'Double-edged sword': 6 ASC leaders on private equity investment

Although private equity investment provides a source of capital, some ASC leaders warn it could diminish physician control.

Here are six ASC administrators and physicians on private equity in ASCs:

Jay Pepose, MD, PhD. Founder and Medical Director of the Pepose Vision Institute (St. Louis, Mo.): In my opinion, private equity investment is good for ASCs. It provides a source of capital that may be needed for major equipment expenditures. In ASCs that are underutilized, it may bring in surgeons who are under the management service organization and who might have been operating elsewhere. This would increase ASC volume and efficiency.

Andrew Lovewell. Administrator of Surgical Center at Columbia (Mo.) Orthopaedic Group: I think this largely depends on many factors: where the ASC is in its life cycle, if there are any strategic plans or goals that require private equity investment, and, quite frankly, who the private equity partner is. More often than not it is just as important to align on fundamental growth plans than to take private equity funding just for the sake of doing it.

There is most certainly some diligent investigation that has to occur to determine if the private equity funding makes sense for the facility. In the short term, the influx of capital is enticing, but the long-term play has to be the center focus. If COVID-19 taught us one thing, it's that there is a tremendous migration that is occurring and will continue to occur in the outpatient space.

Howard Leibowitz, MD. Internal Medicine Physician at Access Family Medical Clinic and Avera Medical Group Worthington (Minn.): Private equity investment is a double-edged sword. It's good in the sense it provides capital to expand and update equipment, but it's bad when it removes physician control and makes return of income the overriding mentality.

Donald Lenz. Retired Administrator of New Albany (Ind.) Eye Surgery Center: Private equity, like many things, can be both good and bad. I have worked for organizations that have been supported by both publicly traded, privately owned and private equity companies.

The positive of the private equity investors is the access to cash infusions and other financial support. The area of concern is the focus on the bottom line above all else. This can be aided if the ASC administrator and company are in constant contact and honest with each other and work to keep the surgeons motivated to continue utilizing the ASC.

For freestanding ASCs competing with hospital groups and or centers affiliated with major ASC managerial companies, private equity investment can be a very good thing. 

Eugenio Hernandez, MD. Vice President of Clinical Affairs of Miami-based Gastro Health: A consolidated, tech-enabled, professionally managed business that allows doctors to be more strategic, better organized and capitalized in all respects, benefits any organization, including ASCs.

John Prunskis, MD. Interventional Pain Specialist and CMO of DxTx Pain and Spine (Chicago). When a pain and spine practice with an ASC is considering affiliation with a private equity group, it is extremely important that they choose a group whose key members are intelligent, knowledgeable, resourceful and have what I call a "true north" moral compass.

Unfortunately, there have been rather significant instances where pain and spine practices with ASCs have not done well affiliating with the wrong private equity partner who does not have those traits.

More articles on physicians:
12 things to know about ASCs, key insights
How 2 physicians believe ASCs will adapt post-pandemic
14 states with highest average pay for physicians and surgeons

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