Independent ASCs are declining after decades of sinking reimbursement rates and soaring operational costs have forced ASC leaders and physicians to think critically about the future of their practice’s financing.
Financial stability and improved rates with payers are one of the central reasons that ASCs seek out partnerships with hospitals and health systems. However, the nature of these relationships can vary significantly depending on the market. Some ASC leaders, like Bruce Feldman, administrator of Eastern Orange Ambulatory Surgery Center in Cornwall, N.Y., have found numerous benefits through a partnership with a hospital.
“We’ve been able to get better reimbursement rates by having a hospital be the majority stakeholder,” Mr. Feldman told Becker’s. “They have a whole contracting department at their disposal. So that was one of the biggest reasons why the hospital became involved here in the first place, and the partners decided to sell their shares to the hospital.”
But, in other cases, hospital, health system or other corporate partnerships can lead to a lacking sense of autonomy and other administrative frustrations.
According to a survey from consulting firm Bain & Co., nearly 25% of physicians in health system-led organizations are contemplating a change in employers, compared to just 14% in physician-led practices. Of those considering a switch, 37% are looking to move to physician-owned settings.
Additionally, 61% of employed physicians said they have moderate or no autonomy to make referrals outside of their practice or ownership system, and 47% said they adjust patient treatment options to reduce costs based on practice policies or incentives, according to a survey from NORC at the University of Chicago.
Additionally, while employment in a hospital or healthcare system offers stability, it may lack the same long-term financial upside as independent ownership.
“We often discuss how physicians in physician-led practices tend to earn slightly better salaries, but many statistics don’t fully address the earnings of the doctors who actually own and run those practices,” Jerry Shriner, founder and CEO of Myriad System, a technology and software company that provides AI-driven practice management solutions, told Becker’s. “While it can be difficult to turn a profit, there’s significant potential — especially when it comes to building generational wealth. That opportunity disappears entirely if all physicians are employees.”
For ASCs evaluating the difficult question of how to retain independence and autonomy while securing a financial future, there is an emerging wave of practice financing models seeking to provide that balance.
Philadelphia-based Atria Health has launched a new, independence-forward partnership model for cardiology practices. While Atria is backed by Cypress Ridge Partners, a private equity group, the company does not acquire practices, but rather invests in them to support long-term goals and growth. Atria recently partnered with Philadelphia-based AMS Cardiology, an independent cardiovascular practice of over 40 years and launched an ASC through the joint venture.
“The things that were very important to us were about empowering physicians to deliver exceptional, patient-centered care,” Matt Eakins, MD, CEO of Atria, told Becker’s. “What we were looking to do is build something with cardiologists in a true collaborative model where we are not buying their practice, but instead we are helping them achieve the practice that they want.”
Ker Leader Medical, an ASC development company, centers and promotes physician autonomy and practice independence. Ker Medical envisions its network of independent ASCs as more akin to a “farming co-op” than a corporate, Wall Street-backed entity. This model prioritizes local physician leadership and autonomy, fostering an environment where they can thrive through creative, low-cost financing solutions.
Others who have opted for more traditional partnerships with private equity groups, hospitals and health systems, advocate for ASC leaders to come adequately prepared for negotiations over possible partnerships with a focus on shared values and cultural alignment. “As a clinician, administrator and industry consultant, private equity-acquisition groups need to keep their focus equally on three important principles for success: patient care, organizational culture and bottom-line business processes,” Robert Nelson, PA-C, former executive director of Island Eye Surgicenter in Westbury, N.Y., told Becker’s. “Neither of them should take precedence over the others. Historically, the acquiring company usually places the most emphasis on business processes and operations, resulting in a significant impact on patient care and organization culture. Yes, the merger needs to have an upside for all stakeholders. But never at the expense of patient care, patient safety and the morale of our important team members.”
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