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What Lenders Want to See Before You Expand
2 Playsin 11 hours
Eric Gonzales and Alexandra DeHart are healthcare banking leaders at Columbia Bank, where they work with healthcare organizations on financing, growth, and capital planning. Eric and Alexandra join us this week to break down how ASC leaders should think about funding growth. They walk through the key differences between debt and equity, what ownership and control trade-offs come with each path, and which financial metrics lenders care about most — including EBITDA, revenue growth, leverage, fixed charge coverage, payor mix, stabilization, and quality of financial reporting.
In our data segment, we’re connecting the conversation back to HST’s 2026 State of the ASC Industry Report. We’ll look at how operational and financial metrics like net collection rate, OR utilization, cancellation rates, specialty mix, and case profitability can help ASC leaders build a stronger, more bankable growth story before pursuing expansion, adding physicians, or taking on new capital.
Resources Mentioned: HST’s 2026 State of the ASC Industry Report
Brought to you by HST Pathways.
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Transcript
Introduction and Podcast Format
00:00:00
Speaker
Welcome to This Week in Surgery Centers. If you're in the ASC industry, then you're in the right place. Every week, we'll start the episode off by sharing an interesting conversation we had with our featured guest, and then we'll close the episode by recapping the latest news impacting surgery centers.
00:00:16
Speaker
We're excited to share with you what we have, so let's get started and see what the industry's been up to.
ASC Financing Overview
00:00:23
Speaker
Hi everyone, here's what you can expect on today's episode. This week, my colleague Grant Duncan sits down with Eric Gonzalez and Alexandra DeHart from Columbia Bank for a practical conversation about ASC financing.
00:00:36
Speaker
They walk through the difference between debt and equity, how surgery centers should think about ownership and control, and what lenders are really looking for when a center is planning for growth.
00:00:47
Speaker
They also get into the numbers that matter most in a financing conversation, such as EBITDA, revenue growth, leverage, fixed charge coverage, payer mix, stabilization, and the quality of a center's financial reporting.
00:01:01
Speaker
One of the clearest takeaways from the conversation is that financing readiness starts well before you actually need the capital.
Preparing for Financing
00:01:08
Speaker
The centers that know their numbers, understand their growth plan, and can explain how that growth will actually translate into cash flow are going to be in a much stronger position.
00:01:18
Speaker
And after Grant's conversation with Eric and Alexandra, I'll come back for our data and insight segment, where we'll look at a few findings from hst's brand new State of the ASC Industry Report for 2026,
00:01:30
Speaker
and look at how it connects directly to today's discussion on how ASC leaders can use operational and financial data to build a stronger, more bankable growth story. I hope everyone enjoys today's episode and here's what's going on this week in surgery centers.
00:01:52
Speaker
Hey there, thanks so much for joining us today on the podcast. Can you briefly introduce yourselves? Yeah, Eric Gonzalez. I am the marketing director for healthcare banking at Columbia bank. I've been in the commercial banking lending platform for about 20 plus years.
00:02:08
Speaker
Healthcare have been in it for about 17. I've had a number of roles within the bank, but specific to healthcare care sales, credit workouts. Now I'm back into more of a sales role, expanding our markets in California, Arizona, Colorado, Nevada, and Texas.
00:02:24
Speaker
I am Alexandra DeHart. I am also with Columbia Bank. I am a health care banker and i am here and I'm excited to be on the podcast and talk with Grant and Eric.
00:02:35
Speaker
Awesome. Thank you both. I'm excited to talk about ASC financing with you both. So to start, How should ASCs think about the difference between debt and equity? And can you give maybe an example of each?
00:02:53
Speaker
They're wanting to think about maybe how to grow, how to look at financing. These are some helpful starting concepts to ground us in. Yeah, so at a high level, debt and equity are just really, they're two different ways an ASC can access capital. With debt, the physicians maintain ownership and control of the surgery center while borrowing money and gets repaid over time through cash flow.
00:03:19
Speaker
With equity, you're bringing in a partner or investor in exchange for the ownership in the business.
Debt vs. Equity Decision-making
00:03:24
Speaker
So a simple debt example would be refinancing a new surgery center or equipment purchase through a bank loan.
00:03:32
Speaker
The physician still owns the ASC, but the bank obviously has repayment expectations and loan covenants. An equity example would be bringing in a management company, hospital partner, private equity group that purchases a percentage of the ASC in exchange for capital and strategic support.
00:03:50
Speaker
That can provide growth capital and operational resources, but it also means sharing future profit decision making. Appreciate that overview. So how do you think an AC should approach which path is best for them?
00:04:07
Speaker
You know, if they're choosing, Hey, do I want finance and grow through debt or through equity? And are there specific metrics that should help guide them in that decision?
00:04:19
Speaker
Yeah, I'll take that one. It starts with the hack, the cashflow visibility, or the risk tolerance of both, I would say the entity and then the finance partner they're seeking financing from.
00:04:30
Speaker
Typically we're looking at the overall EBITDA does, what's the revenue growth. And then what's the timeline if they're expanding or if they're really maybe even a de novo? What, what, at what point are they going to have state
Key Financial Metrics for ASCs
00:04:43
Speaker
stabilization, right? So we're looking from a bank's perspective, where we're, we're providing debt financing.
00:04:48
Speaker
We're looking at the leverage, right? So that's the debt compared to EBITDA. There's two different levels of that. We're looking at total debt or we're looking at senior debt. Total debt would include bank financing and maybe some mezzanine financing plus with equity.
00:05:04
Speaker
And then the other aspect would be the senior debt, which is the bank itself, right? So we're just looking at leverage overall. Then we're looking more at the repayment of the debt, right? So the fixed charge coverage ratio, the pre and the post distribution.
00:05:17
Speaker
That's always one that's a little bit tricky if they haven't had, you know, debt financing or equity partners and maybe reducing what they're taking home, but it's not as much as you may anticipate. Right. And then it's really just understanding the revenue stream. What's the payer mix?
00:05:32
Speaker
You what, if you're expanding, how much is that going to add to your overall revenue stream? Do you have enough doctors to to bring on and, or do you have the existing staff to help build out what you're trying to accomplish?
00:05:44
Speaker
And I think, I think that last thing is just, again, understanding stabilization. Stabilization is one of those things where we have a definition and then maybe the physician groups have a definition the and we're trying to meet and mill, right?
00:05:56
Speaker
What is stabilization? Is it 12 months post of construction and there's good revenue streams and break even, or is it the revenue stream plus covering at a certain FC, a fixed charge coverage ratio?
00:06:08
Speaker
that's always a hard part to to get to, but that's the beauty of it, right? The negotiations and trying to find something that that works for both parties. Yeah. And I imagine that many of our AC leaders that are listening are tracking with you for those who are maybe newer or have a more clinical background. Can you define a couple of those terms you've mentioned for the acronyms?
00:06:33
Speaker
I jumped into that, but yeah, EBITDA is just, that's your profit plus adding back interest, interest, amortization, depreciation, those non-cash events. The other aspect to it is if you own the real estate and your bot and you're expanding, we're going to add back that rent component.
00:06:50
Speaker
The last portion that isn't really talked about lot, it's, I refer to as EBITDA. So majority of these ASCs always have some type of management company.
00:07:01
Speaker
And those are fees that are provided to reduce overall tax implications. But we look at that as part of the overall equation. So EBITDA is what we're looking at. So.
00:07:12
Speaker
Great. And when centers are thinking about, do I focus more on
Hybrid Financing Approach
00:07:18
Speaker
the debt side? Do I focus more on the equity side? What would you say are some pros and cons of approaching each of those?
00:07:27
Speaker
So the biggest advantage of debt is preserving ownership. If the ASC performs well, the physicians keep the upside. Debt is also generally less expensive long-term than giving up equity.
00:07:39
Speaker
The downside, of course, is that debt has to be repaid regardless of market conditions, reimbursement pressure, or operational challenges. With equity, the benefit is access to capital, operational expertise, recruiting support,
00:07:54
Speaker
and resources to help the business grow. But the trade-off is giving up a portion of the ownership and potentially some control over future decisions. And how often do you see a hybrid approach being taken?
00:08:05
Speaker
ye I take that one. Eric gets a lot of those. Yeah. it So it's just, it depends on how fast do you want to grow, right? That's the way I talk about things is that the bank is comfortable with certain thresholds for leverage.
00:08:19
Speaker
Again, that's EBITDA. relative to your debt. And we're trying to stay under certain thresholds, three to four times cup these covenants, right? And and those are We're trying to understand, can they stay within those parameters? If they want to grow faster, and that ratio is going to be higher than the three to four.
00:08:38
Speaker
And we're typically asking to bring in some type of equity. And that's really based on the trajectory of the growth, right? How fast are you going to grow? So what skin do you have in the game outside of the bank debt?
00:08:49
Speaker
That's really trying to understand that. And we have a lot of those conversations because there are certain operators right now that are, they've really sharpened their pencils. are good at what they do. And I would, I don't want to go too deep into this, but there's a lot of hospital systems. there's a lot of acquisitions of hospitals.
00:09:05
Speaker
So there's a fair amount of independent surgeons and physician groups that are wanting to go do their own thing. Right. And they have an existing business. They've definitely sharpened their pencils. ready to move to a new location, build up a campus or just a MOB, medical office building.
00:09:22
Speaker
And there's that growth strategy. here Okay, we did this. Now let's, we want to go do another one and another one. So certain aspects to to the business allow for that growth, but it's just trying to figure out how fast do you want to grow?
00:09:34
Speaker
So. And when they're evaluating that, how should physicians and ASC leaders think about that control and ownership piece? So as you talked about, that is a trade-off.
00:09:47
Speaker
How do you suggest they evaluate that? I always encourage physicians to think long-term. Capital is important, but leadership, control, alignment matter just as much. They really need to understand what decision-making authority looks like after a transaction closes, who controls future capital calls, control recruitment decisions, expansion opportunities, distributions.
00:10:10
Speaker
A deal can look very ah attractive, as we've seen, Eric, financially upfront, but if leadership and expectations aren't aligned, they can absolutely create friction later. I'm going to add to that if you don't mind. I think one of the aspects of the ASC world outpatient facility specific is the cost of control rate.
00:10:28
Speaker
Those are the two things we're talking about all the time. And so they're making these shifts one to reduce costs to, to provide more opportunities for patients to be seen sooner. So, and the, and those costs are the ones that they're exhibiting, but also the patient and the insurance.
00:10:44
Speaker
It's unusual to talk about this in, in, Non-healthcare people when they ask us what we do. And I actually like to say that we help lower the cost of the insurances, right?
00:10:56
Speaker
But that the other part, the whole thing is the control, right? They want to make their own decisions. they They, these are doctors that know what's best for their patients. And I think it really comes down to that, right? Giving the the control back to those that are seeing us, but those
Working with Banks
00:11:11
Speaker
that are helping us. So yes, there's the debt equity components of these things, but it's not always just about the bottom dollar. It's about what's best for the patient and how quickly can you get comfort or get somebody help?
00:11:24
Speaker
So. What would be a piece of tactical advice for someone who's saying, Hey, I'm probably going to work with a bank in the next year or so.
00:11:35
Speaker
This one's always the interesting one because a lot of these groups have grown up having their own internal, we'll call it controller. And they've really graduated, right? They're doing revenues anywhere from 10 to 50, something up to the a hundred million dollar range.
00:11:50
Speaker
but they haven't taken the time to really scrub their books to understand what they have. And then also what level of financials do you have, right? If you're asking for debts of 15 million or greater, typically banks are asking for audited statements, right? And those are expensive and they're also time consuming. So it may slow down that,
00:12:08
Speaker
that opportunity to move forward. So getting, understanding what level of financials you have is number one, right? And you don't have to have audit statements, I would say, but you could have CPA ah reviewed or CPA compiled.
00:12:21
Speaker
And then layering on top of that is is a quality of earnings, right? So that quality of earnings is gonna verify the cash is really there. We want to find out what's the normalized or stabilized cash flows to repay debt, right?
00:12:33
Speaker
Yes, you have an idea about growing and there's going to be this windfall of profit, but we've got to understand what it is, that's what you have today, right? So I think first and foremost is what level of financials do you have, right? Secondarily is understanding that plan, like,
00:12:47
Speaker
What is it that you're trying to accomplish? Are you trying to add more to your overall ASC outpatient facilities? The one that comes to mind to me that we see probably the most of is an ortho. People are adding a lot of pain and spine surgery to that.
00:13:02
Speaker
that's That's one of the biggest ones, right? They're trying to just expand their revenue streams, right? And they go handin hand in hand. So let's just trying to understand what is you're trying to accomplish? How, what revenues, what profits are you goingnna and then also the staff, what other doctors you bring on? Are they associates? Are they going to be an owner?
00:13:18
Speaker
And then how are they buying it? Was that, is it an upfront cost? Is it an earn out? Do you want bank financing? We can help you with that because we help with buy-ins. So I think there's a lot of different things going on there, right?
00:13:30
Speaker
And then also just understanding that there's if there's this, if it's an expansion and they have an existing location, how far away is it from that one? And then is it, if it's, it's like another city or if it's another town over, how are you going to drive other patients to that new location? Right?
00:13:46
Speaker
So it's just understanding the overall plan. How, what, where is the revenue coming from? how are you going to accomplish that with the existing staff or new staff? So. I think the best operators are the ones that are going to really do really well in the coming years. So you really got to sharpen your pencils and know what you're talking about.
00:14:04
Speaker
one of the things I love is getting in front of physician groups and whiteboarding things. If you can tell me on if you can write it down and tell me exactly what you're seeking or what you're doing, you really demonstrate that you know what talking about.
00:14:16
Speaker
I love that kind of stuff, right? Yeah. You can send me a huge 10, 10 page report, but let's talk about it in person to really understand the k nitty gritty of the nuances. So. And let's say that an ASC has gotten to that place where they say, okay, we we do want to proceed here and partner with a bank.
00:14:35
Speaker
We've considered some of those factors you were just talking about, Eric. What should they be looking for in a bank beyond just the interest rate that they're going to get? The cheapest rate is not always the best banking relationship. So ASC should really look for a bank that understands healthcare and even just listening to Eric, the healthcare care reimbursement, the physician ownership structures and operational side of ambulatory surgery centers, the responsiveness, it matters, the consistency matters, experience matters. You want a banking partner that can stay with you through the growth cycles, the expansion and market changes, not just to close a single transaction. And that's something that we come up
00:15:16
Speaker
Quite often with, say someone started with a different bank and we're coming in to help clean up. But if we're able to start from the beginning, it's a little easier. But again, once you start the process with us, they'll see the difference between us and the other banks that they have worked with.
00:15:30
Speaker
I'm going to jump Eric, I know you have something else to add. I think it's the flexibility, the customization of that financing. In the last 24 or 36 months, I don't think any deal we've looked at is exactly the same.
00:15:42
Speaker
Everybody has a different structure. Everybody has a different structure for taxes, for how cash flow flows. You throw an MSO in there, or maybe even throw in something really and unique like a trust, or maybe there's some type of insurance product in there.
00:15:57
Speaker
It gets really complicated. So we need to understand that, that the structure, where where all the assets at, where's the flow of dollars. And I think that's the biggest part is understanding that upfront. I don't want to get into something that we we can't finance. Right. So we do a lot of due diligence on the front end to understand the structure we talk with, we engage counsel to make sure that we're capable of financing any particular entity. And can they be a co-borrower? Can they be a guarantor?
00:16:23
Speaker
Can they grant collateral? And then also the last thing is, can they sign on for a new debt? There's understanding those nuances for each entity. You think about the, when we put these things together, we like to see visually so that we can understand the flow of funds. So I just wanted to make sure that we talk about the flexibility of credit. I've been doing this for a really long time and think that's how we win is with our flexibility, right?
00:16:48
Speaker
And I would say that sometimes they can be expensive because there's a lot going on. Especially if it's not just an acquisition, you've got a construction project. Those take time, 24, 36 months.
00:17:00
Speaker
So, and there's a lot of pay applications, understanding the construction monitoring of that. There's a lot that goes into ground of construction or even just an acquisition of a real estate converting to an m MOV or some type of ASC or micro ER or a BergerCare.
00:17:16
Speaker
There's just a lot going on. So. And I like how you say that, Eric, because I could say just in the last couple of weeks, I feel like a lot of the deals and opportunities we've been looking at, they're similar, but they're very different. And we approach them, they're all different, right? And there was different structure.
00:17:31
Speaker
The things that we were able to do and provide in our term sheet were very different from what other other competitors were able to do, but really thinking outside the box. and i love So Eric, I do have to share this a little bit, but he has been with the company 20 years. I know he mentioned that earlier, but he previously in a previous role had a 30 million credit approval limit, which is very beneficial for me being in the market and working with all of these ASCs, but really taking back any deal or any questions that I may have, I have him as a resource. We're able to dive in and look through all of the financials and structure and do things differently. It's not just what like Eric mentioned earlier,
00:18:09
Speaker
The MSO, so so we we just have to do a lot of different things, but I love that we take the time to really understand the deal. They're all very unique and the solutions that we have, they're very different from our competitors. And I think that's a hundred percent what makes us stand out.
00:18:23
Speaker
Appreciate all you have both shared today. Definitely helpful to understand this world better for those listening.
Operational Data for Strategic Decisions
00:18:31
Speaker
Last question here. We do this every week with our guests.
00:18:35
Speaker
What is one thing our listeners can do this week to improve their surgery centers? I'm going start Eric. and go for it One thing I'd encourage every ASC to do this week is spend time understanding their data. The strongest surgery centers usually know their numbers extremely well. Case volumes, block utilization, turnover times, payer mix, physician productivity, and profitability by specialty. Some operational improvements compound quickly in an ASC environment.
00:19:04
Speaker
And the centers that consistently monitor performance tend to make much better long strategic decisions. That's what I'd say. She stole everything i was going to say. No, Eric, I know you have more. That's why I like to go first.
00:19:18
Speaker
I think just trying to understand where they're at. Let's think about this. where they were at, where they're at today and where they're going, right? Trying to understand what is the one, two, three, maybe five year place that they want to be.
00:19:32
Speaker
and think we're talking about, what we're talking about here is expansion, right? Just understanding where you're going. And then also finding partners that that can help you get there because you don't want to show up unprepared and then have to draw out that that process longer.
00:19:46
Speaker
So I think it's just talking with your CPAs, talking with your lawyers, talking with your bankers, your brokers, even talking about with architects or engine contractors about how is it that we're going to get there and then trying to figure out how do we pay for it. so Thank you both. Great to have you on. Thank you.
00:20:02
Speaker
Thank you.
00:20:10
Speaker
Welcome back. That was Grant Duncan's conversation with Eric Gonzalez and Alexandra DeHart from Columbia Bank. And I thought this was a great episode to connect back to HST's brand new State of the AAC Industry Report because so much of the conversation came down to one big idea, which is if you want to grow, you need to know your numbers. This year's report includes three full years of data from 2023 all the way through 2025, with insights from over 680 surgery centers across 45 states and nearly 4.8 million unique patient visits. So while every surgery center is different, the report gives us a useful benchmark for what ASC leaders should be watching as they think about expansion, financing, and their long-term strategy.
00:20:59
Speaker
The first area that connects really well to today's interview is cash flow visibility. Eric talked about how banks look at EBITDA, revenue growth, leverage, and the center's ability to repay debt.
00:21:12
Speaker
And one of the most direct operational signals behind that is net collection rate. In the report, the average ASC net collection rate improved from 81% in 2024 to 87% in 2025.
00:21:26
Speaker
That is good movement overall, but the specialty level differences are still significant. Pain management and spine, for example, were still lagging 54% and respectively.
00:21:39
Speaker
That matters because when a surgery center is trying to finance an expansion, bring on new physicians, or evaluate debt versus equity, the question is not just, you know, are we doing more cases? The question is, are we turning those cases into predictable cash flow?
00:21:55
Speaker
So for ASC leaders, the practical takeaway is to know your net collection rate by specialty. If one service line is growing, but collections are lagging, that is something you want to understand before you sit down with a lender and not at The second area is capacity and utilization. The report found that OR block utilization ranges from 71% in smaller centers to nearly 50% in larger centers, while cancellation rates remain around 20%. The report also points out that those scheduling gaps can contribute to anesthesia challenges because open time in the schedule can make it harder to work with anesthesia cost effectively.
00:22:35
Speaker
that ties directly to the expansion conversation. A center may be thinking, we need more ORs, or we need another location, or we need to add physicians. But before making that case, leaders should also be able to show how well they are using capacity that they already have.
00:22:52
Speaker
If your current blocks are underutilized, if cancellations are creating holes in the schedule, or if anesthesia coverage is becoming more expensive because the day is not tightly managed, that all affects your growth story.
00:23:06
Speaker
A stronger financing conversation sounds more like this. Here's our current utilization. Here's the volume that we are turning away. And here are the physicians that are committed to bringing in new cases.
00:23:18
Speaker
Here's how we are reducing cancellations. And here's how the expansion will help us create incremental cash flow. And that is a much more compelling story than simply saying we're busy and we simply need more space.
00:23:30
Speaker
The third area is specialty mix and profitability. In the report, gastroenterology averaged 171 cases per month in 2025, supported by shorter OR durations and strong utilization.
00:23:43
Speaker
Orthopedics saw revenue per case rise 16% 2023 to while maintaining steady volume Ophthalmology also remained a high volume specialty, averaging about 127 cases per month.
00:23:57
Speaker
And that matters because not all growth is the same. Adding cases is good, but adding profitable, predictable, operationally manageable cases is what really strengthens a center.
00:24:09
Speaker
And that is especially true in specialties with implants, higher supply costs, or more reimbursement complex complexity. The report also emphasizes reviewing case profitability before the date of service, including procedure costs, staffing hours, equipment usage, overhead, reimbursements, patient payments, and implant costs.
Financial Management and Growth Assumptions
00:24:29
Speaker
It specifically calls out metrics like expected profit margin by procedure, expected profit margin by physician, and implant cost per procedure. That lines up almost perfectly with what Alexandra's advice was at the end of the interview, which is that the strongest centers know their numbers, they know the case volume, block utilization, turnover times, their payer mix, physician productivity, and profitability by specialty.
00:24:54
Speaker
And then the final connection is financial review discipline. The report recommends that ASEs regularly review financial performance, revenue and expenses, their cash flow projections, budget variance, and their growth trends. It also identifies EBITDA, revenue growth rate, budget variance, cash flow, and budget preparation timeline as key financial review metrics.
00:25:18
Speaker
And this is exactly the kind of foundation that Eric and Alexandra were talking about in today's episode. If you're planning to work with a bank in the next year, the preparation starts today. Clean up your financials, understand your cash flow, review profitability by specialty and surgeon, know your payer contracts inside and out, track utilization and cancellations, and make sure your growth plan is specific enough that someone from the outside your center can understand how it will all work.
00:25:48
Speaker
So the takeaway for this week is simple. Pick one growth assumption and pressure test it. Maybe it's a new service line. Maybe it's a new physician. Or maybe it's a new OR or it's a de novo center.
00:26:01
Speaker
Ask yourself, do we have the data that will prove this will work? And if the answer is yes to that question, you are not just improving operations, you're building a stronger financing story.
00:26:12
Speaker
And if the answer is no, then that's a great place to start this week. And that's it for this week's episode. big thank you to Eric and Alexandra from Columbia Bank for joining Grants and sharing such a practical look at ASC financing.
00:26:23
Speaker
If you found this conversation helpful, please share the episode with a colleague, especially someone who is thinking about expansion, financing, or how to make better use of their center's operational data. It helps us grow the show. And more importantly, it helps us get useful conversations like this in front of more ASC leaders. Thanks again for listening to This Week in Surgery Centers. We'll see you again next week.