ASCs: To be or not to be condominiumized?

Stephen SheppardAfter at least 20 years of the medical industry silently kicking around the concept of condominiumizing ambulatory surgery centers (ASCs), it has recently found its way back into the mouths of the media. The condominium ASC model involves separating a single physical ASC plant temporally among two distinct legal entities. For example, ASC-A could operate on Monday, Wednesday, and Friday, while ASC-B could operate on Tuesday and Thursday. It is an idea with potential.

However, there is a reason this concept has been chewed over for so long before finally solidifying. While it may be a viable or profitable option for certain practices in need of ASC space, it is not right for every medical business. Looking at the pros, cons, and long-term prognosis for the condominium ASC model can help a practice make the right decision about whether it is best to be or not to be condominiumized.

The Benefits
This concept is made possible by federal regulations that state, within distinct entity requirements, physical plants can have multiple uses as long as those are temporally distinct. The principal benefit of sharing surgery space is cost savings.

First, consider that:
• ASCs are expensive to build.
• ASCs are time consuming development projects.
• The physical plant of most ASCs has a low utilization rate, meaning it is only functioning during a small percentage (usually around 20-40%) of its available hours.

By pairing up with another entity to operate within an ASC, practices can spread the expense, defray cost, and make the endeavor profitable with fewer surgical cases. Individual practices, either with multiple doctors or a single doctor, that do not have the surgical volume to support building their own ASC may consider this a potentially cost-effective option.

Practices in Certificate of Need (CON) states may also benefit, as some states have a condition stating that if an ASC is already built, a doctor may apply for a waiver for a separate, less expensive CON.

The Obstacles
This may not be a new concept but due to its slow rise in popularity (keep in mind, it is still a long way from widespread acceptance) condominiumized ASCs are a relatively untried model. There are plenty of regulatory and physical hurdles that have yet to be worked out.

Regulatory Hurdles:
State ASC licensing laws must allow two or more licenses to be acquired for one plant. In states such as Colorado and Mississippi, where two of the few condominiumized ASCs are currently in operation, it is allowed, but practices interested in this model should be sure to check their own state regulations before moving forward.

All ASC licensure standards must also be met, such as HIPAA which would prohibit sharing of computers without a partitioned server or a way to protect patient information. And the entity division does not stop at patient medical records. Each entity must be completely separate, including separate policy and procedure manuals, drug formularies, and other related ASC necessities.

Finally, unresolved regulatory questions, such as whether or not the entities involved could share a clinical director without violating HIPAA, are still up for discussion.

Physical Hurdles:
Different supplies and equipment for different specialties require ample storage space, which may not be available.

Long-term Prognosis
In the past, this model was usually put into practice with the cooperation of doctors from the same specialties. Down the road, it is more likely that the industry will begin to see two to ten different specialties from a community come together to build a smaller ASC that can still support all involved specialties. This is thanks in part to the advancement of technology that improves the feasibility of performing more procedures in an ASC setting. Although, downward pressure on the cost of healthcare combined with study results, such as those from Healthcare Bluebook that suggest ASCs are low-cost providers, may also enhance this model’s popularity.

To be or not to be? While condominiumized ASCs boast some obvious benefits, concepts such as these are rarely as easy as they look. An untried model takes time to evolve and to reveal all its hidden pros and cons. For now, many practices may be wiser to hold off on joining one of these ASCs while still keeping an eye on regulatory developments.

However, that does not mean that every practice interested in this model should take the “wait and see” approach. For some it may be a good strategy to act on now. One of the best ways to find out if a practice would thrive under this ASC model is to seek advice from industry experts. The experienced medical business consultants at Medical Consulting Group help practices make these strategic choices every day. Call (417) 889-2040 or visit to request a consultation.


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