Legal Considerations When Selling ASC Shares


One of the most impactful things an ambulatory surgery center (ASC) can do to continue to grow and develop the center is to bring in new physician partners through the sale of equity. In addition to the numerous business, operational and interpersonal considerations involved with identifying appropriate physician partners and selling shares to such partners, there are a variety of key legal considerations that any ASC should also keep in mind. This article addresses such considerations, including federal and state anti-kickback laws, state and federal securities laws and other legal considerations.


Subsequent sections of this article will address the legal rationale for these core concepts in greater detail, but ASCs can go a long way toward ensuring appropriately structured sales of shares in they are mindful of the following four concepts:

  1. Physician investors who refer patients to the ASC should ideally not be passive indirect referral sources. 
  2. Physician investors should invest real capital and take real business risk on their investment. 
  3. Physician investors should pay fair market value for their shares. 
  4. The terms of investment for physician investors should not be tied in any way to the volume or value of their referrals to the ASC.


The Federal Anti-Kickback Statute 

The most relevant federal statute applicable to ASCs is the Federal Anti-Kickback Statute, 42 U.S.C § 1320a-7b(b), which generally prohibits anyone from offering, paying, soliciting, or providing anything of value (i.e., remuneration) to another person in exchange for the referral of healthcare business to another person or entity. The concept of remuneration under the Anti-Kickback Statute has been defined broadly to prohibit several types of payments, discounts or transfers of anything of value in exchange for referrals. 

A violation of the Anti-Kickback Statute is considered a felony, and individuals or providers who violate the Statute may be subject to penalties, including fines of up to Twenty-Five Thousand Dollars ($25,000) per violation, imprisonment for up to five (5) years, or both. Additionally, the Secretary of the Department of Health and Human Services (DHHS) has the authority to exclude providers, including individuals or entities, who have committed any of the prohibited acts, from participation in the Medicare or Medicaid programs. 

The ASC Ownership Safe Harbor

When selling shares to physicians in an ASC, ensuring compliance with the Anti-Kickback Statue is critical. In 1999, the Office of Inspector General (OIG) promulgated the "ASC Ownership Safe Harbor" regulations. 

There are actually four different "ASC Ownership Safe Harbors", based on a different ownership structure (physician-hospital JV, physician only JV, multispecialty JV and single specialty JV), but there are numerous common elements among all four variations of the ASC Ownership Safe Harbors. 

Joint ventures that are structured consistent with all elements of the applicable ASC Ownership Safe Harbor are deemed immune from prosecution under the Anti-Kickback Statute as to certain ownership issues. Thus, ASC companies generally strive to ensure that their joint ventures, including the sale of shares to physicians, are structured in accordance with the ASC Ownership Safe Harbor. 

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