ASC profitability?

[Yo GabbaPentin]

What is the general consensus on ASC investments given the current climate in healthcare?

I started with a group on a partnership tract not too long ago and there is an opportunity to buy in to the new ASC. They project about 500k in profits per year and buy in is $10k per percentage. There is also a 5% buy in limit which we can not go over.

Any thoughts on future profitability of ASCs in general? Payor mix is 50% medicare, 50% private insurance. Thanks.

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[knoxdoc]

It all depends on how it is run. Ortho and NS are strong contributors if they use low-cost hardware for their surgeries. The place needs to be busy and efficient; basically it can't be run like a hospital. The ASC I am in is making a 21% return on investment.

 

[PMR 4 MSK]

I'd be very hesitant to invest in an ASC right now, as no one knows what effect the ACA is going to have on them. CMS wants them gone. Hospitals want them gone. Hospitals have 100's of times the amount of money for lobbying that docs and ASCs have. There are things I cannot do in the ASC for CMS, like SI joints.

 

[facets]

I have had an ASC for 19 years. It has been the only thing that has made money in this area which is almost all medicare. The insurance companies around here pay about the same as medicare and I would starve without it. Rate increases and decreases come and go. Ten years ago ASC were paid twice what HOPD were paid for pain under CMS, now it is the other direction. HOPD get twice what we do. Overall your collections double and if done correctly your overhead is no higher. So if your expenses run an average of 50%, your net triples, eg if you get $200 instead of $100 for a procedure that costs $50, you net $150. The only mistake I made is in opening a place with 13 surgeons, all of whom wanted to do things like they did at the hospital, use tons of expensive supplies, show up 2 hours late when you have 3 people standing around costing you money, etc. A non-owner or minimal owner will burn through your revenue. Rates per speciality flucuate with time. Fifteen years ago I lost money on every ortho case we did and we basically paid the plastic surgeon to go someplace else. Now ortho pays better. If you have several years left to practice, I would buy my own place-my own place. I would not be part of a 10 million dollar center with a bunch of prima donnas uh I mean surgeons. At 5% you have minimal voting power, but also minimal expense, $50 K. It costs about that much to get a place accredited these days

 

[Yo GabbaPentin]

I'd be very hesitant to invest in an ASC right now, as no one knows what effect the ACA is going to have on them. CMS wants them gone. Hospitals want them gone. Hospitals have 100's of times the amount of money for lobbying that docs and ASCs have. There are things I cannot do in the ASC for CMS, like SI joints.

This exact line of thinking is why I am hesitant.

 

[101N]

I have had an ASC for 19 years. It has been the only thing that has made money in this area which is almost all medicare. The insurance companies around here pay about the same as medicare and I would starve without it. Rate increases and decreases come and go. Ten years ago ASC were paid twice what HOPD were paid for pain under CMS, now it is the other direction. HOPD get twice what we do. Overall your collections double and if done correctly your overhead is no higher. So if your expenses run an average of 50%, your net triples, eg if you get $200 instead of $100 for a procedure that costs $50, you net $150. The only mistake I made is in opening a place with 13 surgeons, all of whom wanted to do things like they did at the hospital, use tons of expensive supplies, show up 2 hours late when you have 3 people standing around costing you money, etc. A non-owner or minimal owner will burn through your revenue. Rates per speciality flucuate with time. Fifteen years ago I lost money on every ortho case we did and we basically paid the plastic surgeon to go someplace else. Now ortho pays better. If you have several years left to practice, I would buy my own place-my own place. I would not be part of a 10 million dollar center with a bunch of prima donnas uh I mean surgeons. At 5% you have minimal voting power, but also minimal expense, $50 K. It costs about that much to get a place accredited these days

1+

Glad yours has worked for you. My wife runs a dysfunctional ASC with too many owners most of whom have too little skin in the game to really G.A.S. Not a good thing.

Hard to know how the ACA is going to impact ASC's at this time. While hospitals are much more powerful and have better lobbys and deeper pockets, they are 2-3x more expensive for the same procedure. Now is an important time for the ASC lobby to step up to the plate and make their play. There is absolutely no reason whatsoever that an ACDF in the hospital should cost $80K while the same procedure performed by the same surgeon in the ASC costs $30K.

 

[Yo GabbaPentin]

A little more info. It is a two room ASC. One room will be used by us for procedures and the other by outside surgeons.

 

[Pain Applicant1]

I had and still have an opportunity to buy into an ASC and I turned it down. When I crunched the numbers it just didn't make any financial sense.

Also, I don't agree that overhead, at least in the office, should average 50%. That's the number I hear tossed around all the time but I think you should aim for much less, perhaps 25%. I live around there.

 

[Tenesma]

I have a colleague who co-founded an ASC - turns out the competition including the hospital ratcheted up their presence, and the private payers opted to not contract w/ that ASC... so those patients in that area could choose between in-network ASC w/ the competition or out-of-network w/ his ASC -- clearly he was basically stuck w/ Medicare patients...

so just because something looks good, things can change quickly (usually for the worse)...

5% buy-in limit w/ 500k total profit - that means 25k/yr profit (hopefully) for a 50k buy-in... that is a decent ROI and 50k isn't all that big of a deal... who owns the majority of the shares and can they kick you out? ie: orthopods hire their own injectionist and (force) buy you out?

 

[facets]

Run from outside surgeons

A little more info. It is a two room ASC. One room will be used by us for procedures and the other by outside surgeons.

 

[facets]

Things change, if you have 5 years left to practice thats a lot different from 30 years. Ten years ago hospital pain departments were closing because of poor pay so the rate was raised now the pendulum has swung the other way, who knows how it will swing back but swing back it will. CMS does not want ASCs to close, why would they want to double their costs? Ditto for private insurance. I had a $10,000 endoscopy at a hospital that would have been $800 at an asc but the hospital owned the gastroenterologist. Same with imaging btw, an independent center is a fraction of the cost as a center owned by a hospital so I stay away from them as a physician and a patient.
The surgeons are a deal breaker. I had to buy all of mine out. They were dead weight prima donnas

This exact line of thinking is why I am hesitant.