Ambulatory Surgery Centers (ASCs) and Physician Ownership 

Ambulatory Surgery Centers (ASCs) have become a cornerstone of outpatient surgical care. Over the past few decades, ASCs have experienced significant growth. One of the key factors behind this growth is physician ownership, which has allowed surgeons and healthcare professionals to maintain a greater level of control over their practices and improve operational efficiency. Physician-owned ASCs offer several benefits, but there are some challenges that prospective ASC-owning physicians should be aware of prior to owning an ASC. Understanding the dynamics of physician ownership in ASCs is essential for ensuring long-term success and maintaining high-quality patient care, so here is what to know about ASCs and physician ownership.

What Are ASCs?

ASCs are specialized medical facilities that perform outpatient surgical procedures that do not require hospital admission or overnight stays. These include diagnostic, preventive, and therapeutic surgeries across a variety of specialties. ASCs are designed for efficiency, convenience, and patient-centered care. By focusing exclusively on outpatient procedures, they can reduce overhead, minimize hospital-acquired infection risks, and improve scheduling flexibility for both patients and providers.

ASC Ownership Models

There are several models of ownership in Ambulatory Surgery Centers (ASCs), each offering varying levels of control and financial opportunity for physicians. Approximately 90% of ASCs have some form of physician ownership, and around 65% are entirely physician-owned. The first model is sole physician ownership, where one or more doctors own 100% of the ASC, making all management decisions and retaining full control over profits. Although physicians may engage a management company for administrative tasks, they do not relinquish equity. While still common, this model is slowly declining as hospital systems continue to expand their influence in outpatient surgery.

Physician ownership is allowed under exceptions to the Stark Law, but it must adhere to specific guidelines. These include that physician owners should perform at least one-third of their procedures in the ASC and pay fair market value for ownership shares, based on recent earnings or projections. Distributions must be based solely on ownership percentage, not procedure volume, to avoid conflicts of interest or inequity among partners.

The second model is a joint venture between physicians and an ASC management company, where physicians may retain control of the ASC while benefiting from the company’s expertise in operations and revenue management. Alternatively, the management company may hold the majority share, providing resources to expand market share and revenue. 

The third model is a joint venture with a hospital system, increasingly popular as hospitals seek to reclaim outpatient surgery revenue from ASCs. Physicians gain access to financial stability and better contracts, though their influence in decision-making depends on ownership distribution. 

A fourth model is a three-way joint venture between physicians, an ASC management company, and a hospital system. Ownership is often evenly split, with each party contributing expertise in clinical care, operational efficiency, and resources. 

The fifth model is hospital-only ownership, where the hospital owns the ASC and contracts physicians for co-management. While physicians do not hold equity, they can still participate in clinical decision-making and receive a share of the revenue, reflecting the hospital’s growing control over the ASC market while maintaining physician involvement.

Benefits of Physician Ownership of ASCs

Physician ownership of ASCs offers several distinct advantages that enhance both patient care and operational efficiency. Physicians are able to schedule procedures more conveniently, assemble specialized teams, select equipment best suited to their techniques, and design facilities tailored to their specific practices. This level of control fosters greater accountability, as physician-owners can focus on a narrow set of procedures within a streamlined environment, enabling more intensive quality control and direct oversight of patient care. 

Patients also benefit from the ability to bring concerns directly to the physician responsible for their treatment, rather than navigating through layers of hospital administration. This direct communication can lead to more personalized care and faster resolution of patient issues. 

Additionally, physician ownership promotes convenience by reducing wait times, improving scheduling reliability, and ensuring that physicians remain closely involved in governance and innovation. 

Physicians in ownership roles can quickly implement changes and enhancements based on patient feedback and clinical outcomes. This flexibility and responsiveness create an environment where both patient satisfaction and operational performance can thrive, reinforcing the benefits of a physician-led model in providing efficient and high-quality care. Furthermore, the ability to make decisions quickly and independently allows physician owners to maintain a sharp focus on their specific medical specialties.

Cautions About Physician Ownership of ASCs

One of the primary concerns is the financial risk associated with owning an ASC. Physicians are responsible for the financial viability of the center, which can be challenging, especially in the early stages when operating costs are high, and patient volumes may be low. Despite the potential for profit, ASCs often face financial pressures, including the costs of equipment, staffing, and regulatory compliance. Physicians must have a strong financial foundation and be prepared for the possibility of initial losses before the center becomes profitable.

Market dynamics and increasing competition from hospital systems and other ASCs pose a threat to the viability of physician-owned centers. As hospitals acquire or partner with ASCs, they often benefit from greater bargaining power with insurers and access to more substantial financial resources. Physician-owned ASCs may struggle to compete with these larger entities, particularly when negotiating reimbursement rates with insurance companies.

Administratively, physician-owned ASCs can also encounter several challenges, particularly in areas like insurance contracting, financial management, and overall business operations. These smaller centers often lack the resources and specialized expertise found in larger hospital systems or ASC management companies, which can hinder their ability to negotiate favorable contracts or efficiently handle complex administrative tasks. For instance, without the infrastructure that hospitals or management companies provide, physicians may struggle with managing billing, collections, and compliance issues.

Ready to Make the Jump? Contact a Healthcare Lawyer With ASC Experience

Physician ownership of an ASC offers a great opportunity for physicians with an entrepreneurial spirit. When structured and managed properly, ASCs allow physicians to deliver high-quality, patient-centered care while participating in the financial upside of the business. Success requires a thorough understanding of legal regulations, financial responsibilities, and operational demands. With the right healthcare law expertise, physicians can thrive as ASC owners. Contact us now.