From: Becker Scott <>
Subject: [Becker's ASC E-Newsletter] Hospital Efforts to Retain Outpatient Surgery Cases Go Bad; Surgeon's Qui Tam Suit Prompts Federal Investigation into Allegations of Hospital Kickbacks; Action Needed: Bill Threatens Physician-Owned Hospitals, Expected to Pass House Shortly; Six Days Left for Early Audioconference Registration: Handling Complex Orthopedic and Spine Procedures in an ASC; Registration Commencing for June Orthopedics-Driven ASC Conference
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March 3, 2008
In This Issue
Hospital Efforts to Retain Outpatient Surgery Cases Go Bad; Surgeon's Qui Tam Suit Prompts Federal Investigation into Allegations of Hospital Kickbacks
Action Needed: Bill Threatens Physician-Owned Hospitals, Expected to Pass House Shortly
News and Notes -- 6 Days Left to Register Early for Audioconference: Handling Complex Orthopedic and Spine Procedures in an ASC; Registration Commencing for June Orthopedics-Driven ASC Conference
Companies to Watch
June 08 Conference Ad
Hospital Efforts to Retain Outpatient Surgery Cases Go Bad; Surgeon's Qui Tam Suit Prompts Federal Investigation into Allegations of Hospital Kickbacks

Increased competition between ASCs and hospitals may push organizations to consider aggressive and possibly questionable methods of attracting physicians and cases.

Such competition is evident in a South Carolina case. There, a Medicare and Medicaid fraud case against Tuomey Regional Medical Center in Sumter, S.C., has been initiated by an orthopedic surgeon whose suit accuses the hospital of violating Medicare and Medicaid regulations after the hospital asked doctors to affiliate with the hospital and refer their patients to Tuomey for services, according to published reports.

The U.S. Justice Department, which has now become the lead plaintiff in the case, has said such self-referrals and kickbacks drive up costs and limit competition. They also violate Medicare and Medicare regulations hospitals are required to follow in order to be eligible for and receive federal and state money. The U.S. government's joining the suit is an ominous sign for Tuomey.

Michael Drakeford, MD, the orthopedic surgeon whistle-blower, initiated the lawsuit after he declined to affiliate with the hospital.

Dr. Drakeford's lawsuit says Tuomey began conducting fraudulent practices after it predicted multi-million dollar losses as a result of competition from a new GI clinic for performing low-risk, outpatient surgical procedures, such as endoscopies. Tuomey allegedly entered into business agreements with doctors and would pay them to perform their cases at the hospital rather than the clinic.

"Every time there was a referral, the hospital got money and the doctor got money," said U.S. Attorney Norman Acker, according to reports.

The suit alleges that Tuomey "devised a scheme by which it submitted and caused others to submit false and fraudulent claims for payment to Medicare and Medicaid" from January 2005 to September 2007, according to reports.

The hospital is denying the accusation.

"I just want to take exception to the suggestion that my client was paying kickbacks or anyone was paying bribes to anyone," said Tuomey lawyer Dan Mulholland, according to reports.

The hospital could face millions of dollars in fines, as well as severe penalties, if found guilty of the charges.

NovaMed (every other week/8 weeks)
Action Needed: Bill Threatens Physician-Owned Hospitals, Expected to Pass House Shortly

A portion of the Mental Health Bill introduced today includes a section which directly impacts physician owned hospitals. The bill is expected to pass the House of Representatives. The summary of the bill is as follows:

  • Existing hospitals can be "grandfathered." There is no under-development or new-hospital exception from date of bill passing.

  • Grandfathered hospitals have to have physician-ownership cumulatively no more than 40 percent of the hospital and 2 percent per individual physician within 18 months.

  • Growth allowed to the grandfathered hospitals must be on the hospitals' campuses and cannot be more than 50 percent than currently exists and is not automatic. The secretary of the Department of Health and Human Services has the discretion to deny a hospital the ability to expand.

  • Several disclosure requirements to HHS of the investment and to the patient prior to procedure.

If you would like to help, please e-mail Molly Sandvig or call her at (605) 321-3483, and she can help tell you and your members whom to contact.

ASC Society
News and Notes

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Orthopedics-Driven ASC Conference: June 19 to 21 in Chicago. Here's a sampling of some of the outstanding speakers and topics we have lined up for the 6th Annual Orthopedics, Spine and Pain Management Driven ASC Conference: Improving Profits, Legal and Business Issues:

  • "Spine Surgery as a Core Driver in Multispecialty ASCs," presented by Jim Lynch, MD, chairman and director of SpineNevada and the Surgery Center of Reno;

  • "The Impact of the New CMS Payment System on Orthopedics and Pain Management," presented by Greg Cuniff, the CFO of National Surgical Care;

  • "A Case Study Approach to Building an ASC Around Orthopedics: What Works and What Does Not," presented by Brent Lambert, MD, FACS, principal, Ambulatory Surgery Centers of America;

  • "10 Ways to Maximize the Use of Your ASC's IT System," presented by Scott Palmer of Source Medical and Melody Mena, administrative director of the Surgery Center at Mount Zion; and

  • "Maintaining Successful Physician Investor Relationships Over a Long Period," presented by Jack Jensen, MD, of the Athletic Orthopedics and Knee Center.

The conference is presented by ASC Communications and will be held June 19 to 21 at the Westin Michigan Avenue in Chicago.

There are four easy ways to register:

  • Online. Register through our secure Web site.

  • Fax. Complete the order form and fax it to (312) 706-2526. Please show ASC Communications c/o a5 as the subject line.

  • Mail. Complete the order form and mail it to ASC Communications; c/o a5 Inc.; 1 N. LaSalle Street, 47th Floor; Chicago IL 60602.

  • Phone. Call (312) 546-6042 to register.

If you are interested in exhibiting, contact Jessica Cole or Dan Bragaw.

Speakers needed for October conference. We are looking for topic suggestions as well as speakers for the following topics for the Ambulatory Surgery Centers -- Improving the Profitability of and Establishing ASCs -- Business and Legal Issues conference:

  • Panel: Ophthalmology, ENT and urology in ASCs -- What works and what doesn't; tips for improving profits;

  • Panel or lecture: Ophthalmology and ENT in ASCs;

  • Panel or lecture: Structuring successful physician-hospital joint-ventures for short- and long-term success;

  • Podiatry as a profit center for ASCs;

  • Orthopedics and bariatrics as key specialties for the ASC; and

  • Panel or lecture: Three different methods to improve profits in an ASC -- recruiting, collecting and contracting.

"Ambulatory Surgery Centers -- Improving the Profitability of and Establishing ASCs -- Business and Legal Issues" is presented by ASC Communications and the ASC Association. It will be held Oct. 23 to 25 at the Sheraton Hotel and Towers in Chicago.

"Intersection of Healthcare and Wall Street" event planned for April 23. McGuireWoods' "Iintersection of Healthcare and Wall Street" event is planned for April 12. We are featuring as keynote speakers Harry Kraemer, the former CEO of Baxter Healthcare, and Brian Cressey, the founder of mega private equity fund Cressey and Co. We also have outstanding presentations on a range of healthcare niches and areas including hospitals, dialysis, healthcare real estate and more. The one-day event is held at the Trump Tower in Chicago. If interested, please e-mail Scott Becker or Amy Nolan; you can view the agenda at

Web site traffic on the rise. Our Web site traffic has increased a huge amount since we revamped the site. (Jessica Cole can provide you the latest numbers.) New content is going up several times a week; this week, we've posted the latest issue of EndoEconomics and, separately, Scott Becker and Sarah Abraham's piece from that issue. Go to to view or download. We've also reorganized our resources page according to categories for more user-friendly browsing for ASC-related products and services -- please visit Finally, we have added a page where you can learn more about our June conference sponsors -- please visit In addition, you can search the site as a whole for content using the improved search function.

Seeking business development/sales person. ASC Communications is seeking a business development/sales person to focus principally on electronic media, sales, subscription management and a few other roles to help supplement our sales and growth. While experience is a plus, the most important attributes are intelligence, high energy and drive, and high integrity. A recent college graduate is terrific as is someone with a few years' experience. Please e-mail Scott Becker.

Job opening: Regional operator -- West Coast territory -- needed. Meridian Surgical Partners, a national ASC development and management company headquartered in Nashville, Tenn., seeks an experienced professional to serve as a regional operator overseeing a West Coast territory. Qualified applicants must have at least five years of industry experience. Responsibilities to include clinical operations, financial/budget oversight, physician recruitment and partner/board relations for multiple facilities. Position will require travel and offers an excellent benefit package and salary commensurate with experience. Qualified applicants please e-mail resume and cover letter to Susan Baker.

Six days left for early registration: Handling Complex Orthopedic and Spine Procedures in an ASC audioconference. ASC Communications will present an audioconference, "Handling Complex Orthopedic and Spine Procedures in an ASC," on Wednesday, March 19, at 2 p.m. Central. Attendees of the 60- to 90-minute program will learn

  • which spine procedures can be safely and properly performed in an ASC;

  • which knee, hip and shoulder procedures can and can't be performed in an ASC;

  • how to assess patient selection criteria for spine and advanced orthopedic procedures;

  • how to determine which special safety procedures an ASC should have in place as it handles more complex spine and orthopedic procedures; and

  • the requirements for reimbursement for more advanced spine and orthopedic procedures.

Speakers include Dr. John Caruso, who has more than 16 years' neurological surgery experience; Dr. Phillip A. Davidson, the founder and CEO of Tampa Bay Specialty Surgery Center; and Mr. Jeff Leland, the CEO of Blue Chip Surgical Partners. Attendees can earn 1.5 CME or AEU credits. If you are an orthopedic physician, neurosurgeon, ASC administrator, ASC director of nursing, medical director or anesthesiologist, this program is not to be missed. Registration is limited to 60 attendees.

There are four easy ways to enroll:

Make checks payable to ASC Communications.

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Companies to Watch

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

Orion Medical Services. Orion Medical Services offers a turnkey approach to ASC development and management by covering all aspects of a project from financial feasibility analysis to site and operational development. Surgeons are able to own the majority share in the ASC so they maintain control, without having to do the time-consuming administrative work required to setup a surgery center. Orion has worked with many ASCs across the country resulting in profitability, high quality care, and improved efficiency every time. Over the last several years, Orion has gained valuable experience in developing neuro-spine surgery centers which, in combination with Orion's track record, have led to proven results. For more information, visit Orion Medical online, or call (541) 431-0665.

McShane Construction Corporation. McShane Construction Corporation is an integrated design/build construction and real estate development firm offering comprehensive services for the healthcare industry. Established in 1984 and headquartered in Rosemont, Ill., the firm also operates regional offices in the southeast, southwest and western regions. McShane Construction's healthcare specialties include both construction and real estate services for medical office buildings, ambulatory surgery centers, specialty hospitals, critical access hospitals, diagnostic imaging centers and centers of excellence. Contact Mr. John Daly, vice president, healthcare, at 847-692-8616 or visit the firm's web site at for more information.

VMG Health. VMG Health is recognized by leading healthcare providers as one of the most trusted valuation and transaction advisors in the United States. VMG's experience is unparalleled and their credentials are unmatched. Whether circumstances call for a comprehensive valuation, the sale or acquisition of a facility, or joint-venture development assistance, VMG Health offers a unique and in-depth understanding of the relationships, requirements and business issues that surround today's healthcare facilities. Along with performing hundreds of ASC valuations each year, VMG maintains the most comprehensive database on ASC financial benchmarking statistics. VMG's annual benchmarking study, the Intellimarker, provides decision makers with real information to measure and improve the value of their centers. For healthcare organizations seeking to grow, maximize profitability or form new relationships, having a partnership with financial experts who thoroughly understand the value drivers in today's healthcare industry is absolutely essential. For more information, visit VMG's Web site or e-mail Jon O'Sullivan.

Meridian Surgical Partners. Meridian Surgical Partners aligns with physicians in the acquisition, development and management of multi-specialty ambulatory surgery centers and surgical facilities. Meridian acquires interests in established physician-owned surgical facilities, as well as, partners with physicians seeking to grow their businesses locally through the development of new surgical facilities. Meridian empowers physicians to reach the highest level -- the meridian -- of a partnership opportunity. The company accomplishes this through taking the time and working with its partners to define what success means for every unique partnership, and then tailoring each partnership to meet these defined parameters of success. Driven by the unique and proven PEAK management approach, Meridian concentrates on the four cornerstones of Performance, Efficiency, Achievement and Knowledge to take facility operations to an optimal level and attain superior results. Meridian was founded by veterans of the healthcare industry with the vision of creating a superior model for outpatient surgery. E-mail Kenny Hancock, the president and chief development officer of Meridian, or call him at (615) 301-8142 for more information.

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

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    Upcoming ASC Conferences
    Handling Complex Orthopedic and Spine Procedures in an ASC -- An Audio Conference
    Presented by ASC Communications
    March 19, 2008
    2 p.m. Central

    Orthopedics-, Pain Management- and Spine-Driven ASC Conference
    Presented by ASC Communications
    June 19 to 21, 2008

    Improving Profitability and Business and Legal Issues for ASCs
    Presented by the
    ASC Association
    and ASC Comms

    Oct. 23 to 25, 2008

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