- ASC ownership
- Physician-owned outpatient
- Business-owned ASCs
- Physician-business joint venture
- Legal and Regulatory Requirements for ASC Ownership
- Financial Considerations for Owning an ASC
- Risks and Challenges of ASC Ownership
- Future Trends in ASC Ownership
- Why own an ASC
Wondering who can own a surgery center? We will look into the different structures of ASC ownership and how they work.
First off, let’s define ASCs. Ambulatory Surgery Centers (ASCs) are special medical facilities that give outpatient care regarding surgeries or procedures. Patients do not stay overnight and are discharged the same day.
There are seven common organizational structures of who can own a surgery center.
- Hospital-corporate joint venture
- Physician-hospital-corporate joint venture
- Physician-hospital joint venture
Physicians are permitted to own surgery centers under the Ambulatory Surgical Center model, which includes several arrangements such as multispecialty, single-specialty, single-group, or multigroup centers. However, physician owners are required to perform at least a third of their operations in their owned ASC. In cases where an investor is involved, physicians must pay a fair market value for their ownership percentage or shares in the center, which is determined based on recent and projected future earnings. A standard formula calculates market values by accounting for earnings of similar centers in the market. Despite being unable to receive volume-based discounts, physicians are expected to pay a fair market price for ownership. As such, it may be advisable for physicians who wish to own an ASC to hire a management company or a solid management team to handle administrative duties and ensure smooth operations.
To establish a business-owned ASC model, it is necessary to utilize the managed care contracts of a business. This approach is practical for managing multiple ASCs, performing various tasks, and recruiting new physicians. If a company employs physicians, they become partners in the ASC. Alternatively, businesses can actively recruit doctors. Businesses and management assume responsibility for the associated risks in this model, but the benefits make it worthwhile. The potential profits of an ASC are increasingly recognized by companies, leading to a significant number of acquisitions and mergers.
Physician-hospital joint venture
A physician-hospital joint venture is a business arrangement in which physicians and a hospital work together to jointly own and operate a healthcare facility, such as an ambulatory surgery center, imaging center, or diagnostic center. In this model, the hospital provides the resources and infrastructure, such as equipment, facility space, and administrative support. In contrast, physicians provide medical expertise, including clinical oversight and patient care.
Physician-hospital joint ventures can have several advantages, such as increased access to capital, improved patient care coordination, and increased physician involvement in decision-making. Additionally, these ventures may lead to better alignment between physicians and hospitals, which can enhance the quality of healthcare and patient outcomes.
However, there can also be challenges associated with physician-hospital joint ventures, including conflicts of interest, legal and regulatory compliance, and potential issues related to control and ownership. As such, it is essential for all parties involved to have a clear understanding of their roles, responsibilities, and expectations before entering into a joint venture agreement.
Physician-business joint venture
The model mentioned gives priority to the doctors’ experience in decision-making. In parallel, it leverages the business’ expertise in administrative parts of the process.
Additionally, the same regulatory matters apply to physician ownership as physician-owned ASCs. Similar challenges occur with relationships between partner physicians and physician ownership. If you are a new physician entering an ASC and wish to become an owner, you must buy some shares at fair market value. Note that the distributions to owners don’t rely on volume but equity share.
As a physician, you will be subject to the 1/3 rule, as mentioned before. ASC management companies add a wide variety of expertise to these ventures. Some of them may have contracts of nationally managed care. The latter have rates superior to the ones that a doctor can negotiate on his own.
How do you get out of this? Easy. A management company takes over the administrative tasks for the basic setup. It can take care of daily management, new doctor recruitment, and multiple tasks that arise. Of course, they take a percentage of collections and potentially equity in the company.
Finally, we could clarify who can own an outpatient surgery center successfully. We also tackled the many possible scenarios of each type of ownership. Now, the remaining question is: which scenario works best for you? Remember the many benefits of ASCs, and remember there’s always a better solution for your endeavors.
Legal and Regulatory Requirements for ASC Ownership
ASC ownership comes with numerous legal and regulatory requirements that must be met. Firstly, ASCs must be licensed and accredited by the appropriate regulatory bodies. Additionally, ASCs seeking reimbursement from Medicare must meet the Medicare Conditions for Coverage and comply with federal and state laws, including those related to healthcare fraud and abuse, HIPAA, and OSHA.
Secondly, ASCs must have a medical staff that is appropriately credentialed and privileged to perform procedures at the facility. Credentialing and privileging processes must be in place to ensure that all medical staff members meet the necessary qualifications and standards.
Thirdly, patient safety and quality of care must be a top priority. ASCs must have policies and procedures to ensure that patients receive appropriate care before, during, and after procedures. Quality improvement programs must also be in place to continually monitor and improve patient care.
Fourthly, ASC owners must comply with laws and regulations related to billing, coding, and reimbursement. They must also maintain accurate and complete financial records and operate their businesses ethically and transparently.
Lastly, ASCs must have appropriately trained staff competent in their roles. ASC owners must ensure their team receives ongoing training and education to maintain their skills and knowledge.
Owning an ASC requires compliance with various legal and regulatory requirements. ASC owners and operators must be knowledgeable about these requirements and take steps to ensure adherence to providing high-quality care to their patients while avoiding legal and financial penalties.
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Financial Considerations for Owning an ASC
Owning an ASC requires significant financial investments. The costs of building, equipping, and staffing an ASC can easily reach millions of dollars. Therefore, it is essential to consider the financial aspects of owning an ASC before deciding.
One significant consideration is the source of funding for the ASC. Owners may finance the ASC through personal savings, loans, or investor partnerships. It is crucial to assess the cost of borrowing money and determine if the interest rates and repayment terms are feasible.
Another financial consideration is the ASC’s revenue streams. Owners need to determine how the ASC will generate revenue, whether through insurance reimbursements, direct payments by patients, or other sources. It is essential to analyze the market and competition to determine the ASC’s potential profitability.
Moreover, owners need to consider the costs associated with running the ASC. These include salaries and benefits for staff, equipment maintenance and replacement, and overhead costs such as utilities, rent, and insurance. An effective financial plan should factor in these costs and estimate the ASC’s potential revenue to ensure profitability.
In addition, ASC owners need to understand the regulatory and legal requirements related to financial matters. Owners must comply with state and federal billing, coding, and documentation regulations. Additionally, ASCs are subject to audits and inspections to ensure compliance with regulations, which may result in fines and other penalties.
Risks and Challenges of ASC Ownership
Like any business venture, owning an ASC comes with its own set of risks and challenges. One of the main risks is the potential for financial losses. ASCs require a significant initial investment, including purchasing or leasing a facility, equipment, and hiring staff. In addition, ASCs are subject to fluctuations in reimbursement rates from insurance companies and government programs, which can impact profitability.
Another challenge is the regulatory environment. ASCs are subject to state and federal regulations, including facility and equipment standards, infection control, and licensing requirements. Compliance with these regulations can be time-consuming and costly, and failure to comply can result in fines or even the loss of operating privileges.
Another risk is the potential for malpractice lawsuits. While ASCs generally have lower rates of complications and infections than hospitals, adverse events can occur during a procedure. ASCs must ensure that their staff are well-trained and follow proper safety protocols to minimize the risk of patient harm.
Finally, ASC owners must also contend with the competitive landscape of the healthcare industry. ASCs compete with hospitals and other outpatient facilities for patients and must constantly strive to provide high-quality care and a positive patient experience to remain successful. This may require ongoing investments in staff training, technology, and patient amenities, which can be expensive.
Future Trends in ASC Ownership
As healthcare delivery models evolve, several trends will likely shape ASC ownership’s future. One trend that experts anticipate gaining momentum is the development of larger, multi-specialty ASCs. Such ASCs can offer a broader range of services and benefit from economies of scale, making them particularly attractive to physician groups aiming to expand their practices.
Another trend involves leveraging technology and digital tools to enhance patient care and increase operational efficiency. For instance, telemedicine can enable ASCs to provide virtual consultations, post-operative follow-up visits, and other services that reduce the need for in-person appointments and enhance access to care.
In addition, electronic health records and other digital platforms can help streamline administrative processes, thus improving patient outcomes.
As the population ages and the demand for healthcare services increases, ASCs are expected to form more partnerships and collaborations with hospitals and health systems. These partnerships can offer access to additional resources, such as specialized equipment and expertise, enabling ASCs to serve their patients better.
Finally, regulatory scrutiny around quality and patient safety issues will likely increase, requiring ASCs to comply with all relevant regulations and guidelines. Vigilance in this area will be critical to preserving the reputation of ASCs and protecting their patients.
Why own an ASC?
Before we answer your question, who can own a surgery center? Check out the many benefits of ASCs:
1- When you choose ASCs, you pay less: no more overnight costs.
2- With ASCs, you receive more convenient and faster surgical care: yes, you’ll go home immediately.
3- Fewer complications happen inside ASCs: you are less likely to suffer from post-surgical infections and pain.
4- No more stress: the ASC environments are calmer than hospitals. Imagine your recovery at home among your beloved.
5- Community-based: ASCs are patient-centered. Your comfort would be a priority.
A better quality of care ensures your safety due to certified ASCs like centers for Medicare and Medicaid services.
If you have any further questions, we invite you to call the Ambula Healthcare team: at (818) 308-4108