Larry Taylor of Practice Partners Discusses 3 Trends for Surgery Centers in 2009

Larry Taylor, president and CEO of Practice Partners in Healthcare, an Alabama-based
corporation dedicated to the provision of management and operational services to ASCs in the
United States, shares his observations of three trends he sees as developing in the surgery center
field as we head into 2009. 

1. The market recognizes the value of ASCs.
“Despite continued pressures on finances, what we’ve recently seen here is that the market
understands the value of ASCs and that has allowed for working capital, expansion, etc.,” says
Mr. Taylor. “We are in a favorable situation, the appropriate lenders in healthcare understand the
value of our centers and so there are ways for strong ASCs to continue to get funding.” 

“Centers that are underperforming are going to have a more difficult time, of course, because the
cash flow won’t be there — their partners will have to lever their assets,” he says, “Where in the
past there have been lots of non- recourse notes, now hospitals and partners are going to have to
participate in the financial backing [of healthcare facilities]. This will be a trend-changer, but not
a show-stopper.”

When asked about ASC mergers and acquisitions, Mr. Taylor says, “There is always going to be
further consolidation in the marketplace. We’ve seen a little tapering off of acquisitions speed,
but quality acquisitions are still out there and the opportunity for new centers continues.”

2. There will be an increase in ownership in ASCs

“Not only are we seeing a trend of increasing numbers of partners in centers,  but as under-
arrangements are eliminated in October 2009 we’ll see  continued opportunity for ASCs as the under-arrangements no longer gain traction,” Mr. Taylor says. “Previously, under-arrangements took a physician or a group of physicians, formed an entity and allowed them to provide a service to the hospital. The government said these arrangements did not meet stand in the shoes provision and caused physicians to be in a revenue cycle they really hadn’t participated in. In traditional ASCs, the physicians managing companies and hospitals own equity under-arrangements did not give ownership in the center.” 

This legislation will end increasingly popular yet jeopardizing under-arrangements that put
hospitals and groups of physicians at regulatory risk. 

“Financial pressures have  a potential growth in physician ownership,” Mr. Taylor says.
“Physicians have diverse portfolios that are underperforming, and there is continued pressure  on their professional reimbursement. Investing in ASCs allows physicians to invest in a business they work with, for and in every day.” 

Along with physician investment, Mr. Taylor says there may be an increase in hospital-joint-
ventures as under-arrangements disappear and hospitals try to get physicians more involved. 

3. ASCs can only become more attractive to nurses
"One thing we always hear talk about is the nursing shortage,” Mr. Taylor says. “We [at Practice
Partners] see strong trends of nurses in ASCs because they have a very good work-environment
for them with a consistent work-flow, specific case-types and niche specialties. A nurse working
in an ASC is not going to have to do urology one day, orthopedics the next. That allows a nurse
to become more comfortable and familiar with a specialty. They also are not going to regularly
have late nights, or unexpected calls.” 

ASCs, Mr. Taylor says, offer attractive stability to nurses and therefore won’t have trouble
recruiting them. What’s more, ASCs will draw more individuals as hospitals, due to an uncertain
economy, are forced to cut programs and employees.

Mr. Taylor ( is the founder and developer of Practice Partners’
business concept and has 25 years of experience in healthcare delivery, management, and
physician relations. Practice Partners provides a range of services including CON procurement,
site development management, business line development and syndication. Learn more about
Practice Partners.

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