Risks of asc ownership

[Ravenclaw90]

What are the risks of buying into an asc? The upsides? How would you evaluate the situation?

Also, before you join a group, in order to get a sense of the job, what would you want to ask the other doctors who work there?

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[willabeast]

Risk of ASC. Depends. Are you a limited partner? What is your liability risk? Does the ASC have liability insurance that covers the operations? Upsides? If you do not join you might be replaced with someone who will join. But...who is joining and who is not? The biggest upside is that the ASC eventually gets bought out by the local hospital.

 

[drusso]

Why not just buy a piece of a hospital instead?

Buy a rural hospital for $100? Investors pick up struggling institutions for pennies

Some rural hospitals are in such bad shape, they're selling for next to nothing. One company is snapping several distressed or closed hospitals in rural Tennessee, hoping to turn a profit.

www.npr.org

 

[RoloTomassi]

What are the risks of buying into an asc? The upsides? How would you evaluate the situation?

Also, before you join a group, in order to get a sense of the job, what would you want to ask the other doctors who work there?

Just like buying any company, you want to make sure you get a return on your investment and there's a low risk of loss. You want to make sure it's properly valued via third party fair market valuation, will need profit loss statement, balance sheets, historic trends and projections of revenue, volume. The upside is that they tend to make bank, but it has to be a healthy, efficient one.

 

[pastafan]

While risk of loss is relatively low, ASC's do lose money. I was invested in one from startup and made a good profit but after I left it became unprofitable. Hospital/physician ownership and poorly managed. They catered to orthopods who were allowed to schedule cases for their convenience often causing huge inefficiencies for the center.

 

[Dr. Ice]

Agree that nowadays, the main upside is the ability to sell to a hospital with better contracts that can actually utilize it well not only in terms of revenue but also volume. There are some ascs that are cranking and banking huge ROIs, but I know several in my state that have recently sold or are planning to sell soon.

 

[gaseous_clay]

Overhead is one of the biggest risks, which is related to who is running it and makes the decisions regarding the purchase of expensive inventory. These issues are more prevalent in large multi-specialty centers.

 

[drusso]

Overhead is one of the biggest risks, which is related to who is running it and makes the decisions regarding the purchase of expensive inventory. These issues are more prevalent in large multi-specialty centers.

Those juicy facility fees though…

 

[gaseous_clay]

I invested in one (still am). In 10 years have made back maybe 30% of my investment. It is not always a slam dunk.

My ASC is in one of the richest areas with best payor mix in the country.

Of course, the guys before me made multiple 100% ROIs.

What multiple of EBIDTA did they value this center at when you purchased shares?

 

[gaseous_clay]

Those juicy facility fees though…

To quote someone you might know:

 

[SC Tian]

My limited experience with asc is encouraging. The investment in asc will help in eat what you can kill model, i would think to get the ownership using the facility profit you generate from ASC.

 

[Dr. Ice]

I am eat what you kill..invested in an asc..it’s not going well at all. Hopefully it sells fast.

 

[Doctodd]

i never bought into an ASC when i had the chance. What do you tell your patients about the costs vs doing it in your office? Or do you just not say anything and wait for them to get the EOB?

 

[BobBarker]

The best way to do an ASC as a pain doc is to only do trials, implants in the ASC and the rare injection that demands sedation. I don’t think any of the multi specialty ASC’s here make any money. One just went out of business.

 

[buddababa]

The best way to do an ASC as a pain doc is to only do trials, implants in the ASC and the rare injection that demands sedation. I don’t think any of the multi specialty ASC’s here make any money. One just went out of business.

Are they independent or hospital affiliated? There's a trend of hospital/physician owned opening up now due to insurers expecting certain surgeries and procedures to be done in ASC as opposed to hospital.

 

[RoloTomassi]

Success depends on payer mix, contracts, volume and types of procedures, efficiency, overhead management. You have to play your part--bring in high volume of higher-margin procedures, be fast, don't drop 8 Venom needles on a LOR tray like in fellowship, use more lower level staff rather than RNs and RTs when you can.

If they generally weren't profitable, PE wouldn't be buying them up.

 

[BobBarker]

Physician/investor owned. There might be one physician/hospital dual owned ASC but I’m not sure.

 

[bedrock]

I do most of my cases at our main ASC, but I run two rooms so it works out from a production standpoint.

We have a pseudo ASC in an outlying clinic for which I can’t run two rooms but it is not Medicare certified so I do get paid double for those Medicare and so I make about as much per hour in each ASC.

 

[SC Tian]

The best way to do an ASC as a pain doc is to only do trials, implants in the ASC and the rare injection that demands sedation. I don’t think any of the multi specialty ASC’s here make any money. One just went out of business.

great idea, doing Kypho in ASC is definitely not a great idea, stimulations are great fit for asc, we have 60% commercial equivalent, doing 10-12 injections in half day, it is quite profitable to me, compared to office procedure, even compared to hand surgeon in the group, they are pissed off because of this

 

[DrMDAware]

The best way to do an ASC as a pain doc is to only do trials, implants in the ASC and the rare injection that demands sedation. I don’t think any of the multi specialty ASC’s here make any money. One just went out of business.

Interesting. So you’re saying the bread and butter stuff in a clinic suite?

 

[Doctodd]

And workman’s comp basic injections?

 

[runfastnow]

Got to make sure the ASC is the appropriate mix of busy and efficient. If you've got ortho, optho, GI, pain, plastics, and OMFS all doing stuff in 5-6 ORs that can be very expensive due to all the overhead and equipment. Also need to make sure that you've got contracts with all your insurance companies if you are doing it as physician owned without health system backing. A few ASCs in my area are struggling because they can't get BCBS approval.

I have minority shares of a smaller ASC that is only ortho, plastics (95% cash cosmetics), and pain that is 4 ORs + pain procedure room but extremely efficient with a lot of equipment force fed to the surgeons at start up that keeps costs down. Purposely kept out other specialties to not "waste" resources on buying extra equipment.

 

[RoloTomassi]

Bread and butter still pays better in ASC.
Cervical ESI:
In office: 253
In ASC: 107 pro fee + 332 = 439
And that's Medicare. Start doing multiples of Medicare, and the margins will be more worthwhile.

 

[bedrock]

Bread and butter still pays better in ASC.
Cervical ESI:
In office: 253
In ASC: 107 pro fee + 332 = 439
And that's Medicare. Start doing multiples of Medicare, and the margins will be more worthwhile.

Pays better is debatable. Mostly depends on if your ASC does quick turnover which many ASCs do not. I can often do two office ESI on Medicare in the time I can do one in an ASC, plus I’m making more than double in office.

ASC is a good idea for pain if
1- ASC is run well enough with other physicians to make money even without you
2- they let you run two rooms in ASC.

 

[nvrsumr]

What is an average overhead % for an ASC?

 

[DrMDAware]

Pays better is debatable. Mostly depends on if your ASC does quick turnover which many ASCs do not. I can often do two office ESI on Medicare in the time I can do one in an ASC, plus I’m making more than double in office.

ASC is a good idea for pain if
1- ASC is run well enough with other physicians to make money even without you
2- they let you run two rooms in ASC.

@bedrock how many cases per day are you getting while running two rooms? I’m genuinely curious. I see usually 25-35 cases with one room. Not sure how that would scale to two rooms. Thx

 

[SC Tian]

In the eat what you can kill model, our overhead cost is about $500 a hour, after this, the interventionist gets 50% of profits, it is estimated we can make the balance by doing 6-7 injections in half day.

 

[bedrock]

@bedrock how many cases per day are you getting while running two rooms? I’m genuinely curious. I see usually 25-35 cases with one room. Not sure how that would scale to two rooms. Thx

38-43 depending on type of case. Not double, but 140-150% the procedural volume of a single ASC room.