Great physician owners will boost case volume, help with physician recruitment and contribute to cost-cutting initiatives within the facility, making physician recruitment a top priority for successful centers. Here are five observations on the make-up and characteristics of ASC physicians and physician owners, according to reports by VMG Health, Medscape and HealthCare Appraisers.
1. Gastroenterologists are the most common ASC investors. GI and endoscopy physicians are the most likely to currently invest in a surgery center, according to the Medscape Physician Compensation Report 2011. According to the report, around 40 percent of gastroenterologists currently hold an ownership stake in a surgery center, with 10 percent saying they would consider ASC investment in the future. Gastroenterologists are followed by urologists, 32 percent of whom say they currently invest in a surgery center. Twenty-nine percent of orthopedists and orthopedic surgeons and 27 percent of ophthalmologists hold current ownership in a surgery center. These numbers can prove useful to surgery centers looking to recruit; for example, surgery centers may wish to pursue specialties with a high level of current ownership because of their historic interest in ASCs – or look to other specialties if the level of ownership means the current market is saturated and interested specialists are no longer available.
2. In most ASCs, the top two ASC physicians perform one-third of the cases. In a survey of multi-specialty ASCs across the country, VMG Health found that around 32 percent of cases are performed by the top two physicians at a surgery center, suggesting a high level of case volume rides on the success of several top performers. The top five physicians performed approximately 53 percent of cases at centers, while the top 10 physicians made up 73 percent of case volume. The numbers differed somewhat depending on size, location and revenues; in the southeast United States, fewer physicians were responsible for more cases, while northeast United States surgery centers had fewer cases allocated to their top two physicians.
In facilities with 1-2 ORs most likely surgery centers with fewer physician owners overall — the top two physicians performed almost half (42 percent) of cases, while in facilities with less than two ORs, those physicians performed around one-fifth (22 percent) of cases. Orthopedic-driven ASCs, defined as surgery centers with greater than 50 percent case volume in orthopedics, were only slightly above the national average in terms of the case load of their top physicians, at 34 percent.
4. Management companies prefer 11-15 physician owners in multi-specialty ASCs. When it comes to ASC physician owners, management and development companies prefer neither too few nor too many, according to HealthCare Appraisers' 2010 ASC Valuation Survey (pdf). No companies responded that they preferred 1-5 physician owners, mirroring the VMG Health result that showed a low number of physician owners had a negative impact on ASC value. The most popular number of physician owners for a multi-specialty surgery center was between 11 and 15 – enough physicians to bring a substantial case volume, but not enough to dilute distributions and create a sense of apathy about the center's success. In single-specialty surgery centers, the number of desired physician owners was unsurprisingly lower; the majority of management companies indicated that 6-10 was the perfect range, with 11-15 coming in second, tied with 1-5.
4. Half of radiologists are considering ASC investment. In most physician specialties, 5-15 percent of physicians expressed interest in future ASC investment, according to the Medscape Physician Compensation Report 2011. For example, 12 percent of orthopedists and orthopedic surgeons said they were considering future ASC investment; the number was slightly lower for gastroenterologists (10 percent), general surgeons (7 percent) and ophthalmologists (9 percent). The number decreased for OB/GYN, anesthesiology, dermatology and oncology. Interestingly, radiology showed the highest numbers in terms of future ASC investment. Fifty-four percent of radiologists responded they were considering ASC investment in the future.
5. Physician shortages pose a significant risk to ASCs. According to VMG Health's Value Driver 2011 survey (pdf), 32 percent of management and development companies believe that the growing shortage of physicians poses a significant obstacle to recruiting new surgery center owners and users. This risk outweighed the issue of competition from other surgery centers and hospitals, as well as prohibitive buy-in cost. Respondents also indicated that the increase in physician hospital employment (23 percent) and the expected retirement of high volume physicians (9 percent) pose a risk to case volume growth and retention. The increase in the number of hospital-employed physicians, which has risen substantially in the last 10 years and is predicted to continue, affected around 60 percent of managed ASCs in 2010, and 87 percent of companies believed the trend poses an "increasing threat" to their facilities.
Unsurprisingly, physician shortages also have an impact on implied EBITDA multiples for surgery centers. Sixty percent of responding companies said that a significant number of active physicians nearing retirement age had a "very high" impact on ASC value; a high reliance on few physicians and a low number of physician investors also had a "very high" impact. Companies also said that over the next five years, physician integration with hospital systems is the second largest threat to the ASC industry, following the saturation of the ASC market.
Learn more about HealthCare Appraisers.
Learn more about VMG Health.
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1. Gastroenterologists are the most common ASC investors. GI and endoscopy physicians are the most likely to currently invest in a surgery center, according to the Medscape Physician Compensation Report 2011. According to the report, around 40 percent of gastroenterologists currently hold an ownership stake in a surgery center, with 10 percent saying they would consider ASC investment in the future. Gastroenterologists are followed by urologists, 32 percent of whom say they currently invest in a surgery center. Twenty-nine percent of orthopedists and orthopedic surgeons and 27 percent of ophthalmologists hold current ownership in a surgery center. These numbers can prove useful to surgery centers looking to recruit; for example, surgery centers may wish to pursue specialties with a high level of current ownership because of their historic interest in ASCs – or look to other specialties if the level of ownership means the current market is saturated and interested specialists are no longer available.
2. In most ASCs, the top two ASC physicians perform one-third of the cases. In a survey of multi-specialty ASCs across the country, VMG Health found that around 32 percent of cases are performed by the top two physicians at a surgery center, suggesting a high level of case volume rides on the success of several top performers. The top five physicians performed approximately 53 percent of cases at centers, while the top 10 physicians made up 73 percent of case volume. The numbers differed somewhat depending on size, location and revenues; in the southeast United States, fewer physicians were responsible for more cases, while northeast United States surgery centers had fewer cases allocated to their top two physicians.
In facilities with 1-2 ORs most likely surgery centers with fewer physician owners overall — the top two physicians performed almost half (42 percent) of cases, while in facilities with less than two ORs, those physicians performed around one-fifth (22 percent) of cases. Orthopedic-driven ASCs, defined as surgery centers with greater than 50 percent case volume in orthopedics, were only slightly above the national average in terms of the case load of their top physicians, at 34 percent.
4. Management companies prefer 11-15 physician owners in multi-specialty ASCs. When it comes to ASC physician owners, management and development companies prefer neither too few nor too many, according to HealthCare Appraisers' 2010 ASC Valuation Survey (pdf). No companies responded that they preferred 1-5 physician owners, mirroring the VMG Health result that showed a low number of physician owners had a negative impact on ASC value. The most popular number of physician owners for a multi-specialty surgery center was between 11 and 15 – enough physicians to bring a substantial case volume, but not enough to dilute distributions and create a sense of apathy about the center's success. In single-specialty surgery centers, the number of desired physician owners was unsurprisingly lower; the majority of management companies indicated that 6-10 was the perfect range, with 11-15 coming in second, tied with 1-5.
4. Half of radiologists are considering ASC investment. In most physician specialties, 5-15 percent of physicians expressed interest in future ASC investment, according to the Medscape Physician Compensation Report 2011. For example, 12 percent of orthopedists and orthopedic surgeons said they were considering future ASC investment; the number was slightly lower for gastroenterologists (10 percent), general surgeons (7 percent) and ophthalmologists (9 percent). The number decreased for OB/GYN, anesthesiology, dermatology and oncology. Interestingly, radiology showed the highest numbers in terms of future ASC investment. Fifty-four percent of radiologists responded they were considering ASC investment in the future.
5. Physician shortages pose a significant risk to ASCs. According to VMG Health's Value Driver 2011 survey (pdf), 32 percent of management and development companies believe that the growing shortage of physicians poses a significant obstacle to recruiting new surgery center owners and users. This risk outweighed the issue of competition from other surgery centers and hospitals, as well as prohibitive buy-in cost. Respondents also indicated that the increase in physician hospital employment (23 percent) and the expected retirement of high volume physicians (9 percent) pose a risk to case volume growth and retention. The increase in the number of hospital-employed physicians, which has risen substantially in the last 10 years and is predicted to continue, affected around 60 percent of managed ASCs in 2010, and 87 percent of companies believed the trend poses an "increasing threat" to their facilities.
Unsurprisingly, physician shortages also have an impact on implied EBITDA multiples for surgery centers. Sixty percent of responding companies said that a significant number of active physicians nearing retirement age had a "very high" impact on ASC value; a high reliance on few physicians and a low number of physician investors also had a "very high" impact. Companies also said that over the next five years, physician integration with hospital systems is the second largest threat to the ASC industry, following the saturation of the ASC market.
Learn more about HealthCare Appraisers.
Learn more about VMG Health.
Related Articles About ASC Physicians:
Pharmacists and Physicians Struggle to Cope With Drug Shortages
Senators Propose More Bills to Publish Medicare Claims Data
Case Study: My First Two Years of Surgery Center Ownership With Dr. Daniel Tomes