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Choosing a ASC development/management company

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  • Choosing a ASC development/management company

    Anyone have experience with working with an ASC development company to build and run an ASC? A couple of partners and I are looking to build a spine/total joints capable ASC and have been talking to a few groups that develop and run surgery centers. There are some variables at play. One is the amount of equity the company takes and then there are the management fees. I am trying to get an idea of what the best fit is for us both in terms of getting this thing built, running it, getting adequate contracts and what any future liquidity event would look like. I have read some books on the topic, but would like to hear any experiences any of the docs here have had. What are some of the good, bad and ugly of picking a partner to develop with?

  • #2
    We went with SCD. They take a minority position and help with a lot of the basics. They have been very helpful and the center was successful very quickly due to a dedicated group of surgeons. There model is staying mostly OON, so don't expect contracts. At least that's how it has been in our area. I think there position is 36 or 38%. Once you get established and running, don't expect a ton from them in terms of getting contracts, negotiations, etc. But they don't charge a management fee, unlike some others.
    Outpatient joints have been really good for us. Spine hasn't really been much of a benefit. They cover implants, but not a lot of home runs.

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    • #3
      Yeah that sounds like one of the alternatives we are looking at. Their argument is that management fees basically guarantees a profit for the management company, whereas equity promotes more skin in the game. I’m curious what you mean about once things are up and running, there is not much help on contracts… isn’t it in their best interest to keep things going in terms of favorable contracting? This seems to have been the main problem with some centers in our area.
      OON is really on the outs in my region and not seen as a viable solution going forward

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      • #4
        Originally posted by DrRab View Post
        Yeah that sounds like one of the alternatives we are looking at. Their argument is that management fees basically guarantees a profit for the management company, whereas equity promotes more skin in the game. I’m curious what you mean about once things are up and running, there is not much help on contracts… isn’t it in their best interest to keep things going in terms of favorable contracting? This seems to have been the main problem with some centers in our area.
        OON is really on the outs in my region and not seen as a viable solution going forward
        every market is different and ours is unique (as is every market i suppose). We have been unable to get in network with any providers, even the ones that are paying half of medicare in our current model. SCD as a partner hasn't been able to help at all with that. In fact, they have recently sold many of their centers in the area.

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        • #5
          Regarding OON model, does the state have an impact due to the regulatory environment?
          Will the No Surprised Act effective 1/1/22 have any impact?

          https://finance.yahoo.com/news/surpr....tsrc=fin-srch

          Might change the state specific insurance coverage landscape rather than regional.

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