From: Becker Scott <>
Subject: [Becker's ASC E-Newsletter] OIG OKs Two Gain-Sharing Agreements; CMS Says Resources for Surveys to Be Very Limited


January 17, 2008
In This Issue
OIG OKs Two Gain-Sharing Agreements
CMS Says Resources for Surveys to Be Very Limited
News and Notes
Companies to Watch
March/April 2008 issue
OIG OKs Two Gain-Sharing Agreements

The OIG has given thumbs up to two gain-sharing agreements between a hospital and physician groups in advisory opinions 07-21 and 07-22, issued earlier this week. In the proposed structures, which appear to come from the same hospital based on their similarity, the hospital would share a percentage of its cost savings arising from cost-reduction measures taken by the involved anesthesiologist and cardiologist groups.

Cost savings would be measured based on the physicians' reduction of waste and use of specific devices and supplies during designated cardiac surgery procedures. Further, the arrangements contain "several safeguards intended to protect against inappropriate reductions in services," such as clearly and specifically identifying product substitutions and items for use as needed.

The OIG notes that, while "'Gainsharing' plans can present substantial risks for both patient and program abuse ... Given the limited duration and scope of the Arrangement, the safeguards provide sufficient protections against patient and program abuse."

Further, "The Arrangement is markedly different from 'gainsharing' plans that purport to pay physicians a percentage of generalized cost savings not tied to specific, identifiable cost-lowering activities," writes the OIG in advisory opinion 07-22. "Importantly, the Arrangement set out the specific actions to be taken and tied the remuneration to the actual, verifiable cost savings attributable to those actions. This transparency allowed an assessment of the likely effect of the Arrangement on quality of care and ensured that the identified actions caused the savings."

Finally, says the OIG, "Other arrangements, including those that are more expansive in scope or less specific than the Arrangement, are likely to require additional or different safeguards."

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CMS Says Resources for Surveys to Be Very Limited

CMS informed states on Nov. 5 that resources for initial surveys would be severely limited. In a memo CMS stated that new providers and suppliers would be to be given the lowest priority -- and that providers that have accrediting organization options for accreditation, as ASCs do, were strongly encouraged to seek third-party accreditation rather than state surveys in order to avoid unnecessary delays.

According to Fred Ortmann III, the founder and CEO of Ortmann and Associates, the delays vary by state, and ASCs in development should check with the appropriate state authorities to determine just the extent to which surveys will be delayed.

"We recently opened two new surgery centers in Florida, [which] has announced that new facilities are in Tier 4 of its priority sequence and are therefore discretionary to some extent, and will therefore experience significant delays," says Mr. Ortmann. "Significant here can mean in excess of one year."

Fortunately there is an alternative -- although one that is a bit costly.

"A center can have its chosen accrediting body do the Medicare Certification review, but we discovered a part of that process that can further slow the process," says Mr. Ortmann. "We therefore were pursuing a review by the accrediting body; however, we were informed that we first needed a Life Safety review; Florida has perhaps the most extensive and in-depth Life Safety inspection process in the country, and upon completion of this survey, the state actually completes the CMS 2786 report, which is the 'Fire Safety Survey Report -- Ambulatory Surgical Centers' for Medicare. This means that any other survey done by an accrediting body would be redundant."

"We asked the accrediting body about this, and it agreed to waive the survey if we provided a copy of the CMS 2786," Mr. Ortmann continued. "I spoke with Skip Gregory, chief of the Florida Health Facilities Division; he contacted the Florida Agency for Health Care Administration licensure division and it has agreed that, in the future, its surveyors will leave a copy of the CMS 2786 at the facility. The facility can then present this to its accrediting body and ask for a waiver of the Life Safety Survey. When we did this, our accrediting body approved our request and immediately started scheduling the Medicare Certification survey. This saves several thousand dollars in survey fees and helps get the center approved by Medicare more rapidly, which can also save many thousands of dollars."

According to Mr. Ortmann, this process applies only to Florida at this time, but those who are developing ASCs in other states can check with their state to see if the same conditions apply and, if so, can consider using this approach.

For ASCs, there are several options for accreditation, including the Joint Commission at (202) 783-6655, the AAAHC at (847) 853-6073, the AAAASF at (847) 775-1970, and the American Osteopathic Association at, (312) 202-8060.

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News and Notes

Study: 80 percent of knee arthroscopy back to light activity one-week post-op. More than 80 percent of patients return to walking, yardwork and other light activity one week after undergoing knee arthroscopy, according to a study published in the January issue of Arthroscopy: The Journal of Arthroscopic and Related Surgery. The study, the first to quantify recovery times for patients having the minimally-invasive procedure, tested the hypothesis that a majority of patients return to unrestricted activity within four weeks post-op, and found that 82 percent of patients returned to walking and other light activity one week after surgery. This improved to 94 percent after two weeks and 100 percent after four weeks. Pre-op, 88 percent of patients had described knee-related activity restriction.

Unretrieved device fragments may cause serious harm. The FDA advised healthcare professionals of serious adverse events associated with unretrieved device fragments (UDFs). A UDF is a fragment of a medical device that has separated unintentionally and remains in the patient after a procedure. Patients may not be aware that this has occurred. The FDA Center for Devices and Radiological Health receives nearly 1000 adverse event reports each year related to UDFs. The adverse events reported included local tissue reaction, infection, perforation and obstruction of blood vessels, and death. Contributing factors may include biocompatibility of the device materials, location of the fragment, potential migration of the fragment, and patient anatomy. During MRI procedures, magnetic fields may cause metallic fragments to migrate, and radiofrequency fields may cause them to heat, causing internal tissue damage and/or burns. See the FDA Public Health Notification for the agency's recommendations regarding this issue.

Welcome Joint Commission. Thank you to the Joint Commission, which accredits and certifies more than 15,000 healthcare organizations and programs in the United States, for signing up for electronic and print advertising. To learn more about earning accreditation from the Joint Commission, a symbol of quality that reflects a facility's commitment to meeting performance standards, visit its Web site or call (202) 783-6655.

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Companies to Watch

We are delighted to highlight the following companies in this week's E-Weekly.

The Sanders Trust. The Sanders Trust owns, acquires and develops ASC buildings and medical office buildings nationwide. Owners of ASC "bricks and mortar" who sell their facilities and lease them back from The Sanders Trust benefit by eliminating debt guarantees and freeing capital from an illiquid investment while maintaining control over building management and operation.

Founded in 1997, The Sanders Trust is lead by a 20-year healthcare veteran, CEO Rance Sanders, and by the former Green Bay Packer and NFL Hall of Fame quarterback Bart Starr.

To learn more about how The Sanders Trust can improve your personal balance sheet, visit its Web site, e-mail Bruce Bright or call him at (205) 298-0809 to discuss the sale of your ASC building or MOB.

Manning Search Group. Roger Manning, Cathy Montgomery and their healthcare search consultant team offer middle management and executive search and recruitment with ASC-industry-specific focus. MSG has several national and regional ASC employers as clients covering free-standing ASCs, hospital-owned ASCs as well as specialty surgical hospital venues. The company's most common searches consist of business office managers, CFOs/controllers, administrators, clinical directors, managed care directors, VPs of development and multi-site management such as regional VPs. We have also been involved in C-suite placements. Functional areas include operations, clinical, finance, reimbursement, development and sales. E-mail Roger Manning or Cathy Montgomery, call them at (636) 447-4900, or visit Manning Search Group online.

Regent Surgical Health. As buyers, developers and managers of outpatient surgery centers and physician-owned hospitals around the country, Regent Surgical Health is an experienced developer and specialist in turnaround situations. Partnering with Regent can result in almost immediate improvements in financial health. In addition to acquiring underperforming ASCs and physician-owned hospitals, the company also thrives on turning single-specialty ASCs into multi-specialty, larger entities. Regent believes that doctors need to own the majority interest in their facilities and to control their own destinies. As a result, Regent typically owns about 20 percent of the ASCs and 10 percent of the physician-owned hospitals in which it partners. Its principals invest their own capital and expertise in each facility, sharing risks side-by-side with surgeon partners. Regent employs a limited liability company business model, which places the control of the business in the hands of the physician members. You can learn more by visiting Regent Surgical Health online.

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If you have any questions on any of the items listed in this letter, please contact me at (312) 750-6016 or by email at

Very truly yours,
Scott Becker

Scott Becker, JD, CPA
(312) 750-6016

Becker's ASC Review
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ASC Communications, Inc.
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