Becker's ASC Review

23 TRANSACTIONS & JOINT VENTURES ASCs should brace for these 2 trends, says Regent Surgical Health CEO Chris Bishop By Angie Stewart A SCs should anticipate growth in hos- pital-owned insurance plans and retail medicine, according to Regent Surgical Health CEO Chris Bishop. Mr. Bishop explained the trends in a recent post: 1. Hospitals as insurers. In the past five years, many major health systems have been invest- ing in, creating and acquiring insurance plans, according to Mr. Bishop. He expects to see an increasing prevalence of health systems becom- ing payers. He has also seen health systems assuming shared risk with payers, with a focus on improving value. is trend will make it important for ASC leaders to understand payers, and particularly health system-owned ones. ASCs considering a hospital partner will need to consider how many lives the hospital's insurance plan covers and weigh potential conflicts. "In the past, we didn't factor that into our decision tree when we were selecting hospital partners to join us as partners in our centers," Mr. Bishop said. "Now you have to be thought- ful about which health system you ask to invest because while you may invite one health system that brings covered lives that you couldn't cur- rently treat, you could stand to lose another contracted health system's covered lives." 2. Retail medicine. e transition toward health savings accounts and high-deductible plans drove patients to demand care in the most cost- effective setting. Moreover, employer-owned health plans at companies like Apple, Amazon and Walmart incentivize employees to seek sur- gical care in lower cost, higher quality settings. Providers must now view patients as "discerning consumers who will shop around," according to Mr. Bishop. "at was rare five years ago, but now that a patient could pay as much as $10,000 of their deductible, cost is a greater consideration. If a routine colonoscopy costs $3,000 at the hospital but just $1,000 at a surgery center, that's an easy choice," Mr. Bishop said. n Stryker makes another acquisition for $220M: 5 things to know By Laura Dyrda A bout a month after its billion-dollar acquisition of K2M at the end of August, Stryker continues to make smaller acquisitions to complement its product portfolio. The company has taken steps to acquire the privately held Hyper- Branch Medical Technology, a company dedicated to developing medical devices based on its pro- prietary polymers and cross-linked hydrogels. Here are five things to know: 1. Stryker will acquire HyperBranch Medical for $220 million in an all- cash transaction. 2. The acquisition will support Stryker's growth strategy in the neurotechnology business. Hyper- Branch is the manufacturer of the Adherus AutoSpray Dural Sealant, one of two FDA-approved sealants available on the market. 3. Stryker doesn't expect the trans- action to have a material impact on 2018 net earnings. 4. Adherus has CE clearance and pre-market approval from the FDA and is highly complementary to Stryker's craniomaxillofacial division. The sealant formulation combined with the delivery system has gone through clinical trials to prove safety and effectiveness dur- ing dural closure. 5. Stryker's outside legal counsel for the transaction was Sidley Austin. n 10 statistics on minority, controlling interests in ASCs By Rachel Popa H ealthcare Appraisers surveyed 15 respondents including representatives of Ambulatory Surgical Centers of America, Surgical Care Affiliates and others on selling minority and controlling interests in surgery cen- ters. Over 700 surgery centers were represented in the report. Here are 10 statistics to know: Length of time it takes to sell minor- ity interests • Less than three months: 27 percent • Three to six months: 33 percent • Six months to one year: 40 percent Length of time it took to identify a buyer for a controlling interest • Three to six months: 33 percent • Six months to a year: 67 percent Who was the buyer of a controlling interest • Single outside third party: 57 percent • Single existing owner: 7 percent • Multiple outside parties: 0 percent • Multiple existing owners: 0 percent • Hospital or health system: 36 percent n

• Cover