This article appears in the March 2021 issue of the
PE GI JOURNAL
The advantages and disadvantages of single- and multi-specialty ASC models
Year over year, graduating GI fellows must choose between practicing independently or hospital employment. More questions arise for those fellows who choose to practice with an independent group and seek ownership in their center. With the continued popularity of ambulatory surgery centers (ASCs), this question has never been more relevant. Should I pursue a partnership in a single- or multi-specialty ASC model? Here are some of the considerations to weigh when answering this question.
If you are buying into an existing center, the initial investment required is important. Additionally, the overall return on investment is crucial. The capital needed to invest in a relatively new center operating only a few years may be more attractive for a younger physician who is just starting their career. The financial return and distributions should increase over time as the center continues to grow and mature. On the flip side, the purchase price to buy into an established center that has been operational for several years can be expensive. Still, the financial return should be proportionally attractive.
Suppose you join a group that is building a new center. In that case, the initial investment is also one of the first components to consider. It is relatively low compared to buying into an established center. In a multi-specialty ASC, there will likely be more physician partners to divide costs between,. This may be a good thing. However, it may disadvantage for the partners of a specialty, such as gastroenterology. This is because they require cheaper equipment. Plus, the overall multi-specialty facility will need to be larger to accommodate operating rooms and the variety and types of procedures performed versus smaller procedure rooms for GI cases.
Single-specialty ASCs may have fewer partners to share in the costs. However, the physicians can be assured they are using the equipment they are buying. And the same case can be made for long-term investments such as technology upgrades, renovations, and expansions.
After considering the expenses associated with building an ASC, the projected revenue should be enough to ensure a long-term, financially viable center. A profitable ASC is highly dependent upon expected procedure volume and the number of doctors supporting the center. GI physicians perform an estimated 1,000–2,000 procedures per year, while other specialties may perform less than 500. Moreover, look at the payor mix for these procedures. Are there more governmental payors, who reimburse less, or a good blend with commercial payors?
Finally, consider overall financial risk. Single-specialty partnership ASC models may offer more individual control over financial operations. Yet multi-specialty partnership models usually allow for more diversification of risk. This is especially relevant if one specialty is hit with reimbursement reductions in the future.
When evaluating a single- vs. multi-specialty model, the center’s location in relation to your patient outreach strategy can be very significant long-term. Single-specialty GI ASCs are attractive in areas with a mature population of adults over the age of 45. In densely populated towns with 55-plus neighborhoods, the ASCs can hyper-focus their outreach efforts. On the other hand, it can be challenging to reach people at the colon cancer screening age of 45 and over in increasingly diverse urban areas that are overwhelmed by younger residents.
Multi-specialty center partners do not need to consider location and demographics as closely as single-specialty partners. This is because they offer a variety of procedures to attract a broader patient base. However, whether you are considering a single- or multi-specialty center, the availability of a competing ASC must be part of your overall consideration when deciding on a location.
Corporate Partner Services
When choosing a corporate partner, do you want a jack of all trades or a subject matter expert? Both have their benefits. Remember that a corporate partner who provides management services should be the operational support system to keep the business running smoothly, allowing the physicians to focus on the patient care that matters most.
Common management services include financial, marketing, IT, payor contracting, revenue cycle management (RCM), human resources, credentialing, and more. These services—some more than others, of course—can be tailored to the needs of your GI specialty. There is also the added benefit of a single-specialty partner that is a thought leader within the industry.
A multi-specialty business partner supporting all physicians may only offer limited solutions that indirectly affect the bottom line. Of course, they too can share general healthcare management industry expertise, but your day-to-day connections with their most personal services like HR and marketing may not be hypersensitive to the needs of a GI physician.
A Clear Choice
While there are pros to the multi-specialty ASC model, the unique benefits to a GI physician in a single-specialty ASC remain unmatched. From cost savings to specialized partner services, the choice is clear.
Carol Stopa, former SVP of Business Development at PE, has worked with gastroenterologists for over 20 years. She says that overall, the decision to select a business partner often comes down to the expertise of what the partner can offer and deliver on:
“Over my years in working with GI physicians, many have asked, ‘Why should I partner with PE?’ I typically respond, ‘Why should I see a GI specialist?’”
She continues, “I could have my colonoscopy done by a general surgeon, or I could see my primary care doctor for my stomach ailment—but I would rather see a physician highly trained and experienced in the GI specialty. That makes me, the patient, feel extremely comfortable and confident I am getting the best care possible. Hopefully, the same feelings can translate to a GI doctor who is looking to put his faith and trust in a business partner who will take care of his business and livelihood. PE is a GI specialist—we understand the specialty through and through—it’s all we do as an organization each and every day. While the GI doctor is taking care of his or her patients, PE is taking care of those same patients. The difference is we are also taking care of the doctor.”