OOSS Perspective 2025 at last weekend's ASCRS meeting in Los Angeles addressed issues around renovating or constructing an ambulatory surgery center (ASC)—timelines, costs, obtaining financing, building codes, etc. But, before you even begin any significant changes, the panelists—veterans of ASC construction—cautioned that it is essential to have an exit strategy in mind.
Keep in Mind That It’s an Investment
"Regardless of whether you're updating, renovating or building, I think the most critical thing to keep in mind is that this is an investment, and it can create generational wealth… but you have to have an exit strategy,” said Albert Castillo, of Health Care Management Concepts, San Antonio, and moderator of the panel. “If you don't have that exit strategy, that's where you can be caught holding the bag and then you're stuck with a business, a facility and maybe even a practice that you can't transition."
Collin Hart, of ERE Healthcare Real Estate Advisors, concurs.
“I'll say the most important thing is that you go into this thinking about your exit strategy, whether you exit and regardless of what your exit is. But you have to remember it's an investment,” said Mr. Hart, whose company specializes in structuring sale and leaseback transactions on physicians’ clinical and surgical center real estate. “You need a return on investment [ROI].”
He said he frequently see physicians build very expensive facilities that ultimately make it tougher to get a good ROI when they exit.
“It's like a Taj Mahal, which I get because you work there every day, you might spend more time there than you do at home, but you're not necessarily going to be able to get your money out of it. I would just say go in with cost in mind.”
Before You Set Your Rent
Other important factors, Mr. Hart said, are establishing your rent as fair market value, which he characterized as more of an art than a science. “It's not a number, it's a range,” he explained. Too often, he said he sees people set their rent just to cover their mortgage—which means there’s no ROI.
Additionally, “that affects your buy-in values and if you ultimately sell your practice to private equity, you will want to have a fair market rent,” Mr. Hart said.
Mr. Castillo agreed that looking ahead and considering buy-in is critical. Structure in advance, he emphasized, to prepare for future partners and their ability to buy in.
Summing Up
So, for that graceful, profitable exit from your ASC, “Go in with cost in mind, set your rent in a thoughtful manner and then probably have a good lease set up in advance when you build your building,” Mr. Hart concluded.
For more on ASC building or renovation, see “Update, Renovate, or Recreate?” in the May issue of The Ophthalmic ASC: https://ophthalmologymanagement.com/supplements/2025/the-ophthalmic-asc-may/update-renovate-or-recreate/