Kenny Spitler, senior vice president – development for HealthMark Partners, describes a critical ASC mistake and offers guidance to correct the problem.
I have seen several scenarios over the years where the physician partners in the ASC have entered into a very inflated lease contract, which has placed tremendous pressure on the business or, even worse, have driven the business into a negative cash flow situation. Complicating the matter, several physician members in the ASC are also members of the real estate LLC, which consequently provides many opportunities for confrontation among the general members who rightfully feel unjustly overcharged.
A quick resolution is to hire an independent real estate consultant to provide a fair market value for ASC’s or similar healthcare businesses in the specific area. The independent consultants report usually has a range which still allows for negotiation, yet most people are okay with paying the high end of the scale. Fair market value is the goal of this exercise, not beating down your other physician partners who participate in the real estate LLC.
I would strongly recommend that both parties agree to this approach to settle the issue and move forward to concentrating on a successful ASC venture.
Learn more about HealthMark Partners.
Read more insight from Kenny Spitler:
- Improve ASC Profitability: Case Studies
I have seen several scenarios over the years where the physician partners in the ASC have entered into a very inflated lease contract, which has placed tremendous pressure on the business or, even worse, have driven the business into a negative cash flow situation. Complicating the matter, several physician members in the ASC are also members of the real estate LLC, which consequently provides many opportunities for confrontation among the general members who rightfully feel unjustly overcharged.
A quick resolution is to hire an independent real estate consultant to provide a fair market value for ASC’s or similar healthcare businesses in the specific area. The independent consultants report usually has a range which still allows for negotiation, yet most people are okay with paying the high end of the scale. Fair market value is the goal of this exercise, not beating down your other physician partners who participate in the real estate LLC.
I would strongly recommend that both parties agree to this approach to settle the issue and move forward to concentrating on a successful ASC venture.
Learn more about HealthMark Partners.
Read more insight from Kenny Spitler:
- Improve ASC Profitability: Case Studies