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Sign up for the FREE Becker's ASC Review E-Weekly at www.beckersasc.com or email sbecker@beckershealthcare.com 7 Publisher's Letter Dashboard Observations on 17 Niches and Specialties; 7 Reasons to Worry About the Healthcare Economy; Is a Large Combined System Better? 1. Prospects for markets within the healthcare industry. The dashboard below highlights where we see expansion or slow down in different niches with healthcare. Of course, the success of a specific company or provider within an industry depends a great deal on its individual strengths, and the proficiency of its management team and its available resources. Hospitals and health systems Slow erosion to stable. Political power in part offsets substantial reimbursement risk; reduced inpatient cases; increased risk on patient receivables and increased deductibles; serious pricing pressure if movement of patients to exchanges; continued consolidation across industry. Certain hospitals and health systems that have the best quality, that develop leadership in taking on risk, that have market dominance, or that treat a specialized niche and are very lean in their operations will thrive. Ambulatory surgery centers Slow erosion. Reduced number of available physicians, core specialties remaining fairly independent, pressure on case numbers; reimbursement risk; some access to payor issues. Despite the slow erosion in the overall ASC industry, ASC business remains in the greater context a very good industry and business. It remains remarkable how different the revenue equation can be for ASCs from geographic market to market. Dialysis facilities Stable to growth. Continued increasing patient demand offsets some reimbursement risk; continued consolidation; reduced number of physician owned facilities. systems in hospital and health systems. Urgent care Growth. Strong alignment with consumers and payors; slim margins. Dental practice management Stable to growth. Growth dependent on payor mix, with pressure on Medicaid-dependent companies; increased state regulatory pressure. Physician practices Slow to moderate erosion. Reimbursement risk depending upon specialty (see below); pressure on referral base and payor access. Home health Stable. Little political power; fragmented industry undergoing consolidation; some reimbursement risk. Medical device Slow erosion to stable. Political power in part offsets some pricing pressure (e.g., industry relationship with Sen. Orrin Hatch); better international opportunities; patient demand continues to increase; substantial mid- and long-term pressure on domestic pricing. Hospice Stable. Some political power; reimbursement risk; utilization risk constraints; consistent consumer demand. Health information technology Stable to slow growth. Customer budget constraints (increased risk to customer available capital) offset by need to expand and improve Nursing homes Slow erosion to stable. Reimbursement risks for Medicaid-dependent providers and timing of payment from states impacts cash flow. Behavioral health Growth. High patient demand for services; alignment with payors and consumers. THE T RNAROUND EXPERTS ® PROFITS AND DISTRIBUTIONS TO PARTNERS IN AS FEW AS 90 DAYS SUCCESS IN THE SURGERY CENTER INDUSTRY ISN'T CLAIMED. IT'S EARNED. W hen many ASC companies were being for med 10 years ago, ASCOA was already delivering outstanding care to patients and the indu st r y's best prof it margins to its center partners. For f reestanding ASCs or Hospital J Vs, see why ASCOA is called the Tur naround Ex perts.® ASCOA.COM 866-98ASCOA AMBULATORY SURGICAL CENTERS of AMERICASM