Special February Issue of Becker's ASC Review

ASC Transactions-An Overview and Primer of Key Issues; Evolution of ASC Ownership Models – Independent, Minority Partnership and Majority Partnership; Publisher's Letter: Healthcare Reform; Uninsured Coverage; Obama's Appointments; ASC Transactions; Results of 2009 HealthCare Appraisers Surgery Center Valuation Survey; Buyers More Prudent in ASC Acquisitions, But Pricing Remains High for the Right Opportunity; Determining the Value of a Medical Practice; 11 Ways to Improve Efficiency, Quality and Profitability in Ophthalmology; 3 Eye Surgical Machines ASC Ophthalmologists Recommend; 10 Interesting Stats About Ophthalmology and Cataract Surgery in ASCs; 5 Major Trends Impacting the ASC Marketplace in 2009; Growth of ASCs Outpace Number of Available ASC Physician-Owners; 6 Factors Contributing to Increase in ASC Mergers and Acquisitions; 3 Trends in Mergers and Acquisitions in the ASC Sector

February 2009

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Current Issue Articles

ASC Transactions-An Overview and Primer of Key Issues
The number of ASC purchase and sale transactions remained high in 2008. The most common structures for the typical transactions were as follows: (1) the acquisition of a majority interest in an ASC by a forprofit, strategic acquirer which focuses as a core business in buying majority interests; (2) the acquisition of a minority interest in an ASC by a for-profit, strategic acquirer which focuses as a core business in buying minority interests and/or investing in turn around centers; and (3) the hospital acquisition of a minority or majority interest in a local ASC. In a fourth, less common structure, a hospital purchases an ownership interest in an ASC side-by-side with a third-party ASC management company.
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Evolution of ASC Ownership Models – Independent, Minority Partnership and Majority Partnership

Currently, there are three primary ownership models in the ASC industry:

• independent (100 percent physician ownership);

• selling a minority stake to a corporate partner (e.g., 70 percent physicianowned; 30 percent corporate-owned);

• selling a majority stake (e.g., 49 percent physician-owned; 51 percent corporate- owned).

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Publisher's Letter: Healthcare Reform; Uninsured Coverage; Obama's Appointments; ASC Transactions

2008 is a year that most people, whether in the healthcare industry or in other industries, are glad to have behind them. 2009 promises to be a challenging year as well. However, there are several interesting items that can occur in 2009 that can make 2009 either better or worse than 2008. We expect that this will ultimately be a much better year than most people anticipate. This is a short highlight of some of the upcoming issues.

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Results of 2009 HealthCare Appraisers Surgery Center Valuation Survey
For the past six years, HealthCare Appraisers has surveyed the surgery center industry to determine trends in both the value of ownership interests in surgery centers and management fees charged to surgery centers. This year’s survey had 18 respondents representing more than 500 surgery centers across the United States.
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Buyers More Prudent in ASC Acquisitions, But Pricing Remains High for the Right Opportunity
Pricing trends in ASC sales differ depending upon the ASC’s individual characteristics; and yet overall, ASCs are experiencing the same favorable pricing they have seen for years. In particular, the lowerrisk, more desirable ASCs have seen an uptick in their prices.
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Determining the Value of a Medical Practice
The value or worth of a medical practice to a third-party buyer in an acquisition is often the subject of much debate, theoretical analysis and often confusion. As the healthcare environment undergoes its cyclical market rituals that often includes the acquisition of physician practices, the employment of physicians and then ultimately the divestiture of money-losing strategies, the issue of what a practice is worth invariably plays a leading role.
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11 Ways to Improve Efficiency, Quality and Profitability in Ophthalmology
As Medicare incentivizes ophthalmalogists to perform more procedures outside of hospitals, ASCs are luring more of them to do not only the traditional cataract surgeries, but also corneal transplants and retina surgeries.
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3 Eye Surgical Machines ASC Ophthalmologists Recommend
Here are three pieces of surgical equipment that ophthalmologist Michael Sayegh, MD, of the Eastern Orange Ambulatory Surgery Center in Cornwall, N.Y., says are possible good investments for ASCs offering ophthalmology.
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10 Interesting Stats About Ophthalmology and Cataract Surgery in ASCs

Here are 10 interesting statistics about ophthalmology and cataract surgery in ASCs.

1. The average 2007 Medicare sub charge (submitted charges divided by allowed services), average allow charge (Medicare-allowed charges divided by allowed services, including co-pays and deductibles paid by patient), and average payment (Medicare payments divided by allowed services, not including co-pays and deductibles paid by patient) for post-cataract laser surgery (CPT 66821) is:

• Average sub charge: $1,006

• Average allow charge: $307

• Average payment: $241

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5 Major Trends Impacting the ASC Marketplace in 2009
There will be many opportunities but also hurdles in the ASC market in 2009, according to industry experts. Here are five of the most significant trends facing surgery centers in 2009.
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Growth of ASCs Outpace Number of Available ASC Physician-Owners
A 2008 survey conducted by Deutsche Bank finds that currently there are an average 24 eligible surgeons per ASC. This number is down from more than 32 in 2000 and is likely to drop to a little more than 20 by 2010. Here is a summary of the Deusche Bank data trending the number of eligible surgeons to ASCs:
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6 Factors Contributing to Increase in ASC Mergers and Acquisitions

At ASCs Inc., we have seen a significant increase in surgery and endoscopy center acquisition and merger activity over the past 12 months with more deals and bigger deals than in previous years. We are also seeing higher multiples being offered due to more competition for good quality (less than 20 percent out-of-network) ASCs with growth potential. Here are six reasons for this increase in ASC transaction activity.

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3 Trends in Mergers and Acquisitions in the ASC Sector

Historically, physician-owned centers that opened without corporate support have had an easier time doing well financially; then, if the physician-owners so chose, they could have their choice of corporate partners to whom to sell 51 percent of the ownership for a big payday. Unsuccessful centers could easily find corporate partners specializing in turnarounds willing to take them on.

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