Why surgeons sell
1. Own a mature ASC. For ASCs that have been operating 5-10 years, the physician-owners have already had many years of profit and some of them may now want to retire.
2. Uncertainty about the future. ObamaCare portends a decline in reimbursements for ancillary services such as ASCs, as well as labs and imaging.
3. Opportunity for higher reimbursements. HOPD reimbursements are significantly higher, but physicians would have to hand over majority interest to the hospital.
Why hospitals buy
1. Improved relations with surgical staff. Self-standing surgery centers have better turnaround times and other efficiencies than what surgeons experience in the hospital OR.
2. Meeting expansion needs. Expanding an outpatient surgery department is significantly more expensive. It costs about $500 to $600 a square foot to build an outpatient surgery facility and costs are higher if the work is done within the existing hospital.
3. Having a ready-made ASC. Buying an ASC already in operation means hospitals don’t have to wait for construction, which typically takes 18-24 months for new projects.
Downsides
1. Loss of physician autonomy. When physicians sell their facility to hospitals, the hospitals usually want to have majority interest.
2. Legal issues. The hospital has to make sure the sale price is not excessive, because the payment to the surgeons could be construed as a kickback. The real estate, a separate transaction, might remain in the physicians’ name because the sale also raises kickback concerns. The hospital would then lease from the physicians, again making sure lease payments satisfy kickback concerns.
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