Historically dominated by physician owners, ASCs are now seeing rising involvement from hospitals, private equity firms and even payers.
Shobhit Minhas, MD, orthopedic surgeon at Fox Valley Orthopedics in Algonquin, Ill., joined Becker’s to discuss the decline of 100% physician-owned ASCs.
Question: How have ASC ownership models evolved in recent years, and what shifts do you anticipate in the next five?
Dr. Shobhit Minhas: Over the last several years, ASC ownership models have evolved significantly secondary to multiple factors in the healthcare market. Increasing overhead costs and decreasing reimbursements have placed increasing pressures on physician-owned ASC models. In addition, smaller independent ASCs may not have enough leverage to secure more favorable contracts with private payers, further placing difficulty on physicians to meet adequate financial margins. Furthermore, many founding ASC physicians are steadily retiring, and fewer young physicians want to take on the burden of ownership. Given these financial pressures, 100% physician-owned ASC models have gradually declined over the last few years in favor of shared ownership models. Three major players have entered the space:
1. Hospitals: As CMS and commercial payers are encouraging and reimbursing for more procedures in the outpatient setting, hospitals and large healthcare systems have steadily become increasingly involved in joint ventures with ASCs. Hospitals have also used this strategy to expand market share, align with independent surgeons to secure referrals and prevent physician leakage and comply with emerging value-based care models.
2. Private equity: Over the last several years, private equity firms have also moved into the ASC space, partnering with physicians. PE not only can provide capital for ASC expansion, facility upgrades and service line expansion, but can also bring experience to help with operational efficiency. Given that the healthcare market in the U.S. is still very fragmented, a “roll up” strategy that PE firms typically use allows for consolidation and drives down overhead costs due to economies of scale. This scale allows PE backed ASCs to negotiate better rates with commercial payers.
3. Private payers: Private payers such as UnitedHealth Group’s Optum have also recently begun to invest in ASCs. Strategically, this allows for them to gain vertical integration, allowing them to manage utilization, steer referrals and implement value-based care models.
Over the next few years, I anticipate that 100% physician-owned ASC models will continue to decline, and co-ownership models with physicians, hospitals/health systems, PE and private payers will dominate. This shift has the potential to lower costs, expand access and support the foreseeable value based care payment models. However, it is important that physician engagement remains strong for ethical practice and prioritizing patient outcomes.
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