5 spine surgeons' thoughts on investing in ASCs


ASC investment is top of mind for some spine surgeons as more procedures migrate to the outpatient setting. However, it might not be the best move for everyone.

Here's what five spine surgeons said were key considerations when it comes to ASC investment.

Note: Responses were edited for style and clarity.

Usman Zahir, MD. ScopeSpine-The Orthopedic Group (Dulles, Va.): There are five considerations I think about:

1. Structure of the ASC: A physician-hospital joint venture model reduces upfront liability and costs for a new startup. Such joint ventures can be collaborative, while also offering better managed care contracts. One needs to weigh this collaboration with the reduced physician control that comes with it and concerns regarding higher management costs. 

2. Established ASC vs. new startup: Established ASCs have costly share prices and often few shares that are available, but they usually have a more predictable return than a pure start up. A startup ASC with low or nominal share prices may take years to be successful.

3. Knowing your partners: Established ASCs that have many passive physicians are a red flag. For startups, it is important to get a sense of what the true case volume is first, before committing. Many ASCs start with attractive pro forma statements, but if the surgeon partners are involved in too many ASCs, it might be best to move on. 

4. Linking with other spine surgeons: An ASC with several spine surgeons is attractive. Opportunities exist in such arrangements to partner together and work on creating a spine Center of Excellence.

5. Aim for the future: As many companies become self-insured, ASCs that can offer efficient, low cost and high quality services will excel. To reduce healthcare expenses, we might see more direct-payer models between company self-insured plans linked directly with healthcare providers that will exclude many carriers. This will reduce costs. We might not have a true free market in healthcare today, but we should still aim for it.

Todd Lansford, MD. South Carolina Sports Medicine & Orthopaedic Center (Charleston): Investing in a surgery center can be a scary proposition. While there are many upsides, there’s much to be considered. This can be from both a clinical standpoint, but also a financial standpoint. From a clinical standpoint, the center must be capable of handling spinal procedures in a safe and efficient manner. If the center does not feel comfortable, or does not have the proper setup, then there is no use going forward. Many centers may be able to handle these cases, but have not done so yet. This requires significant patience and time, but can be a great opportunity to boost a center.

With this in mind, an ASC that is new to spine surgery can have a financial upside that may be higher. By bringing value to a center, you can take what could be lower share prices and have a greater return. In these situations, it is important to look to the future and obtain the appropriate number of shares for the value you will increase. If this is not the case, the potential for resentment can erode a positive relationship.

A center that is already established with spine surgery will likely have a higher share price but will already be showing good returns. The contributions can still be felt, without the concern for feeling overwhelmed by being such a majority contributor.

Therefore, investing in the center is like any other business.The risks come with a reward. The only important factor is that the patients are never at risk. And therefore clinical safety and appropriateness are the No. 1 priority.

Kern Singh, MD. Midwest Orthopaedics at Rush (Chicago): The first consideration is whether the ASC is located in a state that requires a certificate of need. If it does not, then it's less challenging to build a competing center, and these typically are valued on a multiple of EBITDA that is less than a CON state. Second, is if the center is profitable and what are the margins and specialities currently practicing in the ASC. Third, ask if the management team has a track record of success and has the center retained its surgeons, or if there was a high turnover. Fourth, will the center make sense geographically in regards to your practice? All of these are important initial factors.

Steve Wray, MD. Atlanta Brain and Spine Care: I would consider the following factors most important in deciding to invest in an ASC:

1. Patient safety and experience
2. Efficiency
3. Staff and personnel
4. Leadership and partners

Samuel Joseph, Jr., MD. Joseph Spine Institute (Tampa, Fla.): The key consideration in my mind is joining an ASC with like-minded doctors and administrators. The goal has to be the same: providing excellent and efficient care to patients. This allows economic and collegial advancement with each surgery or procedure. The remainder of the considerations, such as location, shares and block time can be figured out through constructive dialogue when the physicians in the group understand both the healthcare and economic aspects of the ASC business.


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