ASC growth in the South could be in danger, exec says

The South consistently enjoys some of the best statistics for healthcare facilities and physician pay, but some of the conditions that may have contributed are no longer present.

Stewart Burchett, executive director of Oklahoma Lithotripter Associates and Oklahoma Kidney Stone Center in Oklahoma City, spoke with Becker's about the state of the Southern ASC market.

Editor's note: This piece was edited lightly for brevity and clarity.

Question: How does the ASC industry in the Southern market differ from other markets in the country?

Stewart Burchett: Physician-owned or operated ASCs in Oklahoma, Texas, Kansas and Arkansas have been the result of robust entrepreneurial growth over the years coupled with very little restraints of certificate of need statutes and regulatory oversight. The result early on was a plethora of ASCs as outpatient surgery grew in popularity, and many physician-owned entities were built in areas one would never have imagined. 

Q: What are some of the biggest threats to ASCs in the South?

SB: Risk was there early on, but many of the physicians just now entering the market often balk at the investment prices we see today, and the cost of a new startup is mind boggling compared to the earlier days. 

ASCs also saw older physician owners reaching retirement age and capitalizing on their success. Our center has seen 15 owners retire in the last six years while only adding seven new physician owners. 

One barrier to new ASC ownership is a smaller piece of the pie due to mergers and sales, the large capital required for ownership in those that were successful and the reduced opportunities for new startups as construction costs have reached astronomical prices. 

Fewer of our new physicians have the tolerance for risk and business control of their own practices and investments and choose to simply be employees. As we see all these factors comingle, we begin to see less opportunity for ASCs as we know them. Sure, we will have hospital-owned or partial corporate-owned ASCs, but why build or own an ASC when the hospital outpatient department model generates such greater income and provides the same service? 

Q: What does it take for ASCs in the South to be successful?

SB: I am beginning to lose faith in the future of ASCs to become as successful as they were in the past simply due to the change in mindset of the younger generation physicians. I know those in that group will argue with me, but as an ASC administrator over the last 30 years, I saw the labor of love by those earlier physicians who took the bull by the horns, accepted the risk, fought against the hospital and insurance payer blacklists and worked many hours a day to see the fruits of their labor.

To be successful today means adopting the mindset and dedication to work together and gather business-minded experience and learning from the previous 20 years. If not that, pay a smaller price tag, join a large [corporate practice] and make a small profit to say you're an ASC owner. To do it like the old days is hard in today's environment.

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