Private equity's positive role in the ASC space

In a recent article in Becker's ASC Review, private equity was listed as one of three disruptors in the ASC Space, the other two being supply costs and staffing shortages. 
The concern is that private equity investors do not put patients first, prioritizing profit over patient care. Physician owners understand that when you put patient safety and quality care first, success follows. I personally agree with that statement having been a clinical practitioner for 30 years. Private equity is an incredibly broad term and under that umbrella there are a lot of different models. That is why it is incumbent on physician owners to ensure alignment of interests when considering a private equity partnership. 
Private equity offers a series of unique solutions to deal with the current climate in healthcare that are not open to independent practitioners. These advantages fall into three buckets. 
First a private equity partnership allows the physician partners to monetize the true value of their practice at a tax advantaged capital gains rate. This is done at multiples of current adjusted EBITDA. Physicians can take some chips off the table to do several positive things for their families and themselves. Younger physicians can pay off education loan debt or pay down on a mortgage or even use the proceeds to fund their childrens' education. Older physicians can use the proceeds of the initial capitalization to diversify their wealth or make eventual retirement an actual possibility by building the nest egg. In the event of an untoward event like disability or death physician's equity value will be much higher in a private equity partnership so that they and or their family will be taken care of. 
Private equity is a meritocracy where compensation is based on production as a percentage of collections. So, there is nothing to fear there. Being part of a larger well-capitalized group has several advantages. First, group purchasing yields better prices and subsequent reduction in overhead. Collective negotiation can improve reimbursement rates from payers. Best in class EMR, billing, marketing, IT and ASC is not shouldered only by the physicians but mostly by the private equity partner. 
Another advantage is that the physician doesn't have to wear 10 hats any longer and can focus on caring for their patients which is why they went to medical school in the first place. Truly professional management by corporate executives yields better results all around but mostly for the patient/physician relationship. The physician can relax in the fact that the stewardship of the practice is in professional hands. Regarding control it's important to align with a private equity partner that is committed, in writing, to joint governance with Physician partner positions on the board of governors. Not all equity is equal equity. It is important to ensure that the private equity partner offers Pari Passu (or the same/identical) equity to all equity holders. There should be no phantom equity!
Finally, a partnership with private equity can significantly improve the physician's lifestyle. The fact that the physician is no longer doing everything puts free time into the physician's life. There are safeguards against future risk and uncertainty such as, change in reimbursement, competition from hospital systems, value-based care payment, referral sources being bought up by larger stakeholders, and direct contracting with self-insured employers. Small independent physician groups don't have the scale or the capital to be part of these conversations. 
Overall capital and professional management is positive for the patient/physician relationship and makes the physician's life much less stressful when Private Equity is physician friendly and done well. 


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