Becker's ASC Review

31 12th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference + The Business of Spine - call (800) 417-2035 SourceMedical Names Ann Geier Vice President- Clinical Informatics By Laura Miller A mbulatory surgery center industry veteran Ann Geier has become vice president-clinical informatics with the surgery division for SourceMedical Solutions. Ms. Geier will provide product development insight for SourceMedi- cal. She has more than 30 years of experience in the ASC industry, and has been responsible for total financial and clinical operations in nationally-based management companies and freestanding surgery centers. Ms. Geier has been a member of the ASC Quality Collaborations Ex- pert Group since 2006 and has additional expertise in supply chain management, case coasting, credentialing, peer review and staffing at surgery centers. "I am delighted to join the SourceMedical team, with its deep com- mitment to solutions that help surgery centers run more efficiently and enable higher quality of patient care," Ms. Geier said in a company news release. n I n 2011, 22.3 percent of freestanding ambulatory surgery centers were owned or managed by ASC management and development companies, ac- cording to VMG Health's ASC Intellimaker Survey 2011. In the three years since then, have ASC M&D companies developed a greater share of the market? The ambulatory surgery center field had an eventful 2013. Surgery centers opened, acquisition agreements were made and management and develop- ment companies played no small role in the industry's activity. In 2013, 50 of the largest management and operations companies accounted for 30 percent of the revenue generated in the ASC industry, according to the Outpatient Centers Industry Overview report from Hoovers. As of 2011, the five companies that owned and managed the highest number of ASCs were AmSurg, United Surgical Partners International, Surgical Care Affiliates, Hospital Corporation of America and Nueterra, according to the VMG Health survey. 2013 acquisitions and openings In 2013, 75 percent of ASC management and development companies re- ported purchasing interest in at least one center, according to HealthCare Ap- praisers' ASC Survey 2013. Becker's ASC Review reported on 40 ambulatory surgery center acquisitions in 2013, 25 percent of which involved a manage- ment and development company. Becker's ASC Review also reported on 60 ASCs opening in 2013, 15 percent of which were opened by M&D companies. Industry activity In one of the biggest stories of the year, Surgical Care Affiliates filed an initial public offering of up to $100 million in stock. This announcement came just months after SCA acquired Health Inventures, a national surgical and physi- cian services company operating more than 20 ambulatory surgery centers in partnership with 10 health system partners nationwide. SCA currently owns and operates 167 ambulatory surgery centers in partnership with 2,000 phy- sician partners and 42 health systems. AmSurg is currently partnered with more than 1,800 physicians in 243 ASCs across the U.S. USPI owns or operates nearly 214 surgery centers. Nueterra owns or operates nearly 100 ASCs. In July, Foundation Healthcare, formerly Graymark Healthcare, announced an expansion into the ASC industry with the acquisition of Foundation Sur- gery Affiliates and Foundation Surgical Hospitals. As part of the acquisition agreement, Foundation Healthcare acquired equity interests in 11 surgery centers in seven states. recent financial results Overall, ASC management and development companies reported strong third quarter financial results. • AmSurg, one of largest ASC companies, reported a 19 percent increase in revenue for the third quarter, up to $268.2 million, compared to $224.9 million over the same period last year. • After the acquisition of Foundation Surgery Affiliates and Foundation Surgical Hospitals, Foundation Healthcare reported a 103 percent in- crease in revenue to $25 million, compared to $12.3 million over the same period last year. • Hospital Corporation of America's net revenue grew 4.9 percent to more than $8.4 billion and net income grew 1.4 percent to $365 million. • Medical Facilities Corporation reported a 34 percent increase in con- solidated facility service revenue to $73 million. • Surgical Care Affiliates announced system-wide net operating revenues increased 18 percent and net patient revenue per case grew 9 percent. • Symbion announced a 4 percent increase in revenue to $129 million and revenue per case increased more than 5 percent. • United Surgical Partners International announced a 17.7 percent in- crease in consolidated net revenue to $151 million. ASC M&D and hospital partnerships In 2013, consolidation was one of the dominant themes in healthcare. "We are seeing an increasing willingness and desire from health systems to play in the ambulatory space," says Jason Cagle, CFO of United Surgical Partners International in a Becker's ASC Review report. One of the joint venture models seen in the ASC market is a partnership between a management company, physicians and a hospital or health sys- tem; a model that may be on the rise. Of the 214 ASCs USPI currently owns or operates, two thirds or more of which are in partnership with non-profit health systems. Within the past year, 50 percent of ASC man- agement and development companies report selling a controlling interest to a hospital or health system, according to HealthCare Appraisers' ASC Survey 2013. A number of ASC management and development companies, such as Regent Surgical Health, focus on creating joint venture partnerships with physicians and hospitals. "With a few exceptions, independent ASCs should be actively seeking hospital partnerships," says Bo Hjorth, vice president of business de- velopment at Regent Surgical Health, in a Becker's ASC Review report. If the consolidation trend continues in the ASC industry, management and development companies are poised to be key players. n ASC Management & Development Companies: A Growing Market Power? By Carrie Pallardy

• Cover