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De Novo Expansion

August 27, 2020
De Novo Expansion
Written by
Chad Hooker

Scaling Physician Practices Part 2. Examine the basic needs of a de novo expansion opportunity, including site selection, licensure, and marketing.

Identifying de novo clinic and ASC opportunities outside of established markets takes a broad, strategic approach and oftentimes may be the best market entry strategy.  De novo strategies provide many advantages such as picking the real estate you want with the right patient and payor demographics, consistent branding, and aesthetics across locations, ultimately enabling you to leverage a consistent playbook for growth to maximize the success of the location.

Site Selection

  • Proximity to hospital or referral partners
  • Patient Demographics
  • Payer Demographics
  • Limited Competition

Location plays a key role in the success of a clinic or ASC. Being in close proximity to a hospital and other physician offices for referral convenience is critically important. Patient demographics, payor demographics, competition, and the ability to recruit physicians are all key considerations.

Drawings & Development

  • Architect with healthcare or ASC experience
  • DCH & CMS guidelines
  • Weekly calls with architect & builder

Selecting an architect with ASC experience can help ensure your facility is designed properly and will meet the Dept of Community Health and CMS guidelines. Similarly, selecting the right builder with medical experience can help streamline the development process. Once the project is underway, you should make sure the architect and construction firm keep you well-informed throughout each phase of development. Try to schedule weekly meetings where all key members of the project are briefed to ensure milestones are met.


  • Start early
  • Gather info from physician partners
  • Joint commission or AAAHC accreditation

Start the licensing process early.  Commercial payers and CMS will require your ASC to be Medicare-certified or accredited by one of the CMS-approved accreditation organization (AAHC or Joint Commission). Gather all the necessary information from physician partners and submit it as soon as possible. Once the certification survey is finished, it may take several more weeks to process documentation before Medicare issues your certification letter. The certification letter provides your ASC with its Medicare number and Provider Transaction Access Number (PTAN). This portion of the process can take several months and must be accounted for in your project timeline.


  • Schedule meetings with referral partners
  • Create a strong physical and digital presence

Promoting the future opening of the ASC to the referral community is critically important. Send out press releases, postcards, banners, and build a strong digital presence to help spread the word about the opening. Hold meetings with potential referral partners to let them know you are coming to the area to build awareness and grow brand recognition of the ASC.

Payor Contracting

  • Negotiate reimbursement
  • Negotiate contract terms
  • May take several months

Lastly, but most importantly, securing payor contracts for your de novo ASC is critical to your location’s long-term success.  It may take your new ASC a few to several months to negotiate agreeable reimbursement and contract terms with all its major payers. 

Every project varies, but your general timeline should budget 9-12 months to get up and running.  2-3 months for site selection and drawings.  3 months for construction. And 3 -6 months for licensure, accreditation, and payor contracts.  

This is the second part in a 5-part series on scaling a multi-site physician services practice. Subscribe to our email list or follow us on LinkedIn and Twitter for updates on our latest blog posts. To go back to our series overview, click here.