With more young physicians choosing employment over private practice and increasing financial hurdles to ownership, the historically fragmented ASC industry is seeing a wave of consolidation.
Shobhit Minhas, MD, orthopedic surgeon at Fox Valley Orthopedics in Algonquin, Ill., spoke with Becker’s about the key barriers younger physicians face in pursuing ASC ownership — and how some models may be evolving to meet those challenges.
Editor’s note: These responses were edited for clarity and length.
Question: What do you think are the biggest barriers today for younger physicians who are interested in ASC ownership?
Dr. Shobhit Minhas: Because of the high costs of everything, there’s usually a very significant buy-in required for younger physicians to become partners in private practice. I don’t know the specifics of different practices, but sometimes the buy-in can range from half a million to almost a million and a half dollars, depending on how big the practice is. That’s an initial barrier, because very few younger physicians have that kind of money right out of medical school — especially with the amount of debt. So I think the financial restraints are probably the number one factor for physicians, unless they get lucky or the buy-in is relatively small.
I would also say it’s hard to find physicians now who are willing to take on the burden of ownership, especially younger ones. A lot of independent ASCs have been operating independently for 15 to 20 years, so they’re essentially governed by the older physicians still in practice. Younger physicians today understand the challenges — getting adequate margins, rising healthcare costs, declining revenue, etc. Do they even want to take on the burden or responsibility of ASC ownership, especially with those tight margins?
The biggest reason is financial. It’s like any investment: if the share price or stock price is too high, you just can’t buy in. Also, how many younger physicians even want to do that when they can just take a well-paying salaried job and avoid the pressures of being a business owner dealing with small margins?
Q: Have you observed any innovative models or incentives that are helping attract the next generation of physicians into those ownership roles?
SM: It all depends on who owns the ASC. For example, in many ASCs co-owned by private equity and private practices, physicians are being hired by the PE group. Sometimes, PE can lower the entry cost or buy-in barrier, or offer other incentives. It’s all highly variable — depending on the type of practice, the size of the buy-in, and the specific stipulations — especially because the ASC space is so fragmented.
The post What’s keeping young physicians from ASC ownership appeared first on Becker’s ASC.
