Mark Samples, president of Prime Healthcare Properties in Huntsville, Ala., lists five frequently asked questions about ambulatory surgery center development and provides the answers.
Q: Is owning better than leasing?
Mark Samples: Owning, in my opinion, is now more advantageous than leasing, but this involves a case-by-case analysis and decision. The owners receive an attractive return from rental income and can later sell the property at a profit, if the deal is properly structured. If real estate prices were in decline again, however, leasing would be more advantageous because the value of the property would be shrinking. But in the current market, my opinion is that owning is more advantageous.
Q: Is it necessary to locate in a high-visibility area, such as a major intersection?
MS: No. The higher cost of a high-profile corner is worthwhile for drugstores, restaurants and gas stations, but not for ASCs. A surgery center can be located off the corner at half the cost or less.
Q. How long does it take to complete an ASC project?
MS: It takes a little more than a year from initial planning through construction and up to the point where the surgery center is making money. On average, this period lasts one year and two months, but it can take up to two years. Snags in obtaining zoning clearances and inspections can slow down the process. Due to the recession, many city and state staffs have been reduced, increasing turnaround times.
Q. Can I sell my interest in the property if need be?
MS: Due to divorce, retirement or health problems, a physician-investor may need to sell his interest in the ASC real estate before the loan is paid off. His ability to do so depends on the terms of the ownership agreement. He should review terms and provisions in the ownership operating agreement to understand his right to transfer ownership.
Q. Could I use my retirement plan to invest in the ASC real estate?
MS: A physician-investor who wants to invest in the ASC real estate can sometimes dig into his retirement plan for the funds, but his ability to do so has to do with the terms of his particular plan. Talk to your plan administrator.
Learn more about Prime Healthcare Properties.
Read more about ASC development:
- 5 Significant Surgery Center Development Mistakes
- Developing a Spine Center: 3 Reasons Why Now is the Time
- 10 Cardinal Sins in Surgery Center Design