10 key points on ASC company fees

Here are 10 things about ASC management company fees based on the 2017 ASC Valuation Survey from HealthCare Appraisers. The survey includes responses for 24 ASC companies representing more than 700 surgery centers across the United States.

 

1. ASC companies typically charge a management fee as a percentage of net revenue, although the percentage varies by company. Forty-three percent of companies take 6 percent of the ASC's net revenue as the management fee; 20 percent take 3 to 4 percent of net revenue. Another 24 percent take 5 percent of net revenue.

2. Just 38 percent of ASC management companies report collecting a minimum annual management fee.

3. Among ASC companies that do charge a minimum annual fee, the minimum fee is typically:

• Less than $100,000: 30 percent of companies
• $100,000 to $199,999: 50 percent
• $200,000 to $299,999: 10 percent
• More than $300,000: 10 percent

4. Forty-one percent of ASC companies report using a sliding scale in management arrangements, with their fees based on revenue levels of the surgery center. Among 25 percent of these companies, the threshold for decreasing fees is less than $5 million in annual net revenue; another 38 percent of the companies report the threshold between $5 million and $7.5 million.

5. Fourteen percent of ASC companies put part of their fee at risk, with these factors influencing the management fees:

• Revenue: 25 percent
• Growth in revenue, profitability or case volume: 35 percent
• Earnings or profitability: 50 percent

6. Sixty-four percent of ASC companies report their management fee charges vary by the level of services provided.

7. Seventy-three percent of ASC companies report having equity ownership in all the freestanding entities they manage.

8. Half of ASC companies report providing coding services to their ASCs, but just 25 percent always do.

9. Seventy-one percent of ASC companies always provide benchmarking based on other equity owned centers; an additional 24 percent offer the services.

10. Sixty percent of companies always provide corporate revenue cycle executive or staff, and 80 percent always provide managed care contracting services.

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