Owning your practice gives you control. It doesn't always give you your time back. On Life of Flow, I sat down with Dr. Dan Lieberman, a neurosurgeon trained at UCSF who spent nearly two decades in solo practice, chaired the governing board of a physician-owned hospital, and now develops ambulatory surgery centers. The question: before you buy into an ASC, what do you actually own, and who controls the decisions?
Before You Buy Into an ASC: Ownership, Partners, and Control
Dr. Dan Lieberman on what to check before buying into an ASC: the entity you own, the pro forma, exit terms, supermajority votes and your partners.
Watch The Episode
Before You Buy Into an ASC: Ownership, Partners, and Control, LOF #134 of Life of Flow, hosted by Dr. Lucas Ferrer and Dr. Miguel Montero-Baker.
Ten Years Of Owning A Hospital
Dan's hospital in Phoenix was 100% physician owned. It had seventeen surgeons and 30 beds, and by his account it was the only hospital west of the Mississippi with no management partner.
He chaired its board for 10 years. His word for it: miserable. They sold and did well, but he says he lost as much sleep over that hospital as over his patients.
He moved into ASCs in 2015. Essential tremor ended his operating career in 2018.
His numbers: hospitals run on about a 4% margin, ASCs on 20 to 40%.
The Vacation Problem
Miguel asked the question a lot of independent doctors sit on. He's four years into his own office-based cath lab, with full control. Why hand part of that to partners?
Dan started with vacation. He says that in solo practice he was the busiest neurosurgeon in Arizona by numbers, and the one thing he couldn't afford was time off.
"Being a slave to yourself, you're still a slave."
In Dan's view, the economics of an ASC look far more like a practice than a hospital: that 4% margin against 20 to 40%. Where a patient gets treated should come down to medical necessity first, money second.
Ask How It Ends
Dan's advice: before you sign, ask to see the exits.
An operating agreement can set a good exit and a bad one. Retire, and the group buys you out. Leave to compete across town, and the buyout is close to nothing.
He also pointed to the safe harbor one-third rule. If you own an ASC, you have to do a third of your ASC-eligible cases there, and a group can check that monthly.
What an operator can't do is offer you more shares because you bring in more volume. Dan says that sits outside the safe harbor.
Read The Pro Forma Like A Paper
His checklist:
- Own the actual entity, the one with the state license and accreditation. He sees doctors sign up for a stake in a partnership that only works at an ASC.
- Challenge the pro forma. Volumes should come from your real numbers over the last one to two years. Dan runs a meeting where everyone's only job is to shoot at it.
- Size up the management.
- Read the operating agreement. Typically the operator holds 51% and the doctors 49%, so your protection is supermajority votes on things like admitting new doctors, the kind of work done, location and cash calls.
- Know your partners. "You can't have a good business with a bad partner."
The Takeaway
"It's okay to dance with the devil, but you got to lead."
Dan is coming back for part two, on choosing an ASC developer or operator.
This is educational, not legal or financial advice. Get your own counsel before you sign.