Is PE bad for ASCs? 7 leaders weigh in 

As private equity increasingly invests in ASCs and physician groups, some leaders are concerned about its effect on patient outcomes and costs. 

Here's what seven ASC and physician leaders have to say about private equity in the last six months. 

Jayesh Dayal, MD. Anesthesiologist at White Flint Surgery (Rockville, Md.): As a standalone ASC, we seem to have no negotiating power with any of the insurers and seem to be at the bottom of the procedure reimbursement rungs. The larger health systems, with access to hospital outpatient department rates and private-equity owned ASCs, with their nationwide heft, seem to be able to negotiate enviable rates for the same procedures. The days of standalone ASCs are numbered and we will be forced to sell or partner with these consolidators for survival, defeating the whole concept of physician autonomy and pride of ownership that motivates physicians to undertake ASC ownership in the first place.

Neal Kaushal, MD. Chief of Gastroenterology and Chair of the Department of Medicine at Adventist Health (Roseville, Calif.): 2023 is going to be an interesting year for ASCs. On one hand, the financial climate of high interest rates can potentially limit the borrowing power of firms which can present capital challenges. On the other hand, private equity has gained such a strong foothold in this area that I do not see this slowing down any time soon, despite short-term economic changes in the markets.

Rich Searles, Partner at Merritt Healthcare Advisors: The emergence of private equity investments in healthcare have provided opportunities for physicians to maintain a level of independence. Private Equity backed platforms have created alternative structures to the traditional 100% Physician Owned, or Full Employment models. Physicians can leverage executive and financial resources of Private Equity investors, while maintaining clinical autonomy over their private practice. As history seems to dictate, as physician practices grow & thrive, so do ASCs.

Leslie Jebson. Regional Administrator at Prisma Health (Greenville, S.C.): My thoughts are based on: What is the end game for an orthopedic practice or ASC to be engaged with private equity? My limited experience has been in some cases, a practice has received an infusion of capital and business acumen to help the practice grow and expand.

In other cases, the PE engagement has briefly enhanced the compensation of only the original equity members of the practice and not employed physicians. The visible benefits are limited, and the practice needs to either merge or be acquired by a hospital system.

Anthony Kalloo, MD. Gastroenterologist and Chair of Maimonides Medical Center's Department of Medicine (New York City): This will continue to grow with unexpected partnerships as investors look to have diverse portfolios that have synergy. For example, it makes sense for endoscope manufacturers to invest in ASCs. 

John Peloza, MD. Orthopedic Spine Surgeon, The Steadman Clinic (Vail, Colo.): Because of declining reimbursement, single practitioners and small group practices will not survive. Therefore, medical groups are consolidating, joining, or contracting with hospital systems in order to optimize contracts and reduce overhead. Private equity is another option to capitalize growth for large groups that dominate a geographic area, service line or wish to expand into other geographic areas or service lines. Health systems are also consolidating to leverage their size and economies of scale to maximize their competitive position and manage costs. Bigger is truly better as long as you can manage all the competing interests in a medical organization.

Andrew Gerstner, MD. Independent Anesthesiologist and Consultant. I finally removed myself from private equity and corporatized medicine and changed jobs. I stopped working at giant hospital systems and moved to a smaller, physician-owned hospital and have a much more manageable schedule and am simply just paid fairly for my time … and no longer have to put up with being forced to take on more uncompensated or under-compensated work just because the hospital or staffing company has understaffed everything and expect physicians to pick up the slack for their own business mistakes for free. 

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