|10 Benchmarking Statistics for Ambulatory Surgical Centers|
The following highlights another 10 terrific statistics on ASCs from the 2007 Multispecialty ASC Intellimarker. This publication is authored by VMG Health, an outstanding valuation firm with a focus on ASCs. You can e-mail Greg Koonsman and VMG or call him at (214) 369-4888.
1. The mean EBIDTA margin of ASCs depends greatly on the amount of total ASC revenues. For centers with revenues of between $5 million and $9 million, EBIDTA margins are on average in the 32 percent range. For centers at $3 million to $5 million in revenue, EBIDTA margins are on average in the 17 percent range. Above $9 million, average ebitda margins rise to close to 36.5 percent.
2. The average number of full-time equivalent staff at ASCs is 32.4. Roughly 66 to 67 percent of this staff is nursing and clinical staff.
3. Average hours per case across all ASCs is approximately 14.9 hours per case.
4. The median ASC administrator in the Intellimarker survey for 2007 earned about $96,000 a year.
5. The average nurse's salary was approximately $27.05 per hour.
6. The average of all employee salaries and related costs equalled approximately 30 percent of revenues. The lowest quartile of centers managed to maintain these costs at closer to 23 percent of revenues.
7. The median ASC rental rate was approximately 27 dollars per square foot, costs inclusive of triple net costs were closer to 32 dollars per square foot.
8. Average days outstanding in accounts receivable across centers equalled about 45 days.
9. The average number of cases per center of all centers surveyed equalled approximately 3,950 cases per annum.
10. The top two physicians at a center accounted for approximately 27 percent of the cases at centers, the top five accounted for about 50 percent, and the top 10 accounted for 71 percent of cases.
To order the Intellimarker or to speak with VMG Health, please e-mail Greg Koonsman or call him at (214) 369-4888.
|Can Selling an ASC's Real Estate Enhance the Surgery Business?: An interview with Lt. Col. Bruce Bright|
The business concept of selling your ASC building, then renting it from a real estate investment company such as The Sanders Trust, is an interesting one. An excerpt of an interview with Bruce Bright, the director of business development for The Sanders Trust, follows below. To see the full text in the Jan./Feb. issue, be sure to subscribe to Becker's ASC Review.
Stephanie Wasek: What is the property management model you follow?
Bruce Bright: Our business is to be a long-term holding company; our only focus is to develop, acquire and manage medical offices buildings and ASCs. We buy the real estate - the physical building and land - at full market value and lease it back to the ASC business entity on a long-term basis. Essentially, we become the landlords.
SW: For background, can you speak briefly about types of leases and how they work?
BB: On one end of the lease spectrum there's the triple net lease. In that model, the tenants are responsible for everything. They pay a rent check each month to their landlord, and everything inside is their responsibility. The tenant manages electric, water, maintenance, they're in control and can keep expenses to a minimum.
On the other end is the full-service lease, where the tenant pays one rent check at the end of the month, but the landlord responsible for everything. This may sound as if it's better, but the landlord has to charge in order to prepare for the worst-case scenario. As a result, the rent will be much higher, because the landlord is charging what he thinks the overall cost might be for all issues, major and minor. This arrangement is not typical in a single-tenant ASC building.
We prefer triple-net leasing, letting the tenant better control costs, even though we get a smaller rent check. There are a million ways to modify any part of a given lease to fit a group's specific preferences and needs.
SW: Isn't real estate ownership preferable?
BB: Well, there are pros and cons to both sides. While pride of ownership can be a rallying point and there is some appreciation in real estate, many issues in commercial building ownership overshadow those advantages. So, in most cases, I'd advise physicians to lease their building.
First of all, there is a risk in real estate ownership: Physician-owners have to ask themselves whether they're willing to put personal capital at risk on bricks and mortar, whether they're willing to sign a personal guarantee on a mortgage and be liable for that money.
They also have to ask whether real estate provides a better return on investment than other similar-risk ventures. ROI on real estate is about 8 percent, but you get more than that back on a surgery business itself; it's never that low. Physician-owners might, therefore, prefer to put that money into the higher-margin asset, the ASC business. Real estate ownership isn't essential to the delivery of healthcare; surgeon-owners might rather reinvest the money in higher-margin, mission-critical activity, such as MRI or other equipment.
Even if they have that capital and are willing to take the risk on bricks and mortar, there's also the matter of whether they're willing to tie it up long-term on an ill-liquid investment.
|Early Registration Extended to Dec. 1 for Dec. 5 Webinar, "Key Thoughts on the Orthopedics Industry"|
Over the next several years, there is likely to be no more important specialty for ASCs than orthopedics. ASCs are truly becoming a business of haves and have-nots. This Webinar will provide guidance on the single most significant specialty for ASCs. The presentation will cover expected changes in orthopedics for the next five years, plus how ASCs, hospitals and medical device companies should work with orthopedics surgeons.
At a Glance: "Key Thoughts on The Orthopedics Industry"
What you will learn: There are two key issues that will be the focus of the Webinar:
- A forecast for the next 10 years in orthopedics; and
- how ASCs, hospitals and medical device companies should work with orthopedic surgeons.
Who should attend: C-level hospital leadership, vice presidents and other leaders who who work in a orthopedic-physician-relations capacity, orthopedic physician leaders, ASC administrators, ASC owners, and ASC and medical device companies.
When: Wednesday, Dec. 5 at 2 p.m. CST (running time: 60 to 90 minutes)
About the speakers: John Cherf, MD, MBA, MPH, is an orthopedic surgeon at the Chicago Institute of Orthopedics, a clinical advisor for Sg2 and a thought-leader in orthopedics. Dr. Cherf founded the Midwest Orthopedic Institute, an orthopedic physicians group with full integration of diagnostic imaging, rehabilitation, ambulatory surgery and occupational medicine under one roof. He presently practices in Chicago and is once of the founding members of the Chicago Institute of Orthopedics. With more than 15 years' experience and fellowship training in sports medicine, he has served as team physician for several collegiate and professional sports teams in addition to U.S. Soccer. Dr. Cherf has published in numerous peer review journals, speaks internationally, and serves on several advisory boards for healthcare-related businesses.
Scott Becker, JD, CPA, is a partner in and co-chair of the health depatment at the national law firm of McGuireWoods in Chicago. For more information, visit his McGuireWoods profile or www.BeckersASC.com.
Cost: $199 if registering by Dec. 1 (save $50!).
How to register: There are five easy ways.
- Fill out and submit the online registration form.
- E-mail Jessica Cole.
- Call us toll-free at (800) 417-2035.
- Download the printable registration, fill out and fax to (866) 678-5755.
- Download the printable registration, fill out and mail to 315 Vernon Ave., Glencoe, IL 60022.
|News and Notes
Olympus bids for U.K. medical device manufacturer. Olympus, the world's largest manufacturer of endoscopes, has said it would bid about $1.92 million for U.K. medical device maker Gyrus Group, the Wall Street Journal reports, a deal that underscores "the growing pressure on Japanese companies to gain scale in order to maintain competitiveness." The Journal notes that Pentax recently merged with Hoya Corp. to "focus on medical devices." Should the deal between Olympus and Gyrus be successful, Olympus projects the combined company would have about $3.25 billion in medical device sales.
Medtronic sales slip on defibrillator wire recall. Sales of Medtronic's core defibrillator business dropped 16 percent -- down to $639 million -- during the company's second quarter as a result of a worldwide recall of Sprint Fidelis heart defibrillator wires, reports the Wall Street Journal. "Medtronic said the sales impact was smaller than the company and Wall Street had projected ... [Bill Hawkins, the company's chief executive] said the company isn't expecting a 'delayed impact,'" the Journal writes. Medtronic manufactures devices for a wide variety of procedures, including pain management and spine.
ASC Review's "40 Companies to Watch" will be seen by 25,000.
Our Jan./Feb. issue will highlight 40 companies to watch in the ASC area and discuss extensively bariatrics in ASCs. Our Thursday e-newsletter will highlight 10 of the 40 companies to watch. The issue will also include the orthopedics and spine medical device market letter. The issue will be distributed to 25,000 people, including approximately 19,000 surgeons and proceduralists. Should you have questions about advertising in the Becker's ASC Review please e-mail Jessica Cole or call her at (312) 505-9387; e-mail Emily Noyes or call her at (773) 454-7445; or e-mail Ryan Kiernan or call him at (202) 337-1893.
Hiring top-flight help. If you are seeking a leader for an ASC or an officer or vice president for an ASC company, we encourage you to contact Greg Zoch of Kaye/Bassman International, a leading search firm recruiter that focuses on ASCs. You can e-mail Mr. Zoch or call him at (972) 931-5242 x. 5290.
Looking to partner? One of the leading national companies with regards to physician-hospital-management companies is United Surgical Partners. If you are a health system seeking help in this area, USPI arguably invented the niche. Should you desire to speak with USPI, contact Brett Brodnax or Evie Miller at (972) 713-3500.
Keep operations running smoothly. Looking for ASC consulting and to help solve challenges among partners? Contact Tom Yerden, the founder of TRY Solutions, at (208) 303-0173.
ASC building expertise. For help with regard to your ASC architectural plans and designs, try AMB's Jack Amormino at (414) 291-4430 or John Marasco of Marasco and Associates at (877) 728-6808. For design-build or overall construction help try McShane Construction Corporation's Ray Braun or John Daly at (847) 292-4300.
Sell your medical real estate. If you are seeking a buyer for your medical real estate, try Bruce Bright of The Sanders Trust at (205) 298-0809; Ray Braun of McShane Medical Properties at (847) 292-4300; or Ray Lewis of Ventas Real Estate Investment Trust at (877) 4VENTAS.
Enhance revenues. Caryl Serbin, particularly with the change in Medicare payment rules, has become a major national figure with respect to billing and collecting and coding for ASCs. She is highly sought-after as a speaker and expert on ASC billing. To reach Caryl or to engage her firm, call (888) 453-1144.
Managed care contracting.
Naya Kehayes is widely regarded as the nation's leading expert on managed care contracting for ASCs. No one understands payment rates, strategy and carveouts better than Naya. To reach Naya, call (425) 657-0494.
Turnaround help for ASCs. Two companies that really excel at ASC turnarounds include Regent Surgical Health and Ambulatory Surgical Centers of America. To reach Regent, contact Tom Mallon at (708) 408-7640 or Jeff Simmons at (707) 396-0138; to reach ASCOA, contact Dr. Brent Lambert at (781) 258-1533.
|Companies to Watch |
We are delighted to highlight the following companies in this week's E-Weekly.
Instantia. This is a company founded by Jack Amormino and Lisa Freeman to provide development services to surgical centers. Jack Amormino has long been involved in the ASC industry as CEO of American Medical Buildings, a turnkey facilities developer. Lisa Freeman was a long time leader with Aspen Healthcare. Instantia Health focuses on turnkey facility and operations development through Medicare certification and accreditation. Instantia develops centers with the goal of handing over a well conceived, efficiently designed surgery center that is managed by a center's own in-house administrative and clinical professionals. Instantia does not require an equity stake in its projects or a long term management agreement. For more information visit Instantia online.
ZChart. It's incredible that surgical records are still kept the same way they were almost 100 years ago when you consider paper charts are messy, wasteful, expensive and leave room for error or misinterpretation. Further, creating and filing paper charts is time-consuming and paper storage is inefficient. This robs resources from patient care. ZChart's EMR was developed by dozens of healthcare professionals - administrators, office staff, nurses and physicians - at multi-specialthy outpatient surgery centers. Years of development and everyday use in the real-world surgery center environment has created a first-rate, intelligent, 21st century surgical chart that will surprise and delight users. They have a system designed exclusively for ASCs. Contact Tom Felstad at 866-924-2787. For more information visit www.zchart.com.
HealthCare Appraisers. HealthCare Appraisers is a nationally recognized valuation and consulting firm providing services exclusively to the healthcare industry. Services include the following:
- Fair Market Value opinions for compensation and service arrangements (including but not limited to employment; on-call; medical directorships; collection guarantees; "per click" equipment leasing; billing under arrangements; and block leasing);
- Business Valuation (including but not limited to ASCs, hospitals, dialysis centers; home health, diagnostic and other treatment facilities, physician practices, and intangible assets);
- Consulting and Advisory Services; and
- Litigation Support.
Please visit Healthcare Appraisers' Web site or call the Delray Beach, Fla., office at (561) 330-3488
or the Denver, Colo., office at (303) 688-0700.
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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 email@example.com.
Very truly yours,
Scott Becker, JD, CPA