Becker's ASC Review

19 12th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference + The Future of Spine - call (800) 417-2035 I s there still room for new ambulatory surgery centers to open their doors in increasingly saturated markets? CEO of Physicians En- doscopy Barry Tanner and Reed Martin, COO of Surgical Management Professionals, offer a fore- cast for the future of de novo activity. "The industry has to face the reality that the double digit growth we saw in the early 2000s is not likely to continue," says Mr. Martin. Though de novo ASC growth may not be as robust as it once was, there remain opportunities to support moderate growth. Opportunities vs. Challenges Challenges Independent physicians are the backbone of the ASC industry, but that well is drying up. Hospital employment of physicians is on the rise and many remaining independent physicians are already af- filiated with established ASCs. "The standard challenge is organizing the physicians — gaining their commitment and investment — before the facility actually exists," says Mr. Martin. Physicians that prepare to open a new ASC may underestimate the breadth of the project they have undertaken. There is a significant financial investment and time requirement; Mr. Tanner points out that developing a single-specialty GI center can take more than 3,000 hours of person- nel time from beginning to end. "CMS certifica- tion can take up to 90 days and third-party payer contracts weeks beyond that. Many physicians fail to fully understand this aspect of the develop- ment process," says Mr. Tanner. Opportunities Physicians opening de novo ASCs may be able to find a measure of payer support. "Third-party pay- ers realize that the cost of performing a GI proce- dure in a hospital outpatient setting is far greater than having the same physician perform the same procedure in a freestanding ASC," says Mr. Tanner. Mr. Martin has found one of the most promis- ing areas of de novo activity lies with existing fa- cilities, whether a hospital, ASC or clinic. Existing facilities may view an ASC as an opportunity to expand into different markets or to extend reach in a particular region. CON vs. Non-CON markets The absence or presence of a certificate of need program is one of the most influential factors in an ASC's market. "Some of the best opportunities are in states where there has been a relaxing of the CON regulations thereby making it more possible for phy- sicians to develop their own ASC," says Mr. Tanner. For states that remain strictly regulated by CON regulations, physicians may find ample opportu- nity in cities just beyond those state's borders. Lo- cation in a non-CON state lowers the number of regulatory hurdles and offers an attractive option for patients in nearby states that may have limited access to similar services. Joint venture vs. standalone Two of the three de novo ASC projects SMP has planned for 2014 are joint ventures with hospitals. Though a joint venture partner has not become necessary to open a successful de novo ASC, the right partner can provide an extra level of sup- port. Mr. Martin envisions the right management company as an experienced partner that holds a minority share in the center. "The right hospital partner views the ASC as a win, as a way to further grow roots in the com- munity for the hospital and specialists rather than as a source of lost cases and revenue," he says. Standalone, physician-owned ASCs remain a vi- able model, as long as physicians are prepared to dedicate the time necessary to develop and open the ASC and commit to the work needed to run a quality center. "A joint venture partner is not an absolute must but it should be viewed as an insur- ance policy," says Mr. Tanner. n 2014: A Promising Year for De Novo ASC Activity? By Carrie Pallardy Reed Martin Barry Tanner 12th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference + The Future of Spine June 12-14, 2014 • Chicago To learn more or register, visit www.beckersasc.com/beckers or call (800) 417-2035 132 Sessions • 168 Speakers • 63 Physician Leaders • 28 CEOs Keynote Debate: Former U.N. Ambassador & Republican Diplomat John Bolton Former Six-Term Democratic Governor of Vermont Howard Dean

• Cover