From: Becker Scott <>
Subject: [Becker's ASC E-Newsletter] ASC Outlook for 2008: Cautiously Optimistic; CMS Adds to, Updates Stark Law FAQs
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February 14, 2008
In This Issue
ASC Outlook for 2008: Cautiously Optimistic
CMS Adds to, Updates Stark Law FAQs
News and Notes
Companies to Watch
March Webinar
ASC Outlook for 2008: Cautiously Optimistic

ASC growth is slowing down, due in part to weak pricing and physician supply, according to Deutsche Bank's second annual ambulatory surgery center survey. As a result, "investor expectations remain low [and] the pool of ASC investments is limited," though there are opportunities that are "relatively attractive for risk-tolerant small/micro-cap investors.

The report, which presents an outlook on volume, pricing and competition, yielded three key findings:

  • Volume growth appears to have decelerated slightly, though it has not stopped. "On a weighted average basis, we calculate that respondents expect case volume growth of about 3 percent in 2008 -- still positive, but our prior survey showed 5 percent," says the survey's executive report.

  • ASCs are cautious about pricing growth. "On a weighted average bsis, we calculate that responders expect revenue per case (pricing) growth of approximately 2 percent in 2008," the survey says.

  • Capacity growth has slowed, but continues to outpace supply growth. "The ASC sector remains highly competitive and continues to experience capacity growth that is outstripping volume growth, although new capacity ahs moderated somewhat according to CMS data and our own state-level checks," says the survey. "According to survey respondents, 45 percent of ASCs expect more competition entering their local markets during 2008."

Overall, in 2008, Deutsche Bank expects "little upside to organic growth" and that consolidation "will be an ever-increasing avenue for growth, and new capacity growh will have to be curtailed to allow supply/demand to become more balanced."

The Deutsche Bank ASC survey is based on responses from more than 200 ASCs from 44 states (40 percent response rate). For more information about the 48-page report, e-mail Darren Lehrich or call him at (212) 250-2629.

Medtegrity 12 weeks consec
CMS Adds to, Updates Stark Law FAQs

CMS has updated several existing and issued a number of new FAQs for self-referral rules. Among those that may be of interest:

Q: Is physician ownership a prerequisite for meeting the definition of "physician organization" or "physician practice"? In other words, must all "physician organizations" or "physician practices" have at least one physician owner?

A: No. Physician ownership is not determinative as to whether an entity (regardless of its legal form, for example, limited liability company, professional corporation, etc.) is a "physician organization." We note that 42 C.F.R. 411.352 states that, with respect to a group practice (which is a "physician organization"), the single legal entity that is the group practice may be organized by any party or parties, including, but not limited to, physicians, health care facilities, or other persons or entities. Likewise, physician ownership is not determinative as to whether an entity (regardless of its legal form, for example, limited liability company, professional corporation, etc.) is a "physician practice."

Q:Must a physician who "stands in the shoes" of his or her physician organization (as defined at 42 C.F.R. 411.351) become a signatory to a written agreement between the physician organization and a DHS entity in order to satisfy the requirements of a direct compensation arrangement exception?

A: No. For purposes of satisfying the requirements of an exception to the physician self-referral prohibition, we consider a physician who is standing in the shoes of his or physician organization to have signed the written agreement when the authorized signatory of the physician organization has signed the agreement.

Q: Does the Phase III "stand in the shoes" "grandfathering" provision apply to an arrangement that, as of Sept. 5, 2007, did not meet the definition of an "indirect compensation arrangement" (and was not directly between a physician and a DHS entity) but would have satisfied the requirements of the exception for indirect compensation arrangements in 42 C.F.R. 411.357(p) if it had been applicable?

A: No. The only arrangements that qualify for the "grandfathering" provision in 411.354(c)(3)(ii) are those that, as of Sept. 5, 2007, both (1) met the definition of an "indirect compensation arrangement set forth in 411.354; and (2) satisfied the requirements of the exception for indirect compensation arrangements in 411.357(p). If an arrangement satisfies both of these criteria, it need not be amended during its original term or the current renewal term (that is, the renewal term the arrangement is in as of Sept. 5, 2007) to comply with the requirements of another exception.

Q: What is a "physician practice" within the definition of "physician organization" at 42 C.F.R. 411.351?

A: A "physician practice" is a medical practice comprised of two or more physicians organized to provide patient care services (regardless of its legal form or ownership). For example, a "physician practice" may be a group of physicians that practice together but do not meet all of the requirements of 411.352 for "group practices" for purposes of satisfying the requirements of the physician services and in-office ancillary services exceptions. We note that the provision of patient care services by employed or contracted physicians does not automatically cause an entity to become or be considered a "physician practice" (and, thus, a "physician organization"). For example, a hospital, which, in general terms, is an institution that provides medical, surgical, or psychiatric care and treatment for the sick or the injured, is not considered a "physician practice" or "physician organization" even though it employs or contracts with two or more physicians to provide patient care services to its inpatients and outpatients.

See all the FAQs here.

Spring Group 2nd/4th through July
News and Notes

ASC Association responds to '09 budget proposal. "The proposed Medicare payment cuts to ASCs are totally unacceptable and should be rejected by Congress," says ASC Association President Kathy Bryant in response to the 2009 budget proposal submitted to Congress by President Bush last week. The proposal would extend the freeze on ASC annual updates through 2011, then reduce the update in future years by 0.65 percentage points - which would save the government an estimated $450 million over five years. The budget would cut all providers by $12.8 billion in 2009 and $182.7 billion over five years.

While the payment cuts to ASCs mirror proposed cuts to some other healthcare providers, the impact on ASCs would be even greater, says Ms. Bryant: "ASC payments have been frozen for six years while other provider payments have increased. During this period, nursing and medical supply costs have been escalating steadily. It is unthinkable that ASCs would be subjected to even more Medicare cuts at this time."

To join the ASC Association, call (793) 836-8808.

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 ASCr;

  • 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.

McGuireWoods teleconference: "Structuring Physician Hospital ASC Joint Ventures." McGuireWoods is holding a teleconference, "Structuring Physician Hospital ASC Joint Ventures," on Tuesday, March 13, from 12:30 to 1:30 Eastern. Speakers include Brett Brodnax, the executive vice president and chief development officer of United Surgical Partners International; Joseph Zasa, managing partner with Woodrum/Ambulatory Systems Development; Amber McGraw Walsh, an associate at McGuireWoods; Elissa K. Moore, an associate at McGuireWoods; and Scott Becker, co-chair of the healthcare department at McGuireWoods, who will moderate the conference. Join members of the healthcare industry to discuss the development and maintenance of effective hospital joint-ventures, including best practices and case studies -- register today.

New white papers now online. Two new white papers have been added to To access either a white paper titled "Four Cornerstones to Strategic Planning for ASCs" or "Effective Regulatory Diligence for Healthcare Acquisitions," please visit

Becker's ASC Review special offer. The Becker's ASC Review is published six times a year. To receive a hard copy delivered and never miss an issue, subscribe. As a special introductory offer, the next 100 new subscribers can subscribe for two years for $199 -- a discount of $100 off the usual $299 price. To subscribe, either fax this form to (866) 678-5755 or mail to ASC Communications, 315 Vernon Ave., Glencoe, IL 60022. Please mark on the subscription form "special offer -- $199." Subscription forms must be received by Feb. 20.

As a bonus, each subscriber will also receive a PDF version of the entire and extremely useful useful VMG Health Intellimarker, the single best benchmarking resource. Please call (214) 369-4888 for more information on VMG Health, a leading healthcare valuation firm.

What's on tap for May/June. The May/June issue of the Becker's ASC Review will feature two core subjects: an ASC's guide to orthopedics and spine (clinical and business issues), and an ASC administrator's guide to anesthesia in ASCs -- a focus on business, clinical and product issues. It will also feature 10 products ASC administrators and medical directors should know about for orthopedics, and 10 they should know about for ambulatory anesthesia. The issue will be distributed at the June conference.

May-June issue promo
Companies to Watch

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

AMB Development Group. AMB Development Group specializes exclusively in the development of ambulatory care facilities nationwide, including surgery centers, medical office buildings, clinics, imaging centers and outpatient centers. From the conceptual idea to a completed facility, AMB can deliver a full-service package of services on a turnkey, total-support basis. The company's service offerings are also available on a menu basis: planning and programming; feasibility analysis; site evaluation and procurement; design and engineering; facility ownership formation and syndication; financing procurement; contractor selection and negotiation; project management and oversight; conflict resolution; MOB leasing; and interior space planning.

Healthcare providers nationwide have benefited from AMB's multi-disciplined focus to a project. AMB's mission is to provide our healthcare clients with facilities that help them serve their communities and achieve financial targets within an environment that is characterized by escalating costs, falling reimbursements, and increasing regulations. E-mail Jack Amormino, call him at (800) 779-4420, or visit AMB online for more information.

Affinity Insurance Services.Affinity Insurance Services is a part of Aon Corporation, a Fortune 250 Corporation. As the No. 1 global insurance broker, we have market presence and carrier relationships unmatched by smaller brokers to ensure you the best coverage for the most reasonable cost.

Affinity Insurance Services only accesses leading A.M. Best "A" Rated professional and general liability carriers. These insurance companies must demonstrate financial stability, a commitment to responsive coverage, competitive pricing and exemplary claims management: crucial ingredients for an insurance carrier with the stability to protect clients now and in the future.

Affinity Insurance Services is the leading provider of professional and general liability insurance protection to healthcare practitioners with over 1,000,000 healthcare clients insured, including physicians, dentists, nurses, healthcare group practices, and allied professionals. Affinity has been protecting practitioners within the healthcare industry for over 30 years, and we are proud to bring our expertise, market knowledge and unparalleled client service abilities to you.

Serbin Surgery Center Billing. With the upcoming Medicare ASC payment changes and the ever-changing complexity of ASC billing, many ASCs are looking for solutions to their billing and collection needs. Serbin Surgery Center Billing was founded in 2001 to provide the answer to this much-needed service. SCB concentrates on the unique needs of surgery centers and provides expert and accurate coding, billing, collections, and managed care negotiations solely to the ASC industry. The company's certified and experienced coding, billing, and collection personnel bill and collect over $25 million per month due to their extraordinary attention-to-detail in all aspects of the reimbursement process. SCB's extensive knowledge of payor responsibilities and managed care contracting ensures you'll receive the highest reimbursements possible. By outsourcing to SCB, ASCs can eliminate the headache and necessary evil of billing and collections while simultaneously realizing additional benefits. Claims are processed more rapidly, collections are improved, and office staff is not burdened with patient billing questions. For more information, contact SCB at (866) 889-7722.

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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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