Friday, July 25th, 2025:
Jon Vick, founding partner of ASCs Inc. and Vick & Co., joined Becker’s to discuss the overlooked financial potential of ambulatory surgery center real estate, and why many physicians miss their window to fully capitalize on it.
Editor’s note: Responses have been lightly edited for clarity and length.
Question: What are the biggest factors physicians should think about when deciding how to approach ASC real estate?
Jon Vick: First of all, ASC real estate has increased in value tremendously, and a lot of times the docs don’t understand how much value they have there. Every time a group of doctors builds a surgery center, they improve the property. They’re paying themselves market-rate rent, which often is around $40 a square foot, so they’ve greatly increased the value of the property.
A lot of times they’re not aware of what that value is. So one of the factors they should think about is: What value have they created, and what are their plans for that value? Usually, they increase their rent by 2 or 3 percent a year, and that is then their return on investment. If they have millions of dollars tied up in their real estate and they’re getting a 2 or 3 percent return on that each year, that’s a pretty low return for that investment. There are much better alternatives that’ll earn them more money than keeping it tied up in real estate. That’s another factor to consider.
Third of all, a lot of times we get calls from docs and they say, “I’m about to retire. I own the real estate. I’d like to sell it.” The best time to think about selling real estate is five to 10 years before they want to retire. Because once they’re going to retire, buyers aren’t too interested — because who’s going to pay the rent, right?
Q: How has the current financial environment changed the way ASC leaders are thinking about their real estate options?
JV: The most important financial consideration is interest rates. Back when rates were 1 or 2 percent, the value of commercial real estate was higher. Now that rates have gone up, commercial real estate is worth less — it’s very sensitive to interest rates.
Right now, a lot of docs are waiting for rates to come down, but it doesn’t look like that’s going to happen, especially if tariffs go into effect and inflation rises. To combat inflation, interest rates may even go higher.
So as docs sit on their real estate, they’re getting older, and that works against them — because buyers don’t want to buy property when the doc is about to retire. The key now is to sell when there are a lot of buyers. Right now, there are more buyers than sellers. Docs are holding their real estate, while real estate investment firms have money they need to deploy. It’s a very competitive, seller-friendly market right now.
Q: What are some of the most common misconceptions or challenges when you see ASC real estate owners evaluate their strategies?
JV: I think the most common misconception is that the longer they hold it, the more it’ll be worth. That’s really not true. The lease determines the value — not how long they’ve owned it, and not how successful the surgery center is.
Real estate is directly valued based on the lease’s length and terms. If they have a 10-year lease, but they’ve been there for eight years, they really only have a two-year lease, and that’s not worth anything to an investor.
They really need to have a 10, 12, or preferably 15-year lease to maximize property value. And they need to sell when the doctors still have many years to practice, so there’s no question the rent can be paid.