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1. Fair market value. You must first determine the actual fair market value of units in the company and sell them at this price. To be on the safe side, have an independent, third-party appraiser establish this value; such an expert will be wellequipped to take into account lack of liquidity or minority discounts when establishing unit value for a new investor. Documentation should clearly state the nature and amount of any discounts. If you choose to set the price by doing an internal analysis, you must have a clear, documented method of establishing the valuation.

2. Loans for units. New investors may obtain loans from an unrelated party — a bank, for example — in order to invest in the ASC. If the bank requires new investors to pledge their units as collateral, either your operating agreement should specifically allow this or the other owners should provide a written consent to permit such a pledge.

3. Smaller initial purchase. To reduce the cost of a buy-in, you could allow a new investor to buy a smaller number of units than existing investors own. For example, if existing investors each own 10 units, the new physician investor might buy only two. He would have proportionately less ownership and receive proportionately less distributions than the other members. But the upshot is that he gets to be part of your ASC and still pays fair market value — it's just what he can afford at the time. If subsequent offerings are made, he would still have the opportunity to buy more shares, albeit at the new fair market value price. Just remember that such an offering should generally be open to all physician owners with less-than-equal ownership, regardless of the volume or value of referrals to the ASC.

4. Distribution of debt proceeds. You can also lower the price of the buy-in for a new physician by recapitalizing the company. One way to do this is to increase your debt through a loan or large purchase. You can then immediately distribute the proceeds of the debt to existing members. When the fair market value is calculated thereafter for a new physician, the share prices will be lower because of the increased debt — making it easier for new investors to buy more units.

The advantages of this strategy are that the existing physicians are provided with immediate cash, and new physician investors may purchase a larger ownership share. The disadvantage of this strategy is that you'll have to have a long-term view; the debt burden may take years to overcome. Furthermore, any substantial increase of debt reduces company value, increases risk of default and decreases your ability to obtain additional debt if you should need it. Paying down the principal of the debt also negatively impacts later distributions and won't generally provide corresponding tax deductions to share holders. Finally, such an effort may be viewed as evidence that the ASC doesn't genuinely need new capital.

5. Buy-in price need not equal buy-out price. If a situation arises in which you'd like to redeem units from existing members at or near the time units are offered to new physician investors, there may be situations where you can offer the buy-in shares at a lower (or higher) price than they buy-out shares. While the buy-in price should never be below fair market value, the buy-out price is often calculated according to a valuation formula in your operating agreement. This may result in a per-unit buy-out price that is lower or higher than the per-unit buy-in price.

Anti-kickback Statute. You've heard it before, but it bears repeating: This statute prohibits the knowing and willful solicitation, receipt, offer or payment of "any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind" in return for or to induce the referral, arrangement or recommendation of Medicare or Medicaid business. Offering a discount on an item of value, particularly an ownership interest in an ASC, may be considered remuneration by the OIG and the courts. So may any gift, gratuity, relief from a financial obligation (such as an interest-free or guaranteed loan) or benefit conferred by one party on another, directly or indirectly, The OIG has promulgated several safe harbor regulations to clarify and narrow the scope of the Anti-kickback statute:

- 42 CFR 1001.952(r), provides that return on an investment interest in an ASC will not be considered remuneration so long as the terms of the investment are unrelated to previous or expected volume of referrals and the return on investment is directly proportional to the amount of capital investment.

- The commentary to the ASC safe harbor regulations, 64 Fed. Reg. 63536 (1999), further clarifies that you cannot sell units to a primary care physician who would refer patients to the ASC but not perform surgeries there, and that you should avoid jointly investing in an ASC with physicians in other specialties who often refer to one another. Remember, you must fully comply with them in order to gain the absolute defense to prosecution they afford.

Special Fraud Alert. In this document, the OIG identified what it considers the features of suspect healthcare joint ventures: the selection of investors solely on the ground that they are in a position to make referrals to the joint venture; offering greater investment opportunities to investors likely to make a large number of referrals; actively encouraging investors to make referrals; requiring only a small capital investment by physician-investors or loaning the investment capital to physicianinvestors; and investments with disproportionately large returns compared to similar investments with similar risk. The alert was issued in 1989 and was revalidated by the OIG on Oct. 6.

Special Advisory Bulletin. An April 2003 OIG communication addressing broader concerns regarding joint ventures clarified that a discount is considered a form of remuneration and that safe harbor protection relies on the use of fair market values as determined in an arm's length transaction.