Becker's Spine Review

47 ASC The issue dividing ASC owners By Laura Dyrda A SC growth and expansion can be an uphill battle for inde- pendent centers. A controversial trend makes it easier for some and harder for others. Private equity isn't new to the ASC industry, but surgery centers are becoming an increasingly attractive investment for firms that see surgery centers as the winners of the movement toward high-quality, low-cost healthcare. ASC owners also see bigger opportunities by taking on private equity partners as a means for explosive growth, especially in ophthalmology, orthopedics and gastroenterology. "ere's going to be consolidation on the PE side, and I think there's going to be some winners and some losers on investments made in the PE space in general across healthcare," said Douglas Wisor, MD, CEO and president of National Spine & Pain Centers in Rockville, Md. "I think that will lead to some consolidation or a lot less overall healthcare investors than there are today." e increased cost of running an ASC, regulatory burden and uncer- tainty amid the pandemic has more physician owners considering taking on the investment in exchange for losing some autonomy. "Many gastroenterology practices are now le considering the pros and cons of a private equity acquisition," said Rami Abbass, MD, a gastroenterologist at University Hospitals in Mentor, Ohio. "An upfront acquisition payment must be weighed against the loss of autonomy and a potential longer-term, reduced professional income level. Some providers worry about medical decisions becoming more financially driven or changes in patient perceptions of the practice." ere were at least 13 private equity companies buying new cen- ters and specialty practices from Jan. 1-24, and the deals will likely continue to heat up throughout the year. PE funding is a quick way to inject cash into the physician group and ASC, and then it can grow to acquire other groups. "Over the last decade, we've seen an explosion of private equity investors in ASCs with mixed results," said Melissa Hermanson, RN, administrator of Ambulatory Care Center in Vineland, N.J. "Health- care, especially the ASC model, is enticing for short-term investors whose primary motivation is profit. Private equity is attractive to facility owners, too, as they generally offer more than other potential partners. From a purely economic business standpoint, it seems like a win-win; however, there are many other considerations that need to be taken into account in healthcare — primarily, that patient safety and high-quality care should be at the forefront of every decision." For some ASC owners who prefer to operate a small, independent business, the private equity boom is bad news. "e biggest concern is loss of autonomy for the physician inves- tors," said Caryn Fink, RN, director of ASC clinical operations at IU Health in Indianapolis. "e small independent groups won't have a chance to develop their own centers in bigger markets. Although, if they already have a facility, a private investor may pay top dollar." e number of physicians employed by corporate entities, includ- ing private equity, increased 3 percent from 2020 to 2021 to 20 per- cent of all physicians, according to Avalere. In the last six months of 2020, as physician groups dealt with the height of the COVID-19 pandemic, 11,300 physicians became employed by corporate enti- ties. e private equity investment for some offers a lifeline to stay in business and an alternative to hospital employment, but it stifles competition for others. "Private equity investment is a double-edged sword," said Craig Gold, administrator of Virginia Center for Eye Surgery in Virginia Beach. "On one side, it can provide much-needed capital investment and fi- nancial stability into an ASC; on the other, it can create a profit-hun- gry bureaucracy, which can detract from the clinical autonomy, which comes from a traditional physician-owner model. e future of current private equity and venture capital investment trends will depend on which side is sharper." n 5 states primed for an orthopedic ASC boom By Laura Dyrda There is a huge opportunity for orthopedic ASCs in five states over the next few years. West Virginia, Maine, Massachusetts, New York and North Carolina are among the states with the fewest orthope- dic ASCs per capita, beat out only by Vermont, where regulations make it extremely difficult to develop surgery centers. These states have the fewest orthopedic ASCs, but are primed for growth for the following reasons: 1. Previously hospital-based orthopedic surgeons took cases to surgery centers during the pandemic when hospitals halted nonurgent surgeries. Now those surgeons are comfortable with outpatient surgeries, even outpatient total joint replacements, and want to keep taking patients to ASCs. 2. State certificate of need regulations in North Carolina and West Virginia, and payer policies in New York have become more favorable to ASCs in the last year. It is becoming easier in all three places for independent physicians to open surgery centers and increase case volume. 3. The number of people with arthritis and in need of a joint replacement will increase in the next decade. There are already around 1 million hip and knee replacements performed in the U.S. annually, and by 2030 the number of total knee replacements is expected to hit 3.5 million per year, according to the American Association of Hip and Knee Surgeons. 4. Two of these states — New York and Massachusetts — are among the 15 highest-paying states for orthopedic surgeons. In New York, orthopedic surgeons earn an average annual salary of $475,933, and they earn an average annual salary of $463,856 in Massachusetts, according to the World Scholarship Forum. 5. Economic growth is also an important factor for potential growth. North Carolina, Massachusetts and Maine were among the top 20 states for economic growth, according to U.S. News and World Report. n

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