Ker Leader Medical, a newly established ASC development company, is committed to preserving the autonomy of physicians and ASC leadership.
Central to its model is bypassing private equity, John Webb, one of Ker's founders and president of MMC Capital Markets, told Becker's.
Mr. Webb, a seasoned ASC owner-operator and banker, said a driving force behind the group's formation came from witnessing the effect of what he refers to as "poison equity." He observed that ASC leaders who were not adequately represented lost control of their centers when they attempted to sell to private equity.
"I saw what private equity was doing for physicians and ASC principals who wanted an exit strategy, and I felt compelled to act," he said. "I kept hearing that once equity transactions went through, the original stakeholders lost control, and their key employees weren't taken care of."
Private equity has taken a huge interest in ASCs in the last decade. There were 95 private equity deals involving outpatient centers in 2023, the most of any healthcare subsector, according to the Private Equity Stakeholder Project.
Along with Mr. Webb, longtime ASC owner-operator Mark Quigley, ASC developer Woodrow Moore and analyst Arjun Gangakhedkar created Ker Leader Medical earlier in 2024.
Ker Medical was formed to "level the playing field" and offer physicians and investors a way to pull equity out of an ASC while keeping control, he said. By bypassing private equity and going directly to investment groups, ASCs are given more control over financial operations.
"Bypassing private equity is like shopping at Costco; we eliminate the middlemen and deal directly with financial partners who want long-term investments," he said. "Why can Costco have prices lower? Because they buy in such volume. We do the same thing with money. Money is our inventory."
This approach works best when the ASC has at least $10 million in earnings before interest, taxes, depreciation and amortization, Mr. Webb added.
Ker's ASC model involves integrating four or five ASCs under similar management with a board made up of the principals. The board handles operations, but physicians can retain their autonomy,
The new model comes as private equity has been the subject of scrutiny by many parties. According to a survey in MedPage Today, 60% of physicians viewed private equity investment in healthcare negatively.
Similarly, a recent Becker's LinkedIn poll revealed that 50% of the 778 respondents feel that private equity ownership is having a "mostly negative" impact on hospitals. In addition, a 2023 study published in JAMA found that patients are "more likely to fall, acquire new infections, or experience other forms of harm during their hospital stay after it is acquired by a private equity firm."
"Our model keeps management in place, lowers costs and offers flexibility," Mr. Webb said. "It's like a co-op that allows groups to scale costs and attract talent while maintaining control over medical decisions. Private equity often doesn't allow that, but we do."