Private equity’s influence on the ASC industry has been undeniable over the past few years, scooping up independent practices left and right.
However, there are still ASCs and centers that have remained independent throughout the infusion and influx of private equity dollars into the space, including Amarillo Urology Associates in Texas.
Cashing in potential future earnings for private equity funds in the present has not been an effective pitch for some ASCs, because physicians still want to have their future earnings down the line.
The organization’s CEO, Whitt Holder, recently connected with Becker’s to talk about the impact of private equity on the ASC industry, as well as why their group has chosen to stay independent.
Note: Responses were lightly edited for clarity and length.
Question: What impact has private equity had on ASCs, specifically over the past couple of years? Do you expect it to continue to have that influence over ASCs going forward?
Whitt Holder: I think that remains to be seen, at least where I sit, and I’m not an expert on it. We’ve had a few people come at us private equity-wise, and it’s just something we have not been interested in. It remains to be seen what impact it will have, because it all depends on if they’re able to repackage and resell. Everything that I understand about the private equity world is that it’s all about buying and putting some groups together, repackaging and reselling. From my understanding the reselling part hasn’t gone as fast and succinctly as maybe first hoped. I’m also not an expert in that field, I’ve not been involved in it other than people wanting us to get involved in private equity, and something we just haven’t done. I think the impact remains to be seen. I have my doubts, because in the end, you can squeeze out costs, but if you’re not providing good service and you’re not taking care of the patient, not taking care of the physicians, then over time, someone’s left holding the bag, and I think that’s where we’ll get in trouble. If the money is being taken out in the beginning, there’s someone that’s going to have to pay the price in the end.
Q: What has the PE firm’s pitch to you been when they want you to join and what kinds of things have they been telling you as an independent group as to why you should go that route?
WH: I think the pitch from private equity is the ability to take money out of the business today, and that’s about as far as it goes. Because when you talk about over time, what does that look like? Because you’re basically getting paid today for future earnings. If you’re going to work 10, 15, 20 more years, I haven’t met a doctor or anyone yet that doesn’t need their future earnings in the future. You can take some money off the table today, but if it means less in the future, I’m not sure that’s really helping anyone out.
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