Buying into a Surgi-Center

Buying into a Surgi-Center

I am a partner in a medical group and we are thinking about buying into a surgi-center with another medical group. What information do we need to proceed with this venture?


There are a host of issues on evaluating a surgi-center deal, requiring several outside advisers. Whatever deal you structure you must clear with an attorney expert in medical issues that there are no violations of the Stark rules. You should have a CPA with experience in the area review the projections. Are they reasonable? What assumptions are being made? You should review a summary proposal (MOU=memorandum of understanding, business plan Executive Summary, etc.) first for an overview then with your advisers review the deal and legal documents. Most surgi-centers are structured as a limited liability company so you have to review the operating agreement. What is the management structure? Member managed or manager managed? What rights do you have as a member? Are there reasonable constraints on the manager? How is the deal to be financed? What personal liability do you have? What if the deal sours, how much will you be out? What options to mitigate those losses exist? Most lease space from a related or independent entity. You must review the lease, or if your deal includes the real estate (consider a separate LLC for liability reasons) those aspects of the deal. How is the surgi-center structured? Are you buying it individually (consider a trust or other family entity for the real estate component)? Is your practice buying it? (This creates another practice asset for malpractice claimants). If your practice buys it and you have partners who gets to buy in? If someone leaves your practice do they have to get bought out? Are you, or your practice, subject to non-compete agreements prohibiting the investment? Will your participation bring your primary practice more business or upset current referral sources? What services will the surgi-center provide and what is the likely future for those services (e.g., insurance reimbursements, etc.). Your question is so broad. Perhaps you can start with the above and re-submit more specific questions.

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