From: Becker Scott <>
Subject: [Becker's ASC E-Newsletter] ASCs Face Substantial Challenges; Focused Operators Can Still Achieve Growth and Success; Save $50 -- Last Day to Register Early for Audioconference: Handling Complex Orthopedic and Spine Procedures in an ASC
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March 10, 2008
In This Issue
ASCs Face Substantial Challenges; Focused Operators Can Still Achieve Growth and Success
Visit Sleep Apnea, Medical Device Issues, March/April Issue Online
June Orthopedic-Driven ASC Conference
Last Day to Register Early for "Handling Complex Orthopedic and Spine Procedures in an ASC" Audioconference -- Save $50!
Thank You to New Advertisers and Sponsors; Congratulations to Joanne Sinsheimer
Companies to Watch
June 08 Conference Ad
ASCs Face Substantial Challenges; Focused Operators Can Still Achieve Growth and Success

This is an interesting and challenging time in the surgery center industry. There are a variety of trends that can affect surgery centers and the ASC industry in a negative way. There are also several steps that an operator can take to help strengthen a surgery center. This article lays out a few of the challenges facing the surgery center industry. Then, it provides some insight as to how one ought to approach the challenges we are facing.

1. The surgery center industry remains a tremendous industry. There are still situations in which the correctly planned centers, operated incredibly well, can still provide margins that are outstanding and returns on investment that are terrific. Surgery centers also continue to provide physicians great efficiency and enhanced productivity, while providing patients with better alternative and safer alternative than most large mega hospitals. The surgery center remains an outstanding type of healthcare facility and also remains a potential profit center for physicians and others.

2. Negative Trends. There are several negative trends affecting the surgery center industry. These include the following:

  • Increased payor consolidation. This consolidation can lead to payors' taking unilateral actions to reduce reimbursement rates in some markets. The recent acquisition of Sierra Health Services by UnitedHealth Group is just one example of this consolidation.

  • Increased payor pressure on out-of-network reimbursement and out-of-network practices. The increased pressure on out of network payments weakens a center's hand in several ways, including the ability to negotiate fair contracts with payors. But providers are trying to fight back. Aetna came under intense scrutiny from physicians in several states when the payor announced it would cap the amount of reimbursement paid to out-of-network doctors at 125 percent of Medicare. The National Renal Alliance, which owns and operates 43 dialysis centers across the United States, filed a civil complaint against Blue Cross and Blue Shield of Georgia in February, claiming the payor's reimbursement cuts deny patients rightful out-of-network benefits.

  • Out-of-network scrutiny. States are undertaking investigations of out-of-network practices, such as the current New York investigation of health insurers' rate-setting practices.

  • Increased employment of individual physicians by hospitals and the lessening of the pool of overall specialists available to be brought in to surgery centers. Some hospitals may even be resorting to illegal and fraudulent practices to keep specialists from surgery centers. Tuomey Regional Medical Center of Sumter, S.C., is accused of paying doctors to perform surgeries at the hospital rather than at a nearby outpatient clinic. (See the March 3 e-newsletter.)

  • Economic pressure on the government to reduce the increase in healthcare spending. This is demonstrated by President Bush's 2009 health budget with steep Medicare spending cuts and the proposed state budget from New York Gov. Eliot Spitzer, which included almost $1 billion in healthcare cuts.

  • Continued pressure on physician ownership and specialty hospitals due in part to the negative leadership of Sen. Charles Grassley (D-Iowa), Sen. Max Baucus (D-Mont.) and Rep. Pete Stark (D-Calif.), and pressure on physician ownership of ASCs in certain states such as New Jersey. A recent report by the OIG about the safety of specialty hospitals added more fuel to the ongoing debate about their future. Go here for complete coverage.

3. Success tips. Surgery centers, despite these negative trends, can take several different actions to assure that they remain viable and strong in the face of such situations. Certain of the actions a center should examine include the following:

  • Move toward higher-acuity cases and higher-reimbursement procedures to help offset some of the losses in reimbursement in lower-acuity procedures.

  • Make sure that, operationally, a center is operated on a higher-efficiency basis, with an emphasis on management of supplies, expenses and implant costs (managing costs well is one of the best ways to protect oneself from reimbursement reductions).

  • Examine recruitment of additional physicians or, in some cases, the merger of two centers into one. Surgery centers remain a high-fixed-costs business. Thus, we are seeing several mergers of surgery centers where two centers are looking to combine their caseloads over one set of overall costs.

  • Make management by objective and benchmarking a constantly relentless effort at a surgery center to help ensure that cost, reimbursement and other indicators are brought into line with desired results.

  • Take actions to diversify payor mix, physician mix, procedure mix and suppliers. For example, we are seeing parties double their efforts to bring in patients from afar, even from outside the United States, and efforts to enter into contracts with new networks.

  • If an ASC has specific strengths such as great relationships with a group of physicians, consider other additional services you can provide with the group, such as additional procedures, expanding into a small hospital or other means to take advantage of your current strengths. If you have an outstanding director of nursing, or administrator, try to get her or him more involved in your recruiting efforts and other efforts.

  • If you are building a surgery center or adding a specialty or room, don't do so unless there is a significant margin of safety to ensure that, if results don't hit exactly as you want them to, you will still do fine with the addition and the change.
Joint Commission
Visit Sleep Apnea, Medical Device Issues, March/April Issue Online

New surgical technique helps treat sleep apnea. Patients who have a small jaw and are not morbidly obese may have a new surgical option to treat their sleep apnea. Go here for the complete story.

Federal lawmakers continue push for manufacturers to disclose financial arrangements with doctors. Federal lawmakers, with the support of medical device makers, continue to lobby for the passage of the Physician Payments Sunshine Act of 2007, which would require transparency for financial relationships between physicians and drug, device and medical supply manufacturers. Go here for the complete story.

Prescription drug training, comprehensive patient safety legislation introduced. Rhode Island lawmakers are pushing for a new "near-miss" tracking system, and a bill in Massachusetts may require doctors to complete new drug training before they can become licensed. Go here for the complete story.

March/April issue now online. The March/April issue of the Becker's ASC Review, featuring pieces of profitable endoscopy, establishing an ASC and the orthopedics and spine device markets, is now online. Go to to download a PDF.

Spring Group 2nd/4th through July
June Orthopedic-Driven ASC Conference

Orthopedics-Driven ASC Conference: June 19 to 21 in Chicago. Quick facts and highlights:

  • improving profits and business and legal issues

  • 70-plus speakers focused on strategic, practical, business and legal topics for ASCs

  • Chicago, Ill., Michigan Avenue site

  • program agenda and event brochure --

  • carefully selected topics to help you and your center immediately

  • networking with 500 owners, surgeons, administrators, exhibitors and speakers

  • keynote presentation on the election and healthcare by Tucker Carlson

  • outstanding pre-conferences

  • much, much more

  • visit

  • register before May 1 and save money

  • additional discounts apply when registering two or more attendees

  • Register online through our secure Web site.

  • Call (312) 546-6042 or (800) 417-2035 for more information.

Only 15 exhibitor spots left for June conference. If you are interested in exhibiting at the June Orthopedics-Driven Conference, contact Jessica Cole or Dan Bragaw.

0221 newest audioconf ad
Last Day to Register Early for "Handling Complex Orthopedic and Spine Procedures in an ASC" Audioconference -- Save $50!

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. Register through our secure Web site.

Access Medi 3X
Thank You to New Advertisers and Sponsors; Congratulations to Joanne Sinsheimer

Thank you, advertisers and sponsors. We are very thankful to companies such as Novamed (e-mail Bill Kennedy), an acquirer and operator of ASCs, for commencing e-newsletter advertising with us; QSE Technologies (e-mail Marion Jenkins), a do-it-all IT firm specializing in ASCs, for becoming the sponsor of the Cyber Kiosk for both the June and October conferences; Implantable Provider Group (call Michael Jones at 866-753-0046), which manages all aspects of high-cost implantable devices, for commencing advertising; and Pinnacle III (call Kim, vice president of business office operations at 303-280-9101), which provides ASC management and business office solutions, for resuming advertising. Also, thank you to SourceMedical Solutions, a leading provider of software for ASCs, which is advertising on the Web site; as well as Schedule Surgery (e-mail Schedule Surgery), provider of an ASC-specific scheduling solution; and Pacific Surgical Partners (e-mail Don Cook), an owner and operator of surgery centers, which has commenced advertising in the ASC Review.

Congratulations to Joanne Sinsheimer. Joanne has retired from CMS. Joanne is one of the smartest, nicest and best people to ever work at CMS or any place.

Nat Surg 1X
Companies to Watch

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

Blue Chip Surgical Center Partners. Blue Chip Surgical was founded by ASC veteran Jeff Leland. It also has great leadership in Jay Rom, Beth Ann Johnston, RN, BS, Richard Roski, MD, FACS, and several others. With several highly profitable, physician-led centers in operation around the company and a number of projects in the works, it has been remarkably successful. The company has a reputation for delivering on its commitments and forging strong physician relationships. Blue Chip is focused on multi-specialty ASCs. It holds an equity stake in its projects and also serves as a managing partner. For more information, visit Blue Chip online.

Titan Health. Dissatisfied with your surgery center's returns? Looking for a corporate partner? Interested in exploring your surgery center options? Achieve returns with Titan that beat national industry averages. Titan is a nationwide surgery center development, acquisition and management company that partners with hospitals and physicians to develop successful, multi-specialty ASCs. It specializes in acquisition turnarounds, de novo projects and hospital JVs and is committed to physician majority ownership. Please visit Titan Health online to learn more about the company's ASC philosophy and current center partnerships. Or e-mail D.J. Hill, chief development officer, e-mail Kristen Franz or call (916) 614-3600 for more information.

JCB Laboratories. JCB Laboratories is a compounding pharmacy that serves the ASC market place. Unlike most compounding pharmacies, JCB Labs focuses exclusively on preparing sterile products. By limiting the focus to sterile products, the company is able to provide exceptional safety, consistency and pricing. JCB Labs compounds preservative-free products for epidural use, pain management products and sterile ophthalmics. In addition, JCB Labs provides products that are unavailable due to short supply issues and discontinuation. Contact CEO Brian Williamson, PharmD, at (877) 405-8066 or visit the company's Web site for more information.

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.

*           *           *

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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