In the evolving landscape of ambulatory surgery centers (ASCs), maintaining physician autonomy and operational control has become a significant challenge, especially with the surge of private equity (PE) investments. Recently, a new model introduced by Ker Leader Medical aims to sidestep these pitfalls by creating a “Costco” approach to ASC investment that bypasses private equity altogether. This innovative model provides ASC owners a way to tap into investment funds while preserving control and reducing costs, setting a new precedent in the industry. This arrives from an article originally published in Beckers ASC Review written by Patsy Newitt.
Reference to this article in Beckers ASC Review
How the Ker Leader Medical Model Works
Founded by John Webb, an experienced ASC owner-operator, and backed by key partners, Ker Leader Medical has crafted an ownership model that leverages bulk investment deals with large-scale financial partners rather than private equity firms. This model aligns with the principles of bulk purchasing—similar to Costco—by eliminating intermediaries (i.e., private equity firms) and securing investment directly from financial groups that prioritize long-term returns.
In Webb’s words, “Bypassing private equity is like shopping at Costco; we eliminate the middlemen and deal directly with financial partners who want long-term investments.” For ASCs, this approach means retaining more operational control and greater input into strategic decisions, especially important in a field where continuity of care and physician leadership are paramount.
Addressing the Challenges of Private Equity in Healthcare
The rapid rise in PE acquisitions in healthcare, especially ASCs, is well-documented. In 2023 alone, there were 95 private equity deals involving outpatient centers, the highest in any healthcare subsector. However, while private equity offers ASC owners an exit strategy, it often comes at a cost. Many healthcare providers report that once a PE firm takes control, decisions become more profit-driven, often compromising the quality of patient care and employee well-being.
Private equity’s influence on healthcare has also drawn significant scrutiny, with a majority of physicians expressing negative views on PE investment. According to MedPage Today, 60% of physicians view private equity in healthcare unfavorably. Similarly, a LinkedIn poll by Becker’s revealed that 50% of respondents believed private equity’s influence in hospitals has been “mostly negative.” Evidence from a JAMA study in 2023 adds to the concern, showing increased patient risks like infections and falls after private equity acquisitions in hospitals.
The Ker Leader model responds directly to these issues by maintaining physician leadership and offering flexibility in financial management, allowing ASC principals to retain more control over day-to-day and long-term operations.
Key Benefits of Ker Leader Medical’s ASC Model
The Ker Leader Medical model presents a fresh alternative for ASC owners who want the financial support to grow without losing control. Here are some of the critical benefits:
Autonomy for Physicians: By bypassing private equity, ASC principals and physicians retain the autonomy to make decisions that prioritize patient care and operational efficiency. The governance structure also allows physicians to maintain a seat at the table, ensuring their input is valued and preserved.
Lower Operational Costs: By sourcing funds directly, Ker Leader Medical minimizes administrative and financial overhead, much like a cooperative or bulk-purchasing model. This streamlined approach translates to lower operational costs, benefiting the ASC’s bottom line and allowing more investment in patient care.
Scalability and Cohesion: Ker’s model operates by integrating four or five ASCs under unified management while allowing each center to retain individual operations. This model creates a cost-sharing structure similar to a cooperative, where multiple entities can leverage economies of scale without forfeiting control.
Financial Flexibility: Traditional private equity models often enforce strict financial guidelines, but Ker Leader’s approach provides ASCs with more flexibility. ASC principals can utilize funds for various growth opportunities—expanding facilities, investing in advanced medical technology, or onboarding skilled medical professionals—all without being beholden to the ROI demands typically enforced by PE firms.
Why Now? The Demand for Alternatives to Private Equity
The timing of this model is essential as more healthcare professionals express concerns about the impact of private equity on the quality of care. Private equity firms often focus on quick returns, and the exit strategies they impose may lead to higher costs for patients and increased pressure on healthcare staff. Ker Leader Medical’s model counters this by emphasizing long-term value, cost control, and autonomy in clinical decisions.
A Promising Future for Physician-Owned ASCs
Ker Leader Medical’s model introduces a new avenue for ASCs looking to secure capital without losing their identity or compromising patient care standards. By enabling physicians to maintain control while accessing funding, the model empowers healthcare providers to grow and innovate on their terms, promising a sustainable and collaborative future for ASCs.
How HUB Healthcare Can Help
As healthcare models evolve, HUB Healthcare’s comprehensive platform offers the perfect support for innovative ASC ownership structures like Ker Leader Medical’s. Our solutions enhance collaboration, streamline document management, and improve communication, helping ASC owners effectively manage operations and maintain high standards of patient care. By leveraging HUB Healthcare’s tools, ASCs can maximize efficiency, stay compliant, and ensure seamless coordination across facilities—making it a vital partner for physician-driven ASC models looking to maintain independence and focus on quality care.
