Becker's ASC Review

14 ASC MANAGEMENT CHI Franciscan to divest ASC, pay $2.5M to settle lawsuit: 5 things to know By Laura Dyrda T acoma, Wash.-based CHI Franciscan agreed to settle a federal antitrust lawsuit related to the acquisition of an orthopedic practice and affiliation with a separate multispecialty physician group that the state's Attorney General deemed an- ticompetitive, according to the Washington Attorney General's Office. Five things to know: 1. CHI Franciscan paid $2.5 million to resolve the lawsuit related to its acquisi- tion of Silverdale, Wash.-based WestSound Orthopaedics and affiliation with a 50-physi- cian multispecialty group, Silverdale-based e Doctors Clinic, in 2016. e health system also acquired controlling interest in TDC's ASC, which it divested as part of the settlement. 2. State's Attorney General Bob Ferguson filed a lawsuit against the health system in 2017, alleging the acquisition was anticom- petitive. However, CHI Franciscan reports there were at least 20 clinics outside of Kitsap County that residents used, and around 65 percent of Kitsap county residents traveled outside the county for inpatient orthopedic care. 3. ere was not a judgement or admission on anti-competitiveness in this case. e court dismissed other claims from the At- torney General, including claims against the health system for affiliating with WestSound Orthopaedics. 4. As part of the settlement, CHI Franciscan had to give the Attorney General's Office notification before future acquisitions or alignments that could reduce competition for services, which is aligned with a state law that goes into effect for all hospitals in 2020. 5. e $2.5 million settlement was distributed between West Sound Free Clinic, Peninsula Community Health Services, Bremerton Health Center and Kitsap Mental Health, and used for direct patient services. CHI Francis- can originally requested the agency distribute the settlement in this way. n How ASC acquisitions may change over the next year By Rachel Popa A SC acquisitions may increase over the next 12 months, according to the 2019 ASC Valuation Survey by HealthCare Appraisers. HealthCare Appraisers and the Ambulatory Surgery Center Association collected data from 26 companies, including ASC management companies, investment bankers and business brokers to compile its report. Three statistics on ASC acquisition activity: 1. Fifty-three percent of respondents report plan- ning to purchase one to five ASCs or interest in an ASC in the next 12 months. Fourteen percent plan to purchase six to 10 centers, and 10 per- cent plan to purchase 11 to 20 centers. 2. Sixty-three percent of respondents feel competition for ASC acquisitions is increas- ing, while 30 percent said they have seen no change from the year prior. 3. Fifty-seven percent report observing ASC acquisitions increasing in the past year, while 23 percent didn't see a change from the previ- ous year. n 18-physician group, 2 New York hospitals advance $8M ASC project By Angie Stewart A lbany (N.Y.) Medical Center, Saratoga Hospital and an 18-physician group gained clearance for their surgery center development, Albany Business Review reports. Six key points: 1. Under the name Capital Region North, the groups will jointly build and operate Saratoga Partners North, an ASC with six operat- ing rooms devoted to orthopedic surgeries. 2. Construction is expected to cost about $8 million and wrap up by late 2020. The total project cost is about $19 million. 3. Saratoga Partners North is expected to complete 3,000 surgeries in its first year of operation, generating $754,000 in net income. Net income is projected to reach $1.37 million by the third year. 4. About 24 percent of the center's cases will come from Albany Medical Center and Saratoga Springs, N.Y.-based Saratoga Hospi- tal, and about 35 percent of cases the ASC will take on are currently completed at a Saratoga Hospital extension clinic. The remaining 41 percent will shift to the ASC from office-based settings. 5. About 32 full-time-equivalent employees will staff the center by its third year in business. Orthopedic surgeon Jared Roberts, MD, will serve as medical director. 6. New York's Public Health and Health Planning Council approved the project June 6. The ASC will be adjacent to Malta (N.Y.) Med Emergent Care, creating a destination for osteoarthritis treatment. n

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