5 Observations on New ASC Physician Buy-In

Joan DentlerRecruiting new physicians to the ambulatory surgery center is an important aspect of ASC business growth.

However, it's not always easy. Here are five observations on new physician buy-in:

1. Fewer independent physicians. It can be difficult to find independent surgeons in many markets today where hospitals are employing physicians specialists. ASCs may also find other surgery centers in their market competitors for new physicians.

"Due to the maturity of the ASC industry, it is often hard to even find what we call 'orphan' surgeons — ones without an ASC investment," says Joan Dentler, MBA, president and CEO of Avanza Healthcare Strategies. "An ASC looking to grow its investor pool is going to need to offer something compelling to lure an investor from an existing investment, and the competition between ASCs to attract new physicians is fierce."

In some markets, initial contracts are coming due for surgeons who rushed to employment in the dawn of healthcare reform and they may not like the second offer. As a result, more surgeons may head back to private practice and could become investors in the future.

2. It's a buyer's market. Young physician investors represent business growth in the future, and many current owners are eager to bring in new partners. "It may be as simple as a location that the investor finds convenient to having payer contracts with the surgeon's largest third-party payer," says Ms. Dentler. "Regardless, finding new investors is more difficult now than ever. It's definitely a 'buyer's market' when it comes to ASCs."

3. Hospital partners bring an advantage. Joint venture ASCs with hospital partners are somewhat more successful because the hospital can help recruit new physicians, says Ms. Dentler. The hospital's resources could be invaluable for attracting new surgeons, but other factors also play a part in the decision:

•    ASC location
•    Payer contracts
•    Specialty need
•    Camaraderie among physicians

4. Not every physician is a good fit. It's important to make sure the new physicians will fit into the center's culture and align with the current owners' goals. Ms. Dentler recommends ASC owners encourage potential partners to perform cases at the center before buying in; that way, everyone can see whether the new physician is a good fit. Then, have a "heart-to-heart" conversation with the new physician to discuss their goals and why they're interested in investment.

"It is important that existing owners have a realistic idea about the motivation for potential investors' interest in their ASC," says Ms. Dentler. "A key to a successful partnership is making sure everyone is on the same page about what they want out of the investment. If a new investor is more interested in having their special supplies and equipment while the current owners are focused on expense reductions to improve ROI, there are going to be problems."

5. Young physicians aren't always ready to invest right away. A young physician will likely need time to establish a practice and pay off some medical school debt before making the financial commitment to buy into the surgery center, but courting the physician early could lead to beneficial relationships down the road.

Take this time to consider crucial questions that could make or break the partnership:

•    Is there already an owner at the center performing the same specialty?
•    Would the new surgeon compete with an existing investor?
•    Is the center adding a specialty or purchasing new equipment to accommodate the new surgeon?

More Articles on Surgery Centers:
After Entering a Joint Venture: What Happens to ASC Accreditation?

14 ASC Industry Acquisition Agreements in 2014

5 ASCs Making the News This Week

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