From: Becker Scott <>
Subject: Can an ASC That Is Owned 51 Percent by a Hospital Bill at HOPD Rates?; Call for Speakers for June 2008 Orthopedic-, Spine- and Pain Management-Driven ASC Conference; Register for "Key Thoughts on Orthopedics" Webinar


October 11, 2007
In This Issue
Q&A: When Can an ASC Bill at Hospital Rates?
Register Early for "Key Thoughts on the Orthopedics Industry" Webinar Dec. 5
News and Notes
Fewer Than 10 Spots Remain at Fall Conference
Companies to Watch
Ortho Webinar
Q&A: When Can an ASC Bill at Hospital Rates?

Q: If a hospital owns 51 percent of the shares of a venture, can the ASC bill for services at higher rates?

A: Generally, a hospital's owning 51 percent of a joint-venture ambulatory surgical center would not enable the surgery center to bill for higher rates to Medicare or Medicaid patients.

The ownership of 51 percent may place the joint-venture in a situation where the hospital can treat the joint venture surgery center as an affiliate on certain of its managed care contracts. At 51 percent, many managed care contracts provide that a hospital can add on to its managed care contracts any venture in which it has controlling interests. Accordingly, depending on managed care contracts, this type of venture might be able to bill payors under the managed care contracts of the hospital.

Another consideration as to this question evolves under the antitrust laws. Generally, the antitrust laws prohibit a conspiracy amongst two different parties to decide on the prices to be charged to a third party. Where there is only one party, there is no possibility of "conspiracy" under the anti trust laws. Generally, the antitrust laws treat two parties as "one party" if the first party owns more than a certain percentage of the second party (such as an ASC). Typically, if a first party owns more than 80 to 100 percent of the second party (the ASC), this becomes close to a non-issue. In essence, they are almost always treated as one party. In contrast, where the first party owns less than 80 percent of the second party, the extent of freedom under the anti trust laws to jointly contract depends upon the control the first party has over the second party. If the first party has essentially all decision making over the second party (the joint-venture), there may also be significant freedom to jointly managed care contract.

This answer does not address the ability or inability to utilize under-arrangements options to access higher rates.

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Register Early for "Key Thoughts on the Orthopedics Industry" Webinar Dec. 5
At a Glance: "Key Thoughts on The Orthopedics Industry"

What you will learn: There are two issues that will be the focus:

  1. A forecast for the next 10 years in orthopedics; and

  2. 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, and orthopedic physician leaders.

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

Cost: $199 if registering before Nov. 19 (save $50!).

How to register: There are five easy ways.

  1. Fill out and submit the online registration form.

  2. E-mail Jessica Cole.

  3. Call us toll-free at (800) 417-2035.

  4. Download the printable registration, fill out and fax to (866) 678-5755.

  5. Download the printable registration, fill out and mail to 315 Vernon Ave., Glencoe, IL 60022.
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News and Notes

Physician expenditures, ASC services factors in Part B premium increase. CMS last week announced that it will increase the Medicare Part B premium and deductible for 2008 from $93.50 to $96.40, a rise of 3.1 percent. Factors cited by CMS as contributing to the increase include growth in the expenditures for ASC services, home health services, physician-administered drugs, durable medical equipment, independent lab and physician's office lab services and growth in the Medicare Advantage program.

"Since 2003, statutory changes have resulted in higher than expected Part B expenditures. Accordingly, while Part B trust fund assets increased from 2005 to 2007, the asset level continues to remain lower than intended for contingency purposes," says CMS in a fact sheet. "The planned increase in contingency reserves for 2008 is intended to restore these reserves to a fully adequate level defined as the upper end of the asset range recommended by the Medicare Board of Trustees. If actual Part B expenditures are higher than estimated when the program financing is set, the assets in the contingency reserve can be drawn down to make up the shortfall."

When outsourcing ASC functions, take certain precautions. Outsourcing key functions of an ASC is a growing practice as ASCs are realizing that doing so can help increase efficiency, reduce risk, save money and enhance revenue. It can also help an ASC provide better medical services.

"Outsourcing can free up your precious capital and critical staff resources so that you can focus on activities that are core to your facility, such as providing excellent clinical and patient care," says Tom Jacobs, the president of MedHQ, which delivers customizes business office functions to ASCs and other healthcare institutions such as small hospitals, physician practice groups and diagnostic imaging centers.

ASCs often outsource many back-office duties, like human resources management and administration, credentialing and legal services, and training and development to professional employer organizations, or PEOs, and administrative services organizations (ASOs).

"Through consolidation, PEOs and ASOs leverage themselves to obtain lower per-unit costs for most back-office tasks while employing more competent and expert human resources, accounting, credentialing and revenue cycle staff to provide better service to ASCs at a lower cost," says Mr. Jacobs.

However, while outsourcing can be beneficial in so many ways, Mr. Jacobs cautions ASCs against making the five following common mistakes:

  • Outsourcing core competencies. "Do not outsource those core functions, like the provision of quality medical care and patient services, that are the heart of an ASC's business and must be performed in-house to ensure excellence," Mr. Jacobs warns.

  • Looking for short-term solutions. "Do not seek gains in the short term because you generally will not find them. Outsourcing tends to reap long-term results and should be judged accordingly," advises Mr. Jacobs.

  • Negotiating an unfair contract. "It is not uncommon for ASCs to negotiate inequitable contracts that do not serve their best interest," says Mr. Jacobs. "For this reason, always work with an experienced attorney to make certain you are contractually protected." In addition, it is important to have an exit strategy within the contract so if the ASC finds itself in a bad contract it has the means to extricate itself, he adds.

  • Losing control over outsourced functions. "ASCs will sometimes lose track of those functions that have been outsourced, and this can be a problem if those functions aren't being performed properly," says Mr. Jacobs. "Be sure to maintain control over all of the outsourced duties and work with a company that guarantees to keep you informed."

  • Overlooking hidden costs. Many companies include transaction costs for their services. "Keep track of these costs so they won't overwhelm your savings," says Mr. Jacobs.

Sign FASAPAC's solicitation authorization form. To help FASAPAC, FASA's political action committee, better serve ASCs, please download the solicitation authorization form, fill it out and return to FASAPAC.

Ask Scott Becker. If you have an ASC-related legal or business question, e-mail Scott, and we'll publish the answer in a future E-Weekly. Please indicate when asking whether you prefer to remain anonymous.

Call for proposals. We are seeking speaking proposals for the Orthopedic, Spine, and Pain Management Driven ASC Conference, to be held in Chicago June 19 to 21. Should you have suggestions, please e-mail Scott Becker.

Save the dates for next year's conferences! Please save the following two dates for next year's conferences:

  • Orthopedic-Driven ASC Conference -- June 19 to 21, 2008

  • FASA and ASC Communications: Improving Profitability and Business and Legal Issues for ASCs -- Oct. 23 to 25, 2008.
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Fewer Than 10 Spots Remain at Fall Conference

We are expecting a very full house for the 14th Annual Ambulatory Surgical Center Conference on Improving Profits and Business and Legal Issues for ASCs. The No. 1 networking and business development opportunity for ASCs and ASC companies in the country will be held next week -- Oct. 18 to 20 -- at the Westin Michigan Avenue in Chicago. Because it attracts the highest level audience and the very best speakers possible, registration spots are filling up. Fewer than 10 remain! There are three ways to register:

  1. Download the registration form and fax it to FASA at (703) 836-2090;

  2. Download the registration form and mail it to FASA, 1012 Cameron St., Alexandria, VA 22314; or

  3. simply call FASA at (703) 836-5904.

The Westin Michigan Avenue is SOLD OUT. For your convenience, we have compiled a list of nearby hotels. You can download it here. We can also provide you additional hotel choices. Don't miss out -- register today!

Companies to Watch

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

ASCs Inc. ASCs Inc. helps physician-owners of ASCs form strategic relationships with leading ASC management companies and hospitals. Physician-owners of ASCs who are seeking a sale of their center, an exit strategy, improved management, resyndication and recruitment of new physicians, or expansion of their centers will benefit from a strategic relationship with a corporate partner. ASCs Inc. helps the physicians find the best long-term partner and the highest negotiated price. The principals of ASCs Inc. have been helping physicians form relationships and maximize profits from their ASCs since 1983. For more information contact Jon Vick, president, at 760-751-0250 or visit the company's Web site.

Kaye/Bassman International. Greg Zoch is a partner and Managing Director with Kaye/Bassman International a 26 year old executive search firm. Mr. Zoch is the only executive recruiter we know of that specializes in the ASC world. He has served many of the industry's largest players by finding top talent at the facility and corporate level. He's also helped build start-up and early-stage ASC companies by filling key positions, as well as individual physician-owned ASCs. Mr. Zoch has been an active FASA member for years and we invite you to speak with him should you have any urgent, critical or confidential staffing needs. You can e-mail Mr. Zoch or call him at (972) 931-5242 x5290.

CIT Healthcare. CIT Healthcare offers a full spectrum of financing solutions and related advisory services to companies across the healthcare industry. Through its client-focused and industry-centric model, CIT Healthcare effectively leverages CIT's extensive knowledge and understanding of the healthcare marketplace and approximately $80 billion "A" rated balance sheet. Financing solutions include real estate debt and equity financing; M&A advisory services; cash flow loans; asset-based loans; large/small leases/loans; and working capital lines of credit. For more information, please visit or contact CIT Healthcare at (800) 547-7026.

*           *           *

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

Very truly yours,
Scott Becker

Scott Becker, JD, CPA
(312) 750-6016

Becker's ASC Review
is a publication of
ASC Communications, Inc.
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