Image by Julio César Velásquez Mejía from PixabayAs more procedures transition to outpatient settings, new opportunities are emerging for physicians to become ambulatory surgery center (ASC) owners or partners.
Yet younger physicians, in particular, face several hurdles on the path to ownership.
“[Younger physicians] don’t know about the value proposition of an ASC short and long term,” Janet Carlson, executive director of ambulatory surgery centers with Commonwealth Pain & Spine, told Ambulatory Surgery Center News. “They don’t see the investment as a win that it is, the potential. The other thing is lack of knowledge. They haven’t been taught about it.”
Commonwealth Pain & Spine, based in Louisville, Kentucky, is a health care provider specializing in minimally invasive spinal surgeries. The company operates multiple ASCs.
Carlson noted that by the time physicians finish their board certifications and are ready to become partners, many are also at a point in life where they are getting married, starting families, buying homes and managing large amounts of student debt, making it more difficult to invest in ASC ownership.
“So it’s not just that they don’t know about it, they don’t know if they can afford it,” she said.
The education gap
Few medical programs provide in-depth coursework on health care finance or the business of running a practice, Carlson said.
Training primarily focuses on clinical skills, leaving minimal time for lessons on payer mixes, profit-and-loss statements, or operational workflows.
“There’s just not a lot of education, frankly, in medical school or nursing school for that fact,” she said.
Carlson explained that she had to build her health care business knowledge on her own because traditional medical or nursing education does not include sufficient instruction in that area, mainly because of time restraints.
“We’re focused on taking care of the patient, but I think there are some changes coming so that we’re better informed when learning our profession,” she said. “But still, it’s a huge opportunity to train or educate physicians and nurses about business so they can make the decision that works best for them.”
Grant Luke, a strategic account manager at Colorado-based CapExpert, a health care supply chain platfom, told ASC News he sees limited institutional support for entrepreneurship.
“Where are the majority of these doctors being educated? At academic medical institutions that have direct relationships with hospital systems,” Luke said. “Do you think they give classes on, ‘Hey, you should check out if you want to have a piece of the pie and be entrepreneurial?’ No. There is no incentive to teach these young doctors about ownership.”
Luke previously worked on EHR implementation for several ASC management companies.
According to Luke, more proactive education could encourage younger physicians to explore ownership tracks much earlier in their careers. Simple guidance about financing options, contract structures and the potential return on investment could help new surgeons approach ASC buy-ins with greater confidence, he said.
“Of course, you do have your entrepreneurial doctors who are, you know, slanted that way in terms of they have that business mind, but the majority of them are just doing exactly what they’ve been taught to do,” he said. “And that’s part of the system.”
Another major concern is the high cost of buying into an established facility.
Federal regulations require any buy-in to be at fair market value, preventing centers from selling shares at discounted prices, Robert Aprill, a partner at Physician Growth Partners, told ASC News.
“You have to buy in for what is kind of considered fair market value,” he said. “So the fair market value of these assets is fairly expensive today versus historical.”
Student debt compounds this challenge. According to Aprill, new physicians often prioritize higher base salaries over long-term investment opportunities. This preference can limit their willingness to take on additional loans for ASC buy-ins.
“They are less worried about making those investments and building up their personal wealth for the long term, because they’re more worried about firefighting,” he said. “Today, we see the same thing in the practice side of the world when it comes to buying into practices versus, you know, being an associate or joining a household system and having a higher base salary.”
Carlson agreed that a key obstacle is financial pressure at the start of a physician’s career. However, she encouraged new clinicians not to rule out ASC ownership simply because they lack the funds for a full buy-in.
“Even if they are offered partnership and they cannot afford the full amount of shares being available to them, they should start with the share amount that they can afford, and go into it,” she said. “They are earning more income and paying off their med school debt.”
Other paths to ownership
For those unable or unwilling to take out large loans, private equity (PE) can provide alternative pathways to ownership.
Aprill, who frequently works with private equity groups, said PE firms can offer deeper pockets and more creative investment structures.
“Private equity can be super helpful for younger doctors because it provides a lot more flexibility to get ownership in the hands of younger docs,” he said, noting that PE-backed companies can grant equity through profit interests or other methods that reduce the up-front costs required of new partners.
Still, these deals can involve trade-offs.
Aprill pointed out that giving up a portion of ownership to an outside entity means relinquishing some decision-making authority. However, private equity typically allows more independence than hospital-based partnerships, he said.
“The control you give up with a private equity deal is significantly less than what you give up in … a hospital deal, or [an ASC management company] deal,” he said. “If you’ve decided to align yourself with a partner at a surgery center, I think the risk or downside is pretty consistent amongst all of those groups.”
Still, well-structured deals allow older physicians to sell a portion of their shares and remain involved for several years, which can help stabilize clinical operations and mentorship for newcomers, Luke said.
“The physician has ownership in that, as they can actually be able to contribute more, from a decision-making perspective to actual health care practice, they can’t do that at a hospital,” he said. “Then the insurance company has to pay less, which is always going to be something they love to do.”
And senior partners can also ease the transition by coaching new owners in both clinical and administrative roles, he added.
“There is a tremendous opportunity for these younger physicians from an education standpoint,” he said.
