcomes.

As the population ages and the demand for healthcare services increases, ASCs are expected to form more partnerships and collaborations with hospitals and health systems. These partnerships can offer access to additional resources, such as specialized equipment and expertise, enabling ASCs to better serve their patients.

Finally, regulatory scrutiny around quality and patient safety issues will likely increase, requiring ASCs to comply with all relevant regulations and guidelines. Vigilance in this area will be critical to preserving ASCs’ reputations and protecting their patients.

Joint Venture Surgery Center  Ownership Models

PQR Surgery Center, a joint venture between physicians and a management company in San Francisco, California, has struck a balance between clinical autonomy and management expertise. The physicians’ clinical expertise guides patient care decisions, while the management company’s operational expertise streamlines administrative processes and financial management.

Key factors contributing to PQR Surgery Center’s success:

  • Complementary expertise: The partnership combines physician leadership with management expertise, creating a well-rounded leadership team.

  • Shared vision: Physicians and management share a common vision for patient-centered care and financial sustainability, ensuring alignment and collaboration.

  • Flexible governance: The center’s governance structure allows for adaptability and responsiveness to changing market conditions and patient needs.

Why own an ASC?

benefits of asc

Before we answer your question, who can own a surgery center? Check out the many benefits of ASCs:

1- When you choose ASCs, you pay less: no more overnight costs.

2- With ASCs, you receive more convenient and faster surgical care: yes, you’ll go home immediately.

3- Fewer complications happen inside ASCs: you are less likely to suffer from post-surgical infections and pain.

4- No more stress: the ASC environments are calmer than hospitals. Imagine your recovery at home among your beloved.

5- Community-based: ASCs are patient-centered. Your comfort would be a priority.

A better quality of care ensures your safety due to certified ASCs like centers for Medicare and Medicaid services.

If you have any further questions, we invite you to call the Ambula Healthcare team: at (818) 308-4108

FAQs About This Article

In the United States, non-physicians can own surgery centers, but there are important details and limitations to consider:

  • Ownership models: While traditionally owned and operated by physicians, several other models allow non-physician involvement:

    • Hospitals and healthcare systems: They can own and operate surgery centers as part of their network.
    • Healthcare management companies: These companies specialize in managing surgery centers and can be non-physician-owned.
    • Private equity investors: These investors can also own surgery centers, but usually in partnership with healthcare professionals.

Yes, there are several ownership models for ASCs. Some common ones include:

  • Physician-owned: Solely owned by one or more physicians.
  • Hospital-owned: Owned and operated by a hospital or healthcare system.
  • Business-owned: Owned by individuals or organizations without a healthcare background, often in partnership with medical professionals [2].
  • Joint ventures: Combining ownership between different entities, like physicians and hospitals, or physicians and businesses [2].

Yes, in some cases. Physicians might need to meet specific requirements, like working a certain number of cases per year, to maintain ownership and avoid issues with regulations or passive income concerns

Here’s a breakdown of the advantages of non-physician ownership of surgery centers:

  • Financial Strength: Non-physician entities, such as healthcare corporations or business investors, often have greater access to capital and financial resources. This can lead to:

    • More investment in state-of-the-art equipment and facilities.
    • Ability to handle unexpected expenses or expansion plans
    • Increased financial stability for the ASC

Surgery centers, also known as Ambulatory Surgery Centers (ASCs), are subject to a multi-layered regulatory framework to ensure patient safety, quality of care, and ethical practices. Here’s a breakdown of the key points:

1. Federal Regulations:

  • The Centers for Medicare & Medicaid Services (CMS): Establishes national standards for ASCs participating in Medicare and Medicaid programs, including:
    • Conditions of Participation (CoPs): Define specific requirements for areas like staffing, infection control, equipment, and quality assurance programs [1].
    • Medicare certification: ASCs must meet these CoPs to receive Medicare payments for services provided to beneficiaries [1].
  • Other federal agencies: Play roles in specific areas, such as:
    • The Joint Commission: Offers voluntary accreditation, setting high standards beyond the CoPs, although not mandatory for all ASCs [2].
    • Food and Drug Administration (FDA): Regulates medical devices and drugs used within the facilities [3].
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