Becker's Hospital Review

74 Executive Briefing: Ambulatory Surgery Centers ASD Management is a nationally renowned ASC company with a unique background in hospital administration, and a history of success spanning three decades. We maximize ASC performance and profitability by focussing on operational systems, day-to-day operations, staff performance and revenue growth. Offering comprehensive services for ASC turnarounds, hospital/physician joint ventures, new development and continuous management for success. ASDManagement.com Night Football, listen to the starting lineup," he says. "You will find that most of the players did not play on championship teams, or even the historically great college football programs. They were excellent players in mediocre systems." It's those leaders — the physicians and staff members — that are responsible for the execution of the surgery center, and whether it can be a valuable part within the hospital. Conclusion Mr. Zasa says some ASCs "can't be fixed," but for those that can, a turnaround can occur in as little as three to four months. Fol- lowing the outlined steps can help hospitals that want to boost their surgery center's performance and make it a core community asset. "Essentially, a turnaround entails the diagnostic to identify key de- ficiencies, the adoption of sound management systems, attracting core staff who can implement the systems and incentivizing them to feel like owners, attracting the right physicians and the entire group buying into the management system or program," Mr. Zasa says. n H ere are brief descriptions of five different functional mod- els. This article provides a simple assessment of the dif- ferent surgery center joint venture models. 1. Physician-owned. In this model, a surgery center is owned solely by physicians, though they may or may not outsource man- agement to a third party. The physicians benefit because they end up owning all of the returns from the venture. The downside is the owners don't have access to additional management equity ownership and assistance from one of the more substantial man- agement companies. The physicians also don't have a hospital partner that could be able to step in to help with managed care contracting. 2. Physicians and management company. In 2011, 22.3 per- cent of surgery centers were owned or managed by an ASC chain, according to VMG Health's ASC Intellimaker Survey 2011. Traditionally, a management company owns a greater than 50 percent share in a surgery center, but there are a great number of companies that also own minority interest in this model. Fifty percent of management companies prefer a 29 to less than 10 percent ownership stake, while 50 percent prefer a 30 to 75 per- cent ownership stake, according to HealthCare Appraisers' 2013 ASC Valuation Survey. 3. Physicians and hospitals. In many ventures, physicians share surgery center ownership with a hospital. There are a substantial number of cases in which either physicians or a hospital own a majority share. This model often has the benefit of attracting ad- ditional physician investors. The addition of hospital partners is intended to help with managed care contracting and physician issues. How helpful hospital partners actually are varies widely from market to market. 4. Physicians, management company and hospital. Over the past five years, this three-way joint venture model — in which the management company and hospital often collectively own more than 50 percent of the center — has become increasingly popular. In 2013, 50 percent of management companies reported selling a controlling interest of a surgery center to a hospital or health system, according to HealthCare Appraisers' 2013 ASC Valu- ation Survey. The premise of this model combines the benefits of a management company and hospital partner to help improve management, help gain access to managed care contracts and minimize tension caused by recruiting physicians outside of the venture. 5. Hospital operated outpatient department and contracted physicians for co-management. Due to the reimbursement benefits of hospital ownership, there are a substantial number of models in which a hospital owns 100 percent of a surgery center, in which case it is billed as an outpatient department. Surgery center reimbursement as a percentage of HOPD reimbursement has been steadily declining. In 2003, ASCs were reimbursed at 87 percent of what HOPDs received and by 2011, ASCs received 56 percent of what HOPDs were reimbursed, according to VMG Health's ASC Intellimaker Survey 2011. n 5 Surgery Center Joint Venture Models By Scott Becker, JD, CPA and Carrie Pallardy

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