Operating independently is becoming increasingly difficult, and many leaders feel that having strong leadership and management is the key to maintaining viability.
Jim Freund, managing partner for Physician Transaction Advisors, joined Becker's to discuss the secret to long-term success for ASCs.
Editor's note: Responses were edited lightly for clarity and length.
Question: What is the key to success for ASCs?
Jim Freund: Number one is strong leadership from the physicians. We've completed about 300 transactions, but we've probably worked with three times that many groups over the years. I've learned that strong leadership is at the top of the list. When you're putting together a great team, and that includes physician partners, physicians who may practice there, your administrative staff, your clinical staff and your business staff, all of that is what makes for a successful center.
Q: What are the dangers of not having this strong leadership?
JF: We hear from a lot of physicians that they are considering a strategic partnership because they realize at some point they're gonna get older and need to transition their facility. For facilities that don't properly plan for the future, that's when you hear about them closing or being challenged moving forward. That's typically because they don't have a transition plan. They either haven't partnered, they haven't brought on additional physicians or they haven't been willing to create a larger organization. That's all a lack of planning and a lack of ability to transition. Oftentimes, they're waiting until it's too late to bring on a partner to help them grow, recruit or improve our contracts that bring scale.
No strong leadership often means no adequate planning, preparation, ability to transition, etc. As physicians approach retirement is when we most often see this search for partners or solutions, but oftentimes it needs to happen five to 10 years earlier. That's the biggest challenge we see. Also, obviously, costs are high and running a practice is financially more challenging today than it was 20 years ago or even 10 years ago. Everything is more expensive — personnel, staff, supplies, etc. If you don't have the scale and the ability to effectively manage all that, then it becomes a bigger challenge for independent facilities.