Becker's ASC Review

19 TRANSACTIONS ASC leaders warn of cracks in the consolidation model By Patsy Newitt A s ASCs become increasingly enmeshed in healthcare consolidation trends, leaders are voicing growing concern about the sustainability and consequences of these transactions. Baltimore-based orthopedic surgeon Marc Greenberg told Becker's that he is concerned about the endgame of ASC consolidation. "What is the endgame of private equity? At some point, someone needs to be bigger than a couple billion-dollar company," he said. "You run out of surgeons who can be profitable in an ASC — let alone finding someone who can purchase 300, 400, 500 ASCs and standardize that." Across the country, ASC operators are grappling with this existential dilemma. Here are five transactional threats facing ASCs: 1. Private equity saturation The typical private equity playbook involves acquiring ASCs, consolidating them into platforms, and exiting within five to seven years, Dr. Greenberg said. But as larger firms exhaust their acquisition targets, questions emerge about the long-term feasibility of this strategy. "Private equity is buying them up, but they need to sell them to someone… Does it just become some big real estate investment trust, basically?" he asked. This could lead to a scenario where ASCs are held by passive entities prioritizing yield over clinical innovation, leaving physicians with diminished influence and uncertain futures. 2. Barriers to physician ownership Ownership models are evolving rapidly, and younger physicians are increasingly sidelined by high buy-in costs and waning interest in the burdens of business ownership, Shobhit Minhas, MD, orthopedic surgeon at Fox Valley Orthopedics in Geneva, Ill., told Becker's. "Buy-ins can range from half a million to a million and a half dollars," he said. "Very few younger physicians have that kind of money right out of medical school." This financial barrier threatens long-term clinical alignment and leaves ASCs reliant on temporary staffing arrangements or employed models that may not foster the same investment in outcomes and efficiency. 3. The limits of scale While private equity and hospital systems are building large-scale ASC networks, the fragmented and surgeon- dependent nature of outpatient surgery presents operational limits, Dr. Greenberg said. Standardizing procedures and maintaining profitability across hundreds of centers is difficult when local markets and surgeon practices vary widely. Moreover, as deals scale up, smaller or rural ASCs may be overlooked, exacerbating regional disparities in surgical care access. 4. Erosion of physician autonomy Ownership changes often dilute physicians' voices in decision-making. As consolidation accelerates, many physician partners report a shift toward administrative control, especially when hospitals or corporate entities become majority stakeholders. "There are several modes of consolidation, and ultimately nearly all of them result in a loss of physician autonomy to varying extents," Joseph Lamplot, MD, orthopedic surgeon at Endeavor Health Orthopaedic & Spine Institute, told Becker's. "As such, the desire for autonomy conflicts with physician consolidation." Surveys support this. Around 61% of employed physicians said they have moderate or no autonomy to make referrals outside of their practice or ownership system, and 47% said they adjust patients' treatment options to reduce costs based on practice policies or incentives, according to a survey from NORC at the University of Chicago. 5. The danger of physician misalignment No matter how enticing the payout, private equity can't buy physician alignment, and many ASC leaders see that as the linchpin of a successful transaction. During a panel at the 22nd Annual Spine, Orthopedic and Pain Management-Driven ASC + The Future of Spine Conference in Chicago, Andrew Carlson, director of growth and strategy at Growth Orthopedics, issued a clear warning: "If there's no physician alignment in the group, a strategic partnership won't fix that." He emphasized that alignment must be achieved well before any letter of intent is signed, with attention paid not just to clinical philosophies, but to equity distribution, generational dynamics and real estate stakes. Deals structured to benefit only physicians nearing retirement, he cautioned, risk alienating younger partners who lack buy-in or ownership parity. Misalignment, Mr. Carlson added, can become "extremely messy post-deal," particularly when practice and real estate transactions are lumped together or poorly sequenced. n

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