The real estate and stock markets will eventually recover, but in the meantime they have become a drag on the physician’s net worth and shares in an ASC have become the physician-owner’s chief asset, Mr. Shuffler says.
For this strategy to work, the ASC needs to be performing reasonably well financially, Mr. Shuffler says. “It doesn’t have to be robust,” he says. “It just has to throw out enough of a cash flow to produce a reasonable cash value.”
Determine the ASC’s value, based on cash flow. Mr. Shuffler says a center with 3-5 ORs and 5-8 physician-partners could well be worth 1-1.5 times revenue. He says he has valued a one-OR center at three times the revenue.
In this case, the estate planning comes in the form of buying a life insurance policy, based on the physician’s share of the ASC’s value and naming an heir as recipient. Mr. Shuffler says the physician-owner can also use the ASC’s value to buy disability insurance, in case an accident or illness prevents him or her from doing surgery or perhaps any medical work.
Read more coverage of ASC real estate issues:
– Banking Meltdown Sets New Limits on Accessing Capital for ASC Development
– Why Physicians Sell ASCs to Hospitals and Why Hospitals Buy Them
– 9 Reasons Why Owning ASC Real Estate May Be a Bad Idea
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.