Jeff E. Péo, vice president of acquisitions & development at ASCOA, discusses the company's ASC acquisitions and the challenges of turning around struggling centers.
Q: What kinds of ASCs do you acquire?
Jeff Péo: We acquire struggling centers, ones that have growing difficulty in payor contracting and in retaining or recruiting physicians. My job is very interesting because every acquisition is different. Some centers have waited too long to seek help. They have too much debt.
Q: Is this a good time to acquire struggling ASCs?
JP: We have acquired nine ASCs in the past 24 months. We'd like to acquire 15-20 in a year, but bringing in one of these acquisitions is a very difficult process. We walk away from some offers.
Q: Can you give some examples of ASCs you have turned down?
JP: We were asked to look at a center that had too much space and the rent was too high. But the biggest problem was recruiting additional surgeons. There were no surgeons left not already affiliated with a center. Within a 20-mile radius there were 30 ASCs. In another part of the country, we walked away from a smaller center in a market where surgeons tend to use two to three different centers. That makes it very difficult to gauge volume. Also, it had a very high debt.
Q: What is the greatest challenge in turning these centers around?
JP: Recruiting doctors is a perennial challenge. I'd say 95 percent of the ASCs we acquire need more physicians. Initially it's hard to win over local physicians, because they don't want to be involved in a center that is failing. But we can show them our track record—that we've never had a center fail.
Q: Is it getting harder to recruit physicians?
JP: The pool of available surgeons is getting smaller. There are a lot more surgeons employed by hospitals. And you can’t rely on new surgeons just out of training because it takes them a while to build up case volume.
Q: What is the future like for ASCs?
JP: I think you'll see a lot more consolidation of centers. Many will be sold to management companies or hospitals. I don’t think that's a bad thing. It will only make centers stronger. Small single-specialty centers are going to have a tough time, with some exceptions.
Learn more about ASCOA.
Read more insight from ASCOA leadership:
- 3 Steps to Involve Anesthesia in ASC Cost Reduction Efforts
- Growing Your ASC, the Path of Least Resistance: Top 4 Easiest Specialties to Transition Into an ASC
- 5 Ways ASCs Lose Money
Q: What kinds of ASCs do you acquire?
Jeff Péo: We acquire struggling centers, ones that have growing difficulty in payor contracting and in retaining or recruiting physicians. My job is very interesting because every acquisition is different. Some centers have waited too long to seek help. They have too much debt.
Q: Is this a good time to acquire struggling ASCs?
JP: We have acquired nine ASCs in the past 24 months. We'd like to acquire 15-20 in a year, but bringing in one of these acquisitions is a very difficult process. We walk away from some offers.
Q: Can you give some examples of ASCs you have turned down?
JP: We were asked to look at a center that had too much space and the rent was too high. But the biggest problem was recruiting additional surgeons. There were no surgeons left not already affiliated with a center. Within a 20-mile radius there were 30 ASCs. In another part of the country, we walked away from a smaller center in a market where surgeons tend to use two to three different centers. That makes it very difficult to gauge volume. Also, it had a very high debt.
Q: What is the greatest challenge in turning these centers around?
JP: Recruiting doctors is a perennial challenge. I'd say 95 percent of the ASCs we acquire need more physicians. Initially it's hard to win over local physicians, because they don't want to be involved in a center that is failing. But we can show them our track record—that we've never had a center fail.
Q: Is it getting harder to recruit physicians?
JP: The pool of available surgeons is getting smaller. There are a lot more surgeons employed by hospitals. And you can’t rely on new surgeons just out of training because it takes them a while to build up case volume.
Q: What is the future like for ASCs?
JP: I think you'll see a lot more consolidation of centers. Many will be sold to management companies or hospitals. I don’t think that's a bad thing. It will only make centers stronger. Small single-specialty centers are going to have a tough time, with some exceptions.
Learn more about ASCOA.
Read more insight from ASCOA leadership:
- 3 Steps to Involve Anesthesia in ASC Cost Reduction Efforts
- Growing Your ASC, the Path of Least Resistance: Top 4 Easiest Specialties to Transition Into an ASC
- 5 Ways ASCs Lose Money