Ask THE CAREER COACH

Choosing Between Two Practices: The ASC Factor

Q: I’ve received employment offers from two practices. I’m having trouble making my decision because both offers are attractive. However, one practice’s physicians own an ambulatory surgical center (ASC) and the other practice’s physicians do not. How important is the ASC for me today and in the future?

A: With everything else being equal between the two practices, it would be better for you to join the one that has its own ASC.
A practice with its own ASC has a competitive advantage. Compared to doctors who perform procedures in a hospital setting, physician-owners of an ASC have better control of their surgical schedules, and this leads to increased efficiency. It’s easier for them to provide cost-effective, high-quality patient care. They can add the facility-derived fees to their revenue stream, and they’re in a stronger position to negotiate contracts with non-Medicare third-party payers. An ophthalmology-only ASC with reasonable volume has the potential to produce a 25% to 40% profit for its owners.
Obviously, you won’t have an ownership stake in the ASC right away, but having access to it can help you build your surgical volume. In 2006, approximately 70% of all cataract surgeries in the United States were performed in an ambulatory setting, according to Stephen C. Sheppard, CPA, COE. That means most of the established surgeons you’ll be competing with already have access to an ASC. If you have access, too, you’ll be on a more level playing field.

An ophthalmology-only ASC with reasonable volume has the potential to produce a 25% to 40% profit for its owners.

Consider Your Ultimate Goal
Looking at the long term, if you do well as a practice employee, eventually you’ll have the opportunity to become a partner and purchase your own stake in the ASC. Furthermore, if a practice’s owners are recruiting you as a clinic partner, typically they will sell you a stake in their ASC at a lower multiple than if they were selling a stake to a nonpartner, such as a corporation.
Now is the time to decide if your ultimate goal is to buy into the ASC. You have several factors to consider. First, you should have an idea of your risk tolerance. When the buy-in opportunity arises, will you be willing to make the investment? Will you be eager to add to your current debt or will you be uncomfortable with in-creased debt?
Also, consider if you’re interested in participating in the ASC as a manager, because you may be asked to buy in as a manager. If you’re not interested in the management side of things, it doesn’t mean you should avoid buying in, but it does mean you’ll have to find help to fulfill the management responsibilities.

Ask Questions
As part of your interviewing process, learn everything you can about the ASC. What is its surgical volume? How profitable is it? You wouldn’t want to invest in a poor performer. In addition, be sure the owners consider your buying in as a realistic future possibility.
If one of the practices you’re considering has a stake in a multispecialty ASC, rather than an ophthalmology-only facility, it’s still a potential advantage over no ASC at all. An eventual buy-in to a multispecialty facility could represent a lower financial risk for you because the number of owners is likely to be larger. Ultimately, your decision to buy in should hinge on the profitability of the ASC.

Growth Will Continue
Ophthalmic procedures will continue to migrate to outpatient facilities. Since the early 1990s, more eye surgeries have been performed in outpatient settings than in hospitals, and each year the outpatient percentage grows, according to Sheppard. Aligning yourself now with a practice that’s already taking advantage of the ASC opportunity is one of the best moves you can make toward securing your future success.