Market Warfare: 4 ASC Projects Contested in 2014
In early 2014, Kaleida Health and a group of 22 physicians announced plans to open the multispecialty Southtowns Ambulatory Surgery Center in Orchard Park, N.Y. In line with its reputation as notoriously difficult market, several of the state's providers raised objections. Neighboring Catholic Health claimed that the new ASC would cost it between $3.3 million a $6.5 million in losses. Lake Shore Health Care Center and Betrand Chaffee Hospital echoed Catholic Health's dissent. Though the New York State Department of Health initially recommended approval, the board ultimately denied the project a CON.
Kaleida Health and its joint venture partners rallied and filed an appeal. Through the appeals process, the project will be assigned to a state Department of Health attorney for review and eventually come before the Public Health and Health Planning Council for a final decision.
In a similar scenario, Rex Healthcare, based in Raleigh, N.C., is in the process of recruiting 20 or more surgeons for a joint venture ASC. The ASC will be entering a market with considerable competition. WakeMed Health & Hospitals operates Capital City Surgery Center in Raleigh. Additionally, Novant Health has already received CON approval for its Novant Health Same Day Surgery Franklin in Youngsville, a short 10 miles from the Rex Healthcare proposed project.
Novant Health is the most vocal opponent of the Rex Healthcare project, which comes as no surprise. Rex Healthcare filed its own objections to the Novant Health Same Day Surgery Franklin. The state's Department of Health and Human Services could make a decision regarding Rex Healthcare's application by the end of July, or state regulators could delay the decision until September.
While the fate of the Kaleida and Rex Healthcare projects remains to be seen, 2014 has also had its fair share of ASC victory stories. In 2010, Kennestone Hospital received preliminary CON approval for East Cobb Surgery Center in East Cobb County, Ga., only to be derailed by objections from Northside Hospital in Atlanta. The objections were sustained by the Georgia Court of Appeals and the project remained defunct. But, Kennestone Hospital kept up a dogged pursuit and this year the Georgia Supreme Court overruled the lower court's decision. The project now has the green light.
Mirroring the timeline of the Kennestone Hospital saga, Physicians Endoscopy and a group of five physicians received approval for an endoscopy center project in Gastonia, N.C., after a four year battle. The CON application was filed in 2010 and followed with conditional state approval in 2011. CaroMont Health's appeal added three year of wait time, until this year the North Carolina Court of Appeals denied the claim. The endoscopy center, the Greater Gaston Center, will now open before the end of the year.
What can be learned from these stories? Just the mention of so many big health system and hospital names surrounding just a few projects demonstrates the increasing interest in the outpatient setting. The number – and size – of players is growing and the completion is fierce. But even so, new centers are opening their doors. Which ASCs and strategies have the longevity to endure this market saturation remains to be seen.
More Articles on Transactions and Valuation Issues:
6 Must-Reads for ASC Physicians Planning to Take on a Joint Venture Partner
3 Recent ASC Acquisitions
8 New ASC Openings, Plans & Expansions
© Copyright ASC COMMUNICATIONS 2015. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.
To receive the latest hospital and health system business and legal news and analysis from Becker's Hospital Review, sign-up for the free Becker's Hospital Review E-weekly by clicking here.
New From Becker's ASC Review