For Melissa Hermanson, RN, private equity investors and ASCs must share a mission and values to have a mutually beneficial relationship.
Ms. Hermanson is the administrator of Ambulatory Care Center in Vineland, N.J., where she has served for nearly 11 years. She spoke with Becker's ASC Review on how she predicts private equity investment will affect the ASC industry.
Note: This interview was edited lightly for clarity and brevity.
Question: How do you predict private equity investment will affect the ASC industry?
Melissa Hermanson: I predict that over the next decade the ASC industry will continue to see private equity investment and consolidation, especially within mega groups.
Over the last decade, we've seen an explosion of private equity investors in ASCs with mixed results. Healthcare, especially the ASC model, is enticing for short-term investors whose primary motivation is profit. Private equity is attractive to facility owners, too, as they generally offer more than other potential partners. From a purely economic business standpoint, it seems like a win-win; however, there are many other considerations that need to be taken into account in healthcare — primarily, that patient safety and high-quality care should be at the forefront of every decision.
Finding the right partner who shares the mission and values of the center and the expertise to manage the complex environment can lead to a mutually beneficial relationship. This is especially advantageous for partners looking to retire or who want better returns without all of the administrative headaches. ASCs wanting to make large capital investments also find the financial support appealing.
Unfortunately, all of us have heard the stories of deals that have left ASCs reeling. What happens when a center is hitting the same mark consistently and owners want more profit? They cut expenses. This usually begins with the staff and continues through supplies and services. While the partners experience moderate increases, staff, surgeon and patient satisfaction decrease, quality of care suffers, and ultimately, patient safety is put at risk. Additionally, some find that clinical decisions are made based on metrics without consulting the medical staff.
It would be shortsighted of us not to remember the experiences of long-standing facilities and private investment. Again, some good and some bad, but worth our consideration.