As an ASC owner, you spend countless hours nurturing the business, growing it into a thriving enterprise that takes optimal care of your patients. So, when the time comes to consider relinquishing the reins of the practice, an ASC owner may feel somewhat overwhelmed.

Yet, enabling a smooth transition to new leadership is one of the most important tasks a successful ASC owner must manage. In this article, we’ll review some of the key aspects of succession planning in ASCs, from involving partners to transparency in communication. But first, let’s look at a core stumbling block.

Letting Go

Perhaps the most fundamental element in succession planning is simply that the ASC owner has to be willing to turn the practice over to new owners.

“Sometimes the reason a lot of ophthalmologists don’t have a succession plan is because they really haven’t thought about and aren’t ready, in many cases, to give up some of that ownership,” says Albert Castillo, CEO of San Antonio Eye Center. When retirement looms, it can be difficult for physicians to let go of patients, and at the same time, for patients to let go of their physician, notes Kundandeep Nagi, MD, glaucoma and anterior segment surgeon and managing partner at San Antonio Eye Center.

Mr. Castillo and Dr. Nagi sometimes consult with practices that seek their counsel but have no succession plan. When it comes to planning for the future, “that’s where a lot of people just don’t do it,” says Dr. Nagi. “Their view may be, ‘Well, we don’t have to worry about it now. Let’s just keep on rolling.’ But at some point, it’s going to catch up to you,” says Dr. Nagi.

Creating a Plan

In crafting a succession plan, one of the first steps is thinking carefully about the future of the practice.

Mr. Castillo’s story is illustrative. He was brought into San Antonio Eye Center in 2005 with the goal of helping the founder sell the practice, which had opened in 1975. At that time, the staff of the practice consisted of the founder, his partner, 2 ophthalmologists and an optometrist. The practice had 3 clinic locations and a 1-room ASC, which was being used perhaps a few half-days a week, according to Mr. Castillo. There was no succession plan.

“The first thought was, what do we want the practice to be, and in what direction do we want to go?” says Mr. Castillo. Early on, the owner and Mr. Castillo decided that “in the succession planning and transition of San Antonio Eye Center, we wanted to build something that would be long lasting, longer lasting than the original founder, longer lasting than myself.”

Having resided in San Antonio since 2000, Mr. Castillo knew that there were a few groups larger than the practice, but no practice was all-encompassing. “There wasn’t a large private practice that had every specialty. So, we agreed that we wanted to work on building the practice and be that large practice that had every specialty of ophthalmology.”
In 2009, when the practice was sold to 3 of the physicians employed by the practice, it had 14 physicians. Today, outside of the military and the University of Texas at San Antonio, the practice is the largest in the area, with more than 30 providers, 1 ASC, and 12 clinic and office locations, with 3 more on the horizon.

Paths to Partnership

When first sold, the practice gave special attention to bringing on new partners. Of note, the practice established a phased buy-in approach, where partnership would occur in stages over time. All partners had equal shares.
“There was a dollar buy-in plus time. The time component for us was important, because it wasn’t necessarily just about the dollar buy-in,” says Mr. Castillo. The time component allows partners to make sure that they are comfortable with the new people that are being offered partnership, according to Mr. Castillo.

By combining dollars and time, “you get past the honeymoon period, and you get to really start to see who people are and make sure they’re good fits, and they’re going to keep the same philosophy and culture and the mission, vision and values,” says Mr. Castillo.

Crucial to growing the practice, according to Mr. Castillo, was that as new partners were brought in, the founder would turn over his patients to the younger doctors. “He would definitely work to build up each individual physician,” says
Mr. Castillo. “It wasn’t a competition.”

The pathway to partnership was also an important element in succession planning for Dallas/Fort Worth-based Key-Whitman Eye Center. “Make sure, before you close, that you know what the partnership track is for new people coming in,” says Jeffrey Whitman, MD, chief of surgery. Key-Whitman is a cataract, glaucoma and oculoplastics practice.

Dr. Whitman avers that his practice wants to bring on the best, most industrious surgeons coming out of residency and fellowships—the kind of physician who isn’t satisfied with doing 200 cataract surgeries a year, but wants to do 1,000 or 2,000 per year, notes Dr. Whitman. “To get that kind of person, you need to make sure that you have something they want. Generally, those kinds of good surgeons, people that want to work hard, would like a chance to buy in.”

When the Practice is Too Big for One Partner

As he neared age 70 and wanted to begin to transition the practice, Dr. Whitman realized that the practice was too large for any one partner to purchase. With the consent of his partners, he began searching for an outside buyer. “I wasn’t going to engage in this unless I had their okay,” says Dr. Whitman.

In January 2024, after a process that took a year and a half, Dr. Whitman, as majority owner, and his partners sold 70% of 2 ASCs and some clinics to Tennessee-based Surgery Partners.

Dr. Whitman agreed to continue working for 5 years after the sale, with the option to work part time after that. Now, he refers his surgeries to some of the other surgeons as he does somewhat less.

How to Pick a Successor

Also key to a succession, as you might expect, is identifying a successor.

“Before we ever started looking, I had already identified one of the partners as somebody to take over my main role at our headquarters office. And so even if we hadn't done this deal, if you will, I'd already identified someone,” says Dr. Whitman. “I think the important thing, in any succession plan, is first of all, somebody has to be capable of doing what you did.”

Transparency Eases the Way

Transparency was also an element of a smooth succession at Key-Whitman. As the negotiations proceeded, 
Dr. Whitman would send an email to staff to inform them of what was happening. He sent 2 emails during the negotiation process, and one as the deal was nearing completion. “By the time it was done, everybody knew what was going on,” Dr. Whitman says.

Transparency also plays a role in decision-making at San Antonio Eye Center. An elected executive committee makes major decisions. However, “when we look at making a significant change in the surgery center, or significant change in ownership or real estate or the clinic, we include all physicians,” not just the executive committee, says 
Mr. Castillo.

As managing partner, Dr. Nagi meets often with Mr. Castillo to review operational issues. His goal, Dr. Nagi notes, is to work with Mr. Castillo to move the practice in the direction that the owners have decided upon, so that on a day-to-day level they can focus on taking care of patients.

Eschewing PE

Both Key-Whitman and San Antonio Eye Center decided against pursuing a succession plan that involved private equity (PE). At Key-Whitman, one of Dr. Whitman’s partners had previously had a poor experience with PE, in that the PE company was controlling, and got rid of a lot of good staff.

Consistency was also a consideration. While acknowledging that there is good PE, its model is to build up a practice and then sell it at a profit, notes Dr. Whitman. “We didn’t want that high likelihood that every 2 or 3 years, there would be another PE company that would now be in charge of your practice.”

San Antonio also decided against involving PE. As the second and third generations of doctors have bought in, “everybody agreed we want to remain private because they want to have the ability to practice how they want to practice, control what the practice does. We basically do everything that private equity does, but we just self-fund. We do it on our own,” according to Mr. Castillo.

Eyes Always on the Goal

While changing the ownership of a successful ASC may never be entirely easy, having a succession plan can help ease the transition. Dr. Nagi sounds a note that perhaps is good to keep in mind, not only for large practices but for any practice: “The goals of the practice always overshadow the goals of the individual,” he says. OASC