Health systems are entering the ASC space at a rapid pace, but many are arriving with the wrong playbook.
According to Steve Hockert, Southlake, Texas-based ASC developer Solara, the cultural and structural assumptions that health systems carry into joint ventures don’t just slow deals down; they can quietly undermine the efficiency that makes surgery centers worth building in the first place.
Question: Health system timelines and incentive structures look very different from independent physician deals. What costs come with that pivot that don’t get talked about enough?
Steve Hockert: The biggest one is time. A physician deal might be 12 to 18 months from handshake to open doors. A health system JV can easily take two to three years with legal review cycles, compliance committees, board approvals, etc. Health systems make ASC investment decisions institutionally within the much broader context of their overall service scope. Practicing physicians make decisions more entrepreneurially. The management company in the middle (that’s us) has to be bilingual in a sense. Comfortable in the boardroom with the health system C-suite and equally comfortable at the whiteboard with a group of interventional cardiologists who want to know why things can’t move faster.
Q: What’s the one thing health system executives underestimate about running a high-performing ASC?
SH: The cultural difference. A high-performing ASC isn’t a scaled-down hospital. It’s a fundamentally different operating environment. I say this with genuine respect for health systems; we partner with them, value those relationships, and recognize that hospitals do work surgery centers simply can’t replicate. But the operating rhythm of an excellent ASC is lean, fast, and built around physician workflow and patient throughput in ways that hospitals, for good reasons tied to their broader mission and case complexity, aren’t structured to mirror.
The opportunity I see most often is when ASC models get treated as a direct extension of hospital infrastructure. Hospital-grade administrative layers, compliance frameworks, and HR structures all exist for important reasons in their native environment, but applied wholesale to a surgery center, they slow the center to hospital pace and dilute what makes the ASC model valuable to physicians and patients: autonomy, efficiency, and real decision authority at the point of care. The best partnerships I’ve seen are ones where health systems treat the ASC as a complementary operating model, not a smaller version of what they already do, and let it run that way.
Q: When you’re structuring a JV with a health system, what governance issues tend to cause the most friction? How do you resolve them before they become deal-breakers?
SH: As with any meaningful relationship, resolution begins with education and expectation management on the front end of any deal structure. In my experience, physicians really struggle to understand the 1/3 rule and the potential implications it can have on a center. Friction can quickly become a byproduct of that misunderstanding. It is a regulatory nuance unique to our industry, presuming the center is Medicare certified. Given all centers are not Medicare certified entities, governance around this issue can get even more confusing for a physician. They might “have a buddy down the road” that is invested in a center that doesn’t require surveillance around the 1/3 rule. What often doesn’t get conveyed “from his buddy” is that the center isn’t Medicare certified. Education and clearly defined expectations regarding the 1/3 rule is critical during the structural phases of a JV. How governance handles non-compliant physicians better be crystal clear in your operating agreement or you are certain to run into a conflict eventually.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.