Becker's ASC Review

30 Transactions & Joint Ventures Does Your Hiring Process Feel Like This? Don't Gamble With Your Center's Future! Hire a Search Professional With Experience You Can Trust Executive Search & Recruitment Since 1981 ▪ Administrators ▪ Directors of Nursing ▪ ASC Corporate Executives For a client-focused approach, call/email: Greg Zoch 972-265-5290 gnz@kbic.com "Excellence is never an accident." 5 Bold Predictions in ASC M&A Landscape for 2015 (continued from cover) Here are five bold predictions for the ambulatory surgery center merger and acquisition landscape for 2015 and beyond. 1. There will be huge opportunity for developing new ASCs as part of hospital-based outpatient medical campuses. Instead of developing freestanding surgery centers, hospitals are looking for phy- sician and corporate partners to develop ASCs as part of an outpatient medical campus or single office building to provide the continuum of care. Patients can come in for imaging and diagnostic testing and then have an outpatient proce- dure or schedule outpatient surgery if necessary — all in one place. "You'll see medical office buildings that have surgery centers in them along with a whole array of outpa- tient services that cater to physicians," says Mr. Sim- mons. "People can go to one place for the entire spec- trum of outpatient care." 2. Hospitals will be willing to transition more cases to partnering ASCs. "In the past, hospitals were less likely to joint venture with ASC physicians, especially when they were taking business out of the hospital," says Mr. Sim- mons. "Today, we are developing more partnerships with hospitals who are willing to take cases out of the hospital to support the ASC to provide a low- er cost alternative especially if the hospital is a primary gatekeeper for the healthcare dollar." The cases are transitioned out of the hospital to make more room in operat- ing rooms for higher acuity cases. ASCs with this type of hospital partner are usually located on or near a hospital campus. "Hospitals need to create a less costly environment and want to keep the higher acuity cases in the hospital, so they are willing to partner with loyal physicians on a joint venture center," says Mr. Simmons. "We have always tried to create more value for our hospital partners by enhancing market share for them and now we're seeing hospitals come to us because we not only have that reputation but also we can and have matched private practice and employed doctors successfully into one ASC partnership." 3. ASCs partnering with hospitals will more often than not see better revenue per case. Transitioning a freestanding surgery center to a joint venture with a hospital could help ASCs increase their reimbursement rate, if the hospital is will- ing and able to influence managed care contracts. All Regent centers are in- network — it allows physicians to bring all their cases to the centers as well as appeals to hospital partners. "We've seen a rate increase in ASCs when the hospital is willing to support the center," says Mr. Simmons. "We are able to contract with the hospital to get better rates. We show the payer that even though they might pay more than they would for freestanding centers, we are lowering costs in their bud- get for hospital rates. We can negotiate higher rates because we can reduce the cost of cases to the payer." 4. Hospitals will allow employed surgeons to use the ASC — and even become owners. "We never used to see hospitals allow employed surgeons to participate in ASCs until around 18 months ago," says Mr. Simmons. "Now we are seeing a shift in that direction. It's a growing trend. Hospitals want to recruit more surgeons to be employees, and they see the ASC as a recruitment and reten- tion tool." When surgeons sell their practice to the hospital, they still have the opportu- nity to become a physician owner in the joint venture ASC. That ownership is a chance at additional revenue they wouldn't have otherwise. 5. There will be huge opportunity for new joint ventures ASCs in CON states, and it will be easier than before. "In certificate of need states, there is a new direction for hospitals that are aggressively pursuing outpatient strategies," says Mr. Simmons. "They are looking to companies like ours to develop a full range of outpatient services either in a campus or a large medical office building where ASCs are only one component." Regent is currently working in three new markets — New York, Michigan and Delaware — which are all CON states. "In those markets, we have seen a lot of business opportunity to develop and acquire centers," says Mr. Sim- mons. With the hospital partner, obtaining the CON also becomes an easier process politically. n Jeffrey Simmons

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