At the Becker's Hospital Review Annual Meeting in Chicago on May 10, Ambulatory Surgery Centers of America CEO Luke Lambert presented trends and best practices for hospital acquisitions of ambulatory surgery centers.
Why buy an ASC? "Many systems I speak to, they realize they must be more cost efficient," Mr. Lambert said. He has seen hospitals add substantial capacity to their surgery departments at lower cost by forming alignments with ASCs.
Investment structures. Hospitals can become sole owners of ASCs, but many investors are reticent to make a full sale, Mr. Lambert said. He's seen more hospitals buying a 51 percent share in an ASC for a controlling interest, but some hybrid models have also begun popping up. One such model involves hospitals forming a joint venture in which they have a 51 percent interest, with the joint venture then purchasing a 51 percent interest in the ASC. That gives the hospital a 26 percent interest in the ASC, but it has a controlling interest in the ASC's majority shareholder, giving it substantial authority for a relatively lower investment.
Benefits and concerns. ASC sellers may sell to hospitals seeking liquidity, improved reimbursement or more referrals, This can be aided by the potential for co-management governance structures. At the same time, sellers fear losing control and the implications that may have on clinical quality and financial health. Hospitals have concerns of their own, including that the ASC will "cannibalize" the hospital's own volume, Mr. Lambert said, and that physicians may defect to competitors shortly after the purchase.
New risk-sharing models with payors make ASCs an important part of hospitals' strategies, Mr. Lambert said, because they can treat patients at a much lower cost in the ambulatory setting.
Co-management. These structures can help alleviate physicians' fears of a sale to a hospital by maintaining their sense of control. Co-management helps perpetuate the positive and efficient practices of the center, Mr. Lambert said. All the same, most physicians don't expect the co-management structure to be around much more than five years after the transaction.
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30 Recipients of Becker's Healthcare 2013 Leadership Awards
Why buy an ASC? "Many systems I speak to, they realize they must be more cost efficient," Mr. Lambert said. He has seen hospitals add substantial capacity to their surgery departments at lower cost by forming alignments with ASCs.
Investment structures. Hospitals can become sole owners of ASCs, but many investors are reticent to make a full sale, Mr. Lambert said. He's seen more hospitals buying a 51 percent share in an ASC for a controlling interest, but some hybrid models have also begun popping up. One such model involves hospitals forming a joint venture in which they have a 51 percent interest, with the joint venture then purchasing a 51 percent interest in the ASC. That gives the hospital a 26 percent interest in the ASC, but it has a controlling interest in the ASC's majority shareholder, giving it substantial authority for a relatively lower investment.
Benefits and concerns. ASC sellers may sell to hospitals seeking liquidity, improved reimbursement or more referrals, This can be aided by the potential for co-management governance structures. At the same time, sellers fear losing control and the implications that may have on clinical quality and financial health. Hospitals have concerns of their own, including that the ASC will "cannibalize" the hospital's own volume, Mr. Lambert said, and that physicians may defect to competitors shortly after the purchase.
New risk-sharing models with payors make ASCs an important part of hospitals' strategies, Mr. Lambert said, because they can treat patients at a much lower cost in the ambulatory setting.
Co-management. These structures can help alleviate physicians' fears of a sale to a hospital by maintaining their sense of control. Co-management helps perpetuate the positive and efficient practices of the center, Mr. Lambert said. All the same, most physicians don't expect the co-management structure to be around much more than five years after the transaction.
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