Ambulatory surgery center real estate and M&A: A practical roadmap for physicians and investors

Ambulatory surgery centers (ASCs) sit at the intersection of healthcare operations, real estate, and a fast‑changing regulatory landscape. For physicians and investors, that means every ASC project is really two deals running in parallel: the real estate transaction and the ASC business itself. Getting both right on a realistic timeline and with your own advocates at the table is critical to long‑term success.

This article provides a practical roadmap for de novo ASC development and ASC M&A, with a focus on real estate, purchase and sale agreements (PSAs), due diligence, certificate of need (CON) trends, and why independent counsel remains essential even when a “developer” is driving the project.

Two Deals in One: ASC Business and ASC Real Estate

Every ASC project has two core components:

• The operating business – ownership structure, governance, operating agreement, management and anesthesia contracts, payor relationships, accreditation, licensure, and regulatory compliance.
• The real estate – site selection, purchase or lease, construction or build‑out, financing, and the long‑term allocation of economic risk and reward tied to the building.

Physicians often focus first on the clinical and business model (specialties, case mix, call schedules, and distributions) only to discover that the real estate deal will dictate capital requirements, regulatory timing, and even exit options.

From a legal and strategic standpoint, it is useful to think in terms of two entities:

• A real estate “PropCo” that owns or leases the building and improvements.
• An operating “OpCo” that runs the ASC and contracts with physicians, payors, and vendors.

Why separate them? They are separated this way on purpose, not to make things more complicated, but to solve several problems at once.

• Risk separation. Separating the operating business and the real estate into different entities helps shield each from the other’s risks. The real estate is insulated from clinical and reimbursement risk, while the operating company is protected from real estate-related liabilities. It also allows lenders underwrite the specific collateral they are financing more cleanly and efficiently.
• Ownership flexibility. Not every physician (or hospital partner) wants to invest in both the ASC business and the underlying real estate. Using separate entities allows some investors to own only the real estate and others to own only the ASC business. It also makes it easier to buy into or exist  one side of the investment over time without disrupting the entire structure.
• Clearer economics and valuation. Having OpCo pay fair‑market rent to PropCo keeps ASC operating margins and distributions separate from the appreciation and rental income tied to the building, which simplifies buy‑ins, buy‑outs, and eventual sale or recapitalization.
• Regulatory and tax alignment. A distinct real estate entity with a documented lease to the ASC helps structure rent and returns at fair market value for Stark and Anti‑Kickback purposes, and lets owners use real‑estate‑specific tax strategies (like depreciation and cost segregation) while keeping the ASC’s clinical revenue and expenses in the operating entity.

How those entities interact through a PSA, lease, development agreement, or joint venture then becomes the tool for allocating risk, economics, and control in a way that is compliant and financeable.

De Novo ASC vs. buying an existing ASC

ASC projects tend to fall into two broad categories: building a new ASC from the ground up (or repurposing an existing building) and acquiring an existing ASC business, sometimes with the real estate.

A. De novo ASC with new or repurposed real estate

In a de novo scenario, the group is typically:

• Identifying and securing a site (land, an existing shell, or a building to repurpose).
• Forming new entities for the real estate and the ASC.
• Pursuing a PSA or development agreement for the property.
• Coordinating construction or build‑out, regulatory filings (including CON where applicable), licensure, and payor enrollment on a carefully staged timeline.

Key questions include:

• Will physicians own the real estate, or will the ASC lease space from a third‑party landlord?
• Is the building a straightforward medical office build‑out, or is significant structural and mechanical work required to meet ASC code standards?
• Does the project sit in a CON state, and if so, how do CON milestones drive timing for land control and construction?

B. Acquisition of an existing ASC and its building

In an M&A context, the buyer may be purchasing:

• The ASC business (equity or assets).
• The real estate (through a PSA), or stepping into a long‑term lease, or negotiating a new lease with the existing landlord.

Here, diligence and negotiation focus on:

• Historical financial performance and payor mix.
• Quality and transferability of licenses, certifications, and accreditations.
• The rent profile and lease terms—are they fair market and sustainable post‑closing?
• Whether there are change‑of‑ownership or CON approvals required for the ASC or any related provider numbers.

A concise side‑by‑side view helps frame the differences:

Issue	De novo ASC + new/repurposed building	Buying existing ASC + building
Regulatory posture	New license, new CON or exemption if in applicable state, operations permits	License, CON change of ownership
Real estate documentation	New PSA or development agreement, construction contracts, architectural agreements	PSA, assignment and assumption of existing lease, or negotiation of new lease
Diligence focus	Title, survey, zoning compliance, environmental review, geotechnical analysis, design review and approval, construction budget and timeline	Title, survey, zoning compliance, property condition report, environmental review, historical financial and operational performance, lease terms
Timeline flexibility	Greater control over timing, but more development variables and potential delays	Largely driven by seller and payors
Capital stack	Construction financing plus equipment financing, staged capital contributions	Purchase price financing, potential working capital and equipment true-ups

Both paths require careful coordination among real estate, corporate, regulatory, and financing workstreams; they simply stack and sequence differently.

The real estate process: PSA and due diligence

Whether the group is pursuing a de novo site or acquiring an existing ASC building, the real estate transaction usually follows a recognizable arc.

A. Core steps in an ASC building acquisition

Pre‑LOI planning

• Clarify clinical program (specialties, number of ORs/procedure rooms).
• Understand whether CON applies and how that may influence timing.
• Develop a preliminary capital stack (equity, bank debt, hospital or private equity participation).

Letter of intent (LOI) or term sheet

• Basic business terms: purchase price, earnest money deposit, due diligence period, targeted closing date, key contingencies, and any seller work to be completed pre‑closing.

Purchase and sale agreement (PSA)

• Typically drafted first by seller’s counsel, then heavily negotiated by buyer’s real estate counsel.
• Covers core deal terms, diligence/closing timelines, representations and warranties, covenants, conditions to closing, risk allocation (casualty/condemnation), prorations, default remedies, and closing mechanics.

Real estate due diligence

• Seller provides any diligence documentation required under the PSA for Buyer’s review (if applicable).
• Buyer orders due diligence reports it deems necessary or desirable to evaluate the real estate, including a title commitment, survey, environmental review, geotechnical analysis, and zoning compliance.
• Issues identified during due diligence stage may affect the deal structure, purchase price, closing conditions, or other negotiated deal terms.

Closing and pre-closing conditions

• Seller and Buyer work to satisfy all requisite conditions precedent set forth in the PSA, including curing any title/survey objections, obtaining required consents, and completed agreed-upon deliverables.
• Final closing documents are prepared and executed by both parties, including documents as may be required by a title company (if applicable).

B. Indicative timelines for real estate work

Every transaction is fact‑specific, but there are practical ranges you can share with clients:

• LOI negotiation: approximately 1–3 weeks.
• PSA drafting, negotiation, and execution: approximately 2–4 weeks from initial draft to execution when the parties are reasonably focused.
• Real estate due diligence and closing period:

30 days: possible in simple, low‑risk deals, but often aggressive for a meaningful ASC investment.
60 days: a balanced target in many projects, allowing time for Phase I environmental site assessment, title commitment, survey, lender review, and issue resolution.
90+ days: more conservative and often appropriate when environmental risk, complex title, or lender conditions are present.

From the execution of the PSA to closing, a practical expectation for many ASC building acquisitions is roughly 60–90 days. The timeline may extend for projects involving significant construction, zoning approvals or variances, or complex financing structures.

Physicians and investors should understand that compressing the diligence period to “win the deal” can materially increase risk, especially when individuals are guaranteeing debt or when the ASC business plan depends on regulatory approvals that may not track perfectly with the real estate timeline.

When a “developer” is involved: What changes, what doesn’t

Many physician groups now work with specialty ASC developers who offer turn‑key solutions: site selection, design and construction, and even capital. Developers are valuable partners, but they are not neutral parties.

A. Common developer structures

Developer‑involved projects often take one of these forms:

• Build‑to‑suit lease: the developer builds or repurposes an ASC facility and leases it long‑term to the ASC operating entity.
• JV real estate ownership: physicians (and sometimes a hospital or management company) invest alongside the developer in a real estate joint‑venture entity.
• Turn‑key sale: the developer constructs and then sells a completed (or near‑completed) ASC building to the physician group or joint venture.
• Three‑way joint ventures: hospital–physician–developer structures that combine capital, market presence, and development expertise.

Each structure comes with its own documents (ground leases, development agreements, construction contracts, guaranties, options )that sit on top of or alongside the PSA and ASC operating documents.

B. Why independent counsel is still essential

Even when the developer has deep ASC experience and genuine good faith, its primary duty is to its own investors, not to the physicians. That shows up in several ways:

• Economics and rent
  • Proposed rents and escalators may be at the top of fair market value ranges, affecting long‑term profitability.
  • Cost overruns, change orders, and contingencies may be allocated in ways that disproportionately impact physicians and the proformas that they can “back into” for rent based on the population and cases coming in.
• Control and flexibility
  • Design decisions can affect patient flow, case types, and future expansion; developers may prioritize cost or speed over clinical optimization.
  • Transfer restrictions, buy‑sell mechanics, and consent rights can constrain future sales, partner changes, or hospital joint ventures.
• Regulatory alignment
  • Developer‑friendly terms are not always aligned with Stark and Anti‑Kickback safe harbors, fair market value, or commercial reasonableness. Healthcare counsel is needed to sure the number align with safe harbor and agreements demonstrate the safe harbor structure.
  • Lease and real estate economics must be integrated with the ASC ownership and governance structure to avoid regulatory pitfalls.

For these reasons, physicians and investors should treat developer deals as they would any other major transaction: insist on their own counsel to review structures, negotiate terms, review diligence, and coordinate real estate documents with corporate and regulatory strategy.

McDonald Hopkins routinely works on the “physician side” of developer‑led ASC projects, helping groups separate what is truly “market” from what is simply pro‑developer, and aligning the real estate package with both compliance requirements and the client’s long‑term business plan.

The role of Certificate of Need (CON) in ASC real estate and M&A

Certificate of need laws, where they still apply, can be the tail that wags the ASC dog. They influence where you can build, how many ORs you can operate, and the timing and risk profile of both de novo and M&A projects.

A. Evolving state landscape

Across the country, CON regimes are shifting, with several states relaxing or eliminating CON requirements for ASCs while retaining robust licensure and charity care obligations. The trend is uneven, and local details matter.

Recent state-level developments include:

• North Carolina. Legislation passed in 2023 phases out the CON requirement for ASCs in higher‑population counties, with full exemption for "qualified urban ambulatory surgical facilities" in counties over 125,000 residents effective late November 2025. ASCs in those counties may still face charity care and reporting obligations.
• South Carolina in May 2023 enacted S. 164 (Act 20), which removed CON requirements for ambulatory surgery facilities/ASCs and most other health facilities.
• Georgia House Bill 1339, effective July 1, 2024, created new exemptions for certain single‑specialty ASCs owned by individual physicians or a single practice, subject to capital and OR limits, and expanded flexibility for joint‑venture ASCs with hospitals.
• Tennessee's 2024 legislation removed the CON requirement for ASCs, replacing it with enhanced licensing obligations; non‑hospital ASCs must participate in TennCare and provide charity care comparable to similarly situated hospital‑based ASCs, with the ASC CON repeal taking effect December 1, 2027.

Many states in the Southeast and Mid‑Atlantic are gradually eroding or narrowing CON jurisdiction for ASCs, often tying exemptions to charity care or Medicaid participation requirements rather than pure capacity control. Several states now use targeted exemptions for physician‑owned, single‑specialty centers and certain joint ventures. In "legacy" CON states, regulators continue to scrutinize data, community need, and hospital opposition, which lengthens and complicates the front‑end planning phase.

For developers and physician groups, the practical impact is that “CON‑heavy” and “CON‑light” markets now demand different development and M&A strategies. In some places, real estate can move fairly quickly while regulatory approvals lag; in others, long‑term land control and PSA milestones must be tightly synchronized with the CON calendar to avoid owning or leasing a building that cannot be used as planned. Working with experienced counsel that understands the nuances of intense CON requirements will ensure you do not put the carriage before the horse and lose your investment.

B. Practical implications for planning

When CON is a factor, counsel should help the client:

• Map out the full regulatory pathway (CON, licensure, Medicare certification, accreditation) at the same time as the real estate pathway.
• Decide how much to invest in site control (options, PSAs with contingencies, refundable vs. non‑refundable deposits) at each stage of the regulatory process.
• Build realistic “drop‑dead” dates and contingencies into PSAs and leases in case CON outcomes or timing differ from expectations.
• Consider whether project scope (specialties, OR count, service area) can be tailored to fit within a more favorable exemption or reduced‑review pathway where available.

In short, CON cannot be treated as an afterthought. It is a front‑end design constraint that must be integrated with real estate and M&A strategy.

Illustrative timelines: De Novo vs. ASC M&A

To make this concrete for readers, it is helpful to set out example timelines—clearly labeled as illustrative, not guaranteed.

A. De novo ASC in a relatively CON‑light environment

• Strategic planning and site identification: 4–8 weeks.
• LOI and PSA negotiation for the building: 3–6 weeks.
• Real estate due diligence: 60–90 days from PSA execution.
• Design, permitting, and construction/build‑out: 6–12 months, depending on whether the project is a retrofit or ground‑up construction.
• Parallel corporate and regulatory work:
  • Entity formation, operating agreement, and investor documents: 4–8 weeks.
  • Licensure, accreditation, and payor enrollment: often 3–6 months, overlapping with construction.

A realistic “start to first case” expectation in many markets will range from roughly 12 to 18 months, assuming no major CON or construction surprises.

B. Timeline of acquisition of an existing ASC in a CON state

• Initial term sheet or Letter of Intent (LOI) with seller: 2–4 weeks.
• Business purchase agreement and related documents: 4–8 weeks, including negotiations on rollover equity, physician employment and non‑compete agreements, and governance.
• Real estate PSA or lease assignment or new lease: 3–6 weeks, often on a parallel but interconnected track.
• Diligence and regulatory approvals:
  • Real estate diligence: 60–90 days.
  • CON and licensure change‑of‑ownership approvals: several months in many CON states, with substantial variation based on the specific statute and local practice.

From first substantive discussion to closing and operational transition, ASC acquisitions in CON states often run on a 6–12 month timeline, particularly where hospital or health system partners are involved and regulator review is contested or complex. Please note, in states where CON is live and well I do not move forward with any of the above before a CON is obtained.

Across both scenarios, clients should understand that “everything takes longer than you think.” Particularly the Medicare enrollment and certification process to obtain a PTAN number and CMS Certification Numbers (CCNs) that effectively allows the ASC to participate and bill Medicare has seen significant delays since 2022 when CMS completed a transition of moving responsibility for oversight of the enrollment and certification process to Provider Enrollment & Oversight Group (PEOG) within CMS’s Center for Program Integrity. It oversees key aspects of Medicare provider enrollment and certification, especially for certified providers and suppliers like ASC.

Working with counsel that has deep healthcare regulatory understand and can devise an integrated timeline prepared jointly by real estate, corporate counsel at the outset is one of the best risk‑management tools available.

What your counsel will need: A practical checklist

One of the most concrete ways to help a client get ready is to explain, up front, what information and documents counsel will need to move quickly. The following checklist can be adapted as a handout or appendix.

A. Corporate and investor information

• Names and contact information of anticipated physician and non‑physician investors.
• Proposed ownership percentages or ranges.
• Existing practice entity documents (articles or charter, operating or shareholder agreements, bylaws).
• Any existing management or professional services arrangements that may affect the ASC.

B. Property and transaction details

• Property address, parcel ID, and any available marketing materials, offering memoranda, or broker packages.
• Any existing LOI, term sheet, or “non‑binding” agreement with the seller or developer.
• Seller or developer contact information and the identity of any brokers.
• Basic deal economics: proposed purchase price or rent, deposits, and intended financing structure.

C. Financial and capital stack information

• Estimated all‑in project budget (land/building, construction/tenant improvements, equipment, soft costs).
• Anticipated sources of capital: physician equity, hospital or management company equity, bank debt or other financing.
• Any term sheets or proposals received from lenders or potential joint‑venture partners.

D. Regulatory and operational context

• State and locality where the ASC will operate and a preliminary assessment of whether CON applies.
• Intended specialties, anticipated case mix, and planned number of ORs/procedure rooms.
• Target opening date or closing date and any hard external deadlines (expiring lease, expiring options, seasonal construction constraints).
• Any prior CON determinations, licensure surveys, or accreditation reports relevant to the site or an existing ASC.

E. Existing documents for M&A deals

For acquisitions of existing ASCs:

• Current lease and related real estate documents if the buyer is acquiring the business but not the building.
• Key contracts: anesthesia, management, imaging, pathology, equipment leases, IT/EHR, and any co‑management or joint‑venture agreements.
• Organizational charts, capitalization tables, and historical financial statements for the ASC.

Providing this information early allows counsel to:

• Draft or respond to PSAs and business purchase agreements efficiently.
• Identify regulatory and CON considerations before they become critical path issues.
• Coordinate with lenders and developers so that business objectives, compliance requirements, and timeline realities are all aligned.

How McDonald Hopkins can help

ASC development and ASC M&A are not “one‑document” exercises. They are multi‑track projects that require real estate, corporate, regulatory, tax, and often litigation‑savvy thinking working together from day one.

McDonald Hopkins’ healthcare and real estate teams regularly:

• Guide physician and investor groups through de novo ASC projects, from concept to first case, including entity structuring, PSAs and leases, construction and development contracts, CON and licensure, and payor enrollment.
• Represent clients in ASC and related real estate acquisitions, including business purchase agreements, real estate transactions, lease negotiations, and integration planning.
• Act as independent counsel for physicians and investor groups in developer‑driven projects, helping level the playing field on economics and risk while ensuring regulatory compliance.
• Help clients translate evolving state‑law trends into practical site selection, transaction structure, and timeline strategies.

For physicians and investors considering an ASC project, whether de novo, a joint venture with a hospital or developer, or an acquisition the most important step is engaging experienced counsel early enough to influence structure and timing rather than simply “papering” a deal that has already taken shape.

If you would like to discuss a specific project or explore how these concepts apply in your state, please contact Rachel Carey at rcarey@mcdonaldhopkins.com and Kirstyn Wildey Fritz at kfritz@mcdonaldhopkins.com who are ready to help you design your project.