From: Becker Scott <>
Subject: Columbus Eye Center Achieves Long-term Success; A Shortage of Individual ASCs for Sale Drives Prices Higher; City of Joliet Challenges Relocation by Silver Cross Hospital


October 23, 2007
In This Issue
The Columbus Eye Surgery Center: A Story of Physician-driven Success
News and Notes
Get Insight on the Orthopedics Industry: Register for Webinar, Dec. 5
Companies to Watch
Ortho Webinar
The Columbus Eye Surgery Center: A Story of Physician-driven Success

The Columbus Eye Surgery Center (Columbus, Ohio) opened "the very month Bill Clinton and Congress deadlocked on the budget, and the government shut down -- so we could get no one from Medicare to certify our center," says Richard G. Orlando, MD, FACS, the president of Columbus Ophthalmology Associates. "Even with that [setback], we knew we had done the right thing." Within two months, the four-man practice had moved most of its core procedures to the center.

"Twelve years later, we have paid off all our original debt," says Dr. Orlando. "We have added three other docs and now do 4,000 case per year. And we never had a corporate or hospital partner. So it can be done."

Here are the keys to Columbus Eye Surgery Center's success.

CON due diligence. The certificate of need laws in Ohio were so stringent that even a hospital could not just open an ASC without it going through the proper channels for approval. The group hired a lawyer who usually worked on behalf of hospitals that wanted to add beds or open their own outpatient facilities in order to guide them through the six-month, $50,000 proposition.

"It was indeed a landmark decision to fight the CON laws in Ohio, to even think that a group of surgeons would have the courage to open an ASC," says Dr. Orlando. "We [chose to pursue a location] on the east side of Columbus, on the campus of Mt. Carmel East Hospital, which had only three full-time eye surgeons on staff, none of whom did phacoemulsification, retinal or glaucoma surgery,"

By choosing a location not saturated with ophthalmologists, the physicians group was able to prove that the number of cases the four surgeons performed on a yearly basis "would have overwhelmed the hospital, as it had neither the equipment nor the staff to serve our needs," says Dr. Orlando "We worked out an agreement to build the ASC in a medical building that was going up on the hospital grounds at that time. In essence, they would be adding services unavailable to the growing east side of town right on their campus just 200 yards from their ER.

"So they helped us obtain CON approval, and we were set to build the first physician-owned ASC in Ohio."

Seeking successful models. "During the CON process, I visited several eye only ASC's across the country to get ideas on how to make our operation lean, efficient and patient-friendly," says Dr. Orlando. Ideas the Columbus Eye Surgery Center ended up incorporating included

  • a separate viewing room for patients' families to view the actual procedure;

  • having a staff member in the viewing room to narrate the procedures for the families;

  • having patients wear street clothes in the OR;

  • buying a special eye surgery cart that kept the patient from having to be moved from one bed, to the OR, to an OR table and back to a recovery bed;

  • having pre- and post-op patients alike in a common large room with a centralized nurses station, so that nurses could float between both areas as needed; and

  • a single anesthesiologist who oversaw the entire area while also administering pre-op peribulbar injections and sedation, and starting all IVs, so surgeons could work between two ORs without interruption to give medications.

Innovative procedures. "Retinal surgery was usually an overnight hospital stay back in 1996, but [Robert A. Bruce, MD,] developed his technique to the point that he was the first retinal surgeon to do vitrectomies and detachments as an outpatient in Ohio," says Dr. Orlando. "His skills were such that he could complete these procedures in less than 40 minutes. This was an important milestone and innovation, though it's now common throughout the United States."

In addition, Robin Beran, MD, a corneal refractive surgeon, had been performing RK since 1990, "long before anyone considered doing it as a subspecialty," says Dr. Orlando. "We began doing RK and later on PRK/LASIK based on his experience. As you may know, these patients are a little different than the regular ophthalmology patient and demand the utmost in customer service. This helped us when we put together the ASC, as we had six years' experience and good word of mouth from our refractive practice."

Strong bank partnership. "KeyBank, our business banker, looked at our business plan and took the plunge with us even though no privately owned ASC had ever been attempted before," says Dr. Orlando. "The bank depended on our skills as surgeons to make the ASC work and we depended on it to help get us the ASC we needed."

The faith of all involved was tested immediately, however, when the national budget shutdown occurred, and there was "no funding for any projects or departments -- including to Medicare for new ASC licensing," says Dr. Orlando. "That meant no federal inspector could come to our center, look over our test cases, review our facility nor grant us approval to do surgery."

And the Columbus Eye Surgery Center had just hired four nurses, a full-time administrator, a full-time billing person, as well as a front office clerk and support staff.

"We could do no surgery, at least none that would be paid for," he says. "We now had a decision to make and we needed the bank's support. We chose to pay these hand-chosen staff members, do minor surgery that would be covered, but needed a 'bridge' loan to cover these costs."

It would be four months before the facility could begin the Medicare certification process and another four before it received any payments, due to further problems with Medicare's giving the center a provider number.

"KeyBank again stepped up with a $250,000 bridge loan to keep the staff we had, order supplies and keep the center open," says Dr. Orlando. "We all stuck to our original plan of keeping the center an eye only facility despite having calls from pain specialists, podiatrists, and some general surgeons about opening it up to them. We could have paid off that bridge loan sooner but felt we would not benefit in the long run so we stuck to our original goal."

Since the rough early days, the center has grown each year, adding more procedures and more surgeons. The most recent milestone in its successful story is the paying off of all loans -- the Columbus Eye Surgery Center is now debt-free and continues to thrive, despite the departure (due to retirement) of Dr. Bruce.

"As the next generation of surgeons is added to the center, it is my goal to continue to provide our patients with the latest technology, the best qualified surgeons and the most compassionate staff possible," says Dr. Orlando.

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News and Notes

Consolidation and deal issues emerging. There seems to be a record number of consolidation and deal issues emerging. There also seems to be very good interest from both strategic and financial buyers for these transactions. Interestingly enough, there seems to be a shortage of hyper-profitable independent facilities available for sale. This may be because the one-off facilities focused on orthopedics or in part with a good reimbursement mix are very optimistic regarding reimbursement changes and are cautiously reviewing sale possibilities rather than aggressively attacking the same.

Improving Profits and Business and Legal Issues for ASCs Conference. We had more than 570 people at the ASC conference that ran Thursday through Saturday. There was a great mix of attendees, and FASA's support was invaluable. Please call (703) 836-8808 to join FASA, or at minimum, please download FASAPAC's solicitation authorization form, fill it out and return to FASAPAC.

Save the dates for Orthopedics- Spine- and Pain Management-Driven Conference: June 19 to 21. Our orthopedics-, spine,- and pain management-driven ASC conference, which had more than 460 people in attendance last year, is scheduled for June 19 to 21. We sold out exhibit space early last year. We plan this year to add on more speakers and more pre-conference opportunities. We expect a great and focused meeting in the area in which ASCs are growing most. We will have the exhibitor prospectus done in early January. Please save the dates.

Record Nov./Dec. issue. We expect to have a record-size issue for our Nov./Dec. issue. We have stories on improving profits for ASCs, featuring case studies from companies such as SMP, Healthmark Partners, Woodrum/ASD, Regent, Prexus and ASCOA. We also have stories on the new Medicare conditions of coverage, a story on pain management by Amy Mowles, a story on architectural considerations by Bill Lindeman, a story and feature on health information technology for ASCs by Stephanie Wasek and a number of other stories. It should be a record-size issue.

City of Joliet challenges hospital relocation. For a copy of a white paper regarding the opposition by the city of Joliet, Ill., to the proposed relocation of Silver Cross Hospital to outside Joliet, please go to and look under "Hot Topics," or e-mail Scott Becker.

New: Orthopedic and Spine Medical Device Market Letter. We have an outstanding piece on ASCs' buying orthopedic devices and implants that features talks from Drs. Larry Teuber and John Cherf scheduled for the introduction of the orthopedics and spine medical device market letter, to be provided along with the Jan./Feb. issue.

Update on the Jan./Feb. issue. Our Jan./Feb. issue will as always highlight 40 companies to watch in the ASC industry. This is limited to companies that develop, manage or own ASCs. It will also include extensive coverage of bariatrics and adding weight-loss surgery to ASCs.

Welcome new advertisers. We greatly appreciate some of the newer advertisers to the ASC Review: HBE, a design build firm; Sanders Trust, a buyer of healthcare real estate; JCB, a leading lab company in ASC space; KayeBassman, a leading search and deal firm in ASC space; SourceMed, a leading software firm in the space; zChart, a terrific EMR company; KBKG, which focuses on cost segregation studies; Surgical Management Professionals, a terrific management and development firm; and BBraun, one of the finest medical equipment and device firms.

Thank you advertisers. We are also thankful to recent '08 full-year renewal advertisers, such as McShane, a leading build and design firm; Eveia, the best managed care contract negotiation firm in the business; ASCOA, one of the very best management firms and led by brilliant management; Somerset CPAs, an outstanding ASC-focused accounting and business firm; and CIT, a leading ASC finance firm with tremendous breadth.

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 by early November.

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Get Insight on the Orthopedics Industry: Register for Webinar, Dec. 5
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:

  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, 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

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.
Companies to Watch

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

Alpine Surgical Equipment. The reputation of the Alpine Surgical Equipment team is well known throughout the ASC industry: This team of professionals has worked on well over 750 surgery centers nationally, and has worked extensively with the industry's leading corporations, surgery center development, equipment planning and consulting firms. Alpine Surgical provides its clients with a wide array of both new and refurbished medical equipment for the entire ASC, including OR, pre- and post-op areas, by working closely with many of the leading medical equipment manufacturers and specialty refurbishing companies nationwide. Alpine Surgical's goal is to provide customers with exemplary service, great product knowledge, the best products on the market and pricing that fits each budget. For more information, contact Matt Sweitzer at 916-933-2863 or visit Alpine Surgical on the Web.

Meridian Surgical Partners. Meridian Surgical Partners is an ASC company focused on partnering with physicians to reach the highest level -- the meridian -- of a joint venture opportunity. The company accomplishes this through taking the time and working with its partners to define what success means for every unique partnership, and then tailoring each joint venture to meet these defined parameters of success. The Peak Program enables every Meridian facility to achieve the right combination of performance, efficiency, achievement and knowledge to be successful. Meridian is actively seeking established ASCs that want to maximize financial performance; ASCs in need of a turnaround; and de novo opportunities. E-mail Jennifer Fuqua or call her at (615) 301-8156 for more information.

Foundation Surgery Affiliates.Foundation Surgery Affiliates is a healthcare management organization specializing in project development, innovative facility design, partner recruitment and facility operations for ASCs, medical office buildings, surgical hospitals and bariatric hospitals and healthplexes.

Foundation, established in 1996, is founded on the values of excellence, leadership, integrity and compassion. We are committed to continually delivering the highest quality of services for our physician partners and patient care in the industry.

More information about FSA can be found at

*           *           *

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

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