Starting an Ambulatory Surgery Center vs. Buying an Existing One
Physicians interested in owning an ambulatory surgery center generally have two paths: starting a new ASC or purchasing an existing facility. Both options can provide opportunities for growth, but they involve very different financial, operational, and planning considerations.
For physicians considering ambulatory surgery center financing, comparing these options can help determine which approach may be better suited to their goals.
1. Starting a New ASC
Starting a new ambulatory surgery center allows physicians to build the facility around their preferred specialties, procedures, equipment, staffing, and operational model.
However, starting from scratch can require substantial planning and capital before the facility begins generating revenue.
2. Buying an Existing ASC
Purchasing an established ASC can provide an existing business, facility, equipment, staff, and operational infrastructure.
Depending on the transaction, an established ASC may also have existing physician relationships, patients, revenue, and historical financial records.
3. Startup Costs Can Be Significant
A new ASC may require capital for:
- Real estate
- Construction
- Facility improvements
- Medical equipment
- Technology
- Licensing and regulatory expenses
- Staffing
- Marketing
- Working capital
These expenses can accumulate before the ASC begins generating meaningful revenue.
4. An Existing ASC May Have Established Revenue
One potential advantage of buying an existing ASC is that the business may already have a history of revenue and operating performance.
Physicians can potentially review financial statements, procedure volume, expenses, and other information when evaluating the acquisition.
This can provide more historical information than is available when starting a completely new facility.
5. Starting From Scratch Provides More Control
A new ASC gives the physician more control over how the business is designed and operated from the beginning.
The physician can select the facility, equipment, technology, staffing model, specialties, and other aspects of the business.
6. An Acquisition May Offer Faster Entry
Buying an established ASC may allow a physician to enter the market without building every part of the business from the ground up.
However, the acquisition still requires careful due diligence and evaluation before completing the transaction.
7. Existing ASCs Require Due Diligence
Buying an established ASC means evaluating the business before committing to the purchase.
Physicians should review areas such as:
- Revenue
- Profitability
- Cash flow
- Accounts receivable
- Equipment
- Staffing
- Physician relationships
- Lease or real estate arrangements
8. New ASCs Have Development Risk
A new facility may take time to establish physician relationships and build procedure volume.
Revenue projections should therefore be realistic and supported by a detailed business plan.
Adequate working capital can also be important during the early stages of operation.
9. Financing Can Differ Between the Two Options
The financing structure can vary significantly depending on whether a physician is starting a new ASC or purchasing an existing one.
A startup may require financing for construction, equipment, real estate, and working capital.
An acquisition may involve financing for the purchase of the existing business, equipment, real estate, and other eligible expenses.
10. Consider Your Experience
Physicians should consider their clinical and business experience when deciding between starting and buying.
Operating an ASC requires management of staffing, finances, equipment, compliance, scheduling, and other business responsibilities.
11. Location Can Influence the Decision
When starting an ASC, physicians can potentially select a location based on market demand and their long-term plans.
When purchasing an existing ASC, the location is generally already established.
The buyer should therefore evaluate the market, competition, accessibility, and future growth potential of the existing location.
12. Compare the Total Investment
Physicians should compare the total capital required for both options.
This includes more than the initial purchase price or construction budget.
Consider:
- Real estate
- Equipment
- Construction
- Working capital
- Staffing
- Technology
- Operating expenses
- Financing costs
13. Which Option Is Better?
There is no universal answer.
Starting an ASC may be attractive to physicians who want maximum control over the facility and business model.
Buying an established ASC may be attractive to physicians who want an existing operation with historical financial performance and infrastructure.
The right choice depends on the physician’s goals, experience, available capital, market, and financing strategy.
Final Thought
Starting an ambulatory surgery center and buying an existing ASC can both provide opportunities for physician ownership. Starting from scratch provides greater control but may require significant upfront investment and time to build the business. Buying an established ASC can provide existing operations and historical financial information but requires careful due diligence.
Physicians should compare the financial requirements, risks, operational considerations, and long-term opportunities before deciding which path is right for them.
