Rob Carrera, President and CEO of Pinnacle III, discusses his outlook on the de novo ambulatory surgery center market and where we can expect new development in the future.
Q: Are there still opportunities out there for physicians to develop de novo surgery centers?
Rob Carrera: In the past 12 months, we have experienced an uptick of groups interested in new surgery center development. Interest is coming from hospital/physician joint ventures as well as physician-only centers; a trend we anticipate going forward. A lot of these new centers are focusing on bringing higher acuity cases, traditionally performed as inpatient cases, into the outpatient arena. Orthopedic, spine and higher acuity general surgery cases are being driven into these ASCs.
Q: Is this a widespread trend or are there certain markets that are more likely to foster de novo ASC development?
RC: We've seen a lot of different scenarios. Physicians who were participating in multispecialty ASCs are forming larger physician groups and seeking opportunities to invest in their own single-specialty centers. Single specialty joint ventures are resurfacing. These trends are occurring in both larger markets and smaller markets.
Q: Why are we seeing an uptick in de novo projects? What factors make it possible to develop these new centers?
RC: I think a lot of it is due to financing. In the past year, banks and lending institutions have been making money available for these types of projects. As a result, some of the physician groups and hospitals have decided it's a good time to make these types of investments. For physician/hospital joint ventures, hospitals are realizing the value of aligning with physicians and developing relationships with groups they haven't had relationships with in the past. Hospitals are looking to form relationships with surgeons who were in another hospital's sphere of influence and new systems are developing relationships with physician groups.
A significant amount of hospital expansion has occurred in recent years and the next phase of their strategic planning is to look into joint ventures in areas hospitals may not have previously reached geographically. They might have a location in a new part of the city that allows them to work with a physician group who would have been out of their range in the past.
For physician-only centers, we are seeing physicians exerting their influence by doing it on their own. In smaller markets, physicians may have thought about developing a center for a long time and are now getting around to solidifying that as part of their practice.
Q: What advantages are there for physicians partnering with hospitals on joint venture ASCs?
RC: There are a lot of advantages for physicians. ASCs will have access to patients they didn't have access to in the past if the hospital has an exclusive relationship with a payor or their own managed care plan. There are always capital needs for ASCs, and a hospital partnership can be advantageous for the ASC from that standpoint. Additionally, if there is a great geographic location for the ASC but it falls within an area around the hospital, a joint venture allows physicians the opportunity to open an ASC within hospital-controlled real estate.
Q: What do surgeons need to consider when deciding to open a new surgery center?
RC: They need to look at where there is a need for their services. Some markets contain an abundance of ASCs and adding another one in that area may not make sense. Ensure a feasibility study is undertaken to evaluate the proposed center to determine whether an ASC makes sense from a business standpoint. We've seen too many development projects based on a "build it and they will come" mindset which end up failing all too often.
More Articles on Surgery Centers:
5 Important Scheduler Qualities to Improve ASC Scheduling
7 Revenue Cycle Enhancements for ASCs
25 Statistics on Medicare Reimbursements in ASCs
Q: Are there still opportunities out there for physicians to develop de novo surgery centers?
Rob Carrera: In the past 12 months, we have experienced an uptick of groups interested in new surgery center development. Interest is coming from hospital/physician joint ventures as well as physician-only centers; a trend we anticipate going forward. A lot of these new centers are focusing on bringing higher acuity cases, traditionally performed as inpatient cases, into the outpatient arena. Orthopedic, spine and higher acuity general surgery cases are being driven into these ASCs.
Q: Is this a widespread trend or are there certain markets that are more likely to foster de novo ASC development?
RC: We've seen a lot of different scenarios. Physicians who were participating in multispecialty ASCs are forming larger physician groups and seeking opportunities to invest in their own single-specialty centers. Single specialty joint ventures are resurfacing. These trends are occurring in both larger markets and smaller markets.
Q: Why are we seeing an uptick in de novo projects? What factors make it possible to develop these new centers?
RC: I think a lot of it is due to financing. In the past year, banks and lending institutions have been making money available for these types of projects. As a result, some of the physician groups and hospitals have decided it's a good time to make these types of investments. For physician/hospital joint ventures, hospitals are realizing the value of aligning with physicians and developing relationships with groups they haven't had relationships with in the past. Hospitals are looking to form relationships with surgeons who were in another hospital's sphere of influence and new systems are developing relationships with physician groups.
A significant amount of hospital expansion has occurred in recent years and the next phase of their strategic planning is to look into joint ventures in areas hospitals may not have previously reached geographically. They might have a location in a new part of the city that allows them to work with a physician group who would have been out of their range in the past.
For physician-only centers, we are seeing physicians exerting their influence by doing it on their own. In smaller markets, physicians may have thought about developing a center for a long time and are now getting around to solidifying that as part of their practice.
Q: What advantages are there for physicians partnering with hospitals on joint venture ASCs?
RC: There are a lot of advantages for physicians. ASCs will have access to patients they didn't have access to in the past if the hospital has an exclusive relationship with a payor or their own managed care plan. There are always capital needs for ASCs, and a hospital partnership can be advantageous for the ASC from that standpoint. Additionally, if there is a great geographic location for the ASC but it falls within an area around the hospital, a joint venture allows physicians the opportunity to open an ASC within hospital-controlled real estate.
Q: What do surgeons need to consider when deciding to open a new surgery center?
RC: They need to look at where there is a need for their services. Some markets contain an abundance of ASCs and adding another one in that area may not make sense. Ensure a feasibility study is undertaken to evaluate the proposed center to determine whether an ASC makes sense from a business standpoint. We've seen too many development projects based on a "build it and they will come" mindset which end up failing all too often.
More Articles on Surgery Centers:
5 Important Scheduler Qualities to Improve ASC Scheduling
7 Revenue Cycle Enhancements for ASCs
25 Statistics on Medicare Reimbursements in ASCs