A recently formed ASC development company has a new model for consolidation — a network of independent surgery centers that puts power directly in the hands of physicians.
Longtime ASC owner-operators, Mark Quigley and John Webb, along with ASC developer Woodrow Moore and analyst Arjun Gangakhedkar created Ker Leader Medical earlier this year. Ker Medical's ownership-focused model is a response to ASC physician investor concerns and current market forces, Mr. Moore said in an interview with Becker's.
Here are five ways Ker Medical differs from other models, according to Mr. Moore:
Putting physicians in leadership positions
Ker Medical's network of independent ASCs aims to be more kin to a "farming coop" than a Wall Street-backed corporation, Mr. Moore said, allowing for local physician leadership to prosper.
"We feel that physician leadership leads to better quality healthcare," Mr Moore said. "Given independent ASC focus on physician governance and leadership, we feel the opportunity to stay independent as a physician is also integrally tied to their independent ASC and other ancillary services which fill out the offering for patients’ needs."
Incorporating an exit strategy
The ASC industry is slowly consolidating as economies of scale become harder to reach. With this in mind, Ker Medical's model provides physicians with the option of an exit strategy.
This exit strategy is particularly attractive for physician owners who "do not want to involve large intrusive institutional management, equity or health system partners" in the partnership phase and who may seek an exit strategy.
"Operationally aligning then bundling multiple ASCs upon exit has increased multiples for each ASC aligned as opposed to a single ASC’s exit," Mr. Moore told Becker's. "We assist ASC owners throughout that continuum."
Offering employee ownership
The company also offers the potential of employee ownership, including employee stock option plans, depending on the physician owners' preference.
This could allow for production incentives that are "tied to meeting key performance indicators, both clinical and operational."
With ASCs across the country struggling to retain staff, this could be a huge win for recruitment. Clinical and clerical personnel are already drawn to the ASC setting for its efficiencies, and the option for ownership could enhance the appeal.
Creating an internal acquisition model
With more than 77% of U.S. physicians now employed by hospitals, health systems or corporate entities, there's not many independent physicians left to take over the ASCs.
Ker Medical's model also accounts for generational changes of the aging physician population by offering an acquisition and transition model to the new younger generation of physician leaders.
"The future of medicine should not be doctors being directed to the benefit of the hospitals, insurance companies and Wall Street firms, rather we offer the opportunity for physicians to build long term value for their patients and communities independently," Mr. Moore said.
The model also could offer minority ownership pieces, making buy-in easier for new physicians to help for recruitment and succession planning.
Hyperfocusing on independent ASCs
Ker Medical focuses on the needs of independent ASCs from concept to accreditation, allowing physician owners to gain leverage without sacrificing autonomy.
"Such an alignment of independent ASCs creates scale and size to impact negotiations with payers, vendors and prospective buyers who may eventually emerge during an ASCs lifephase,
Mr. Moore said. "Because of the increased scale of our unique business model we can implement debt costs at institutional pricing."