revive your asc
DESCRIPTION
Learn practical strategies.TRANSCRIPT
Most Common Issues in Struggling ASCs
Non-using surgeon partners
Collections not good—large A/R of old accounts
Accounts payables too extended
Shortage of cash & no distributions
Payer contracts—low yield reimbursement & bad terms
Fee schedule outdated
Staffing not aligned with caseloads
Supply cost/case too high & no ongoing utilization review or GPO use
Strategies for reviving struggling ASCs
Operational Strategies to
Meet the Challenge
Operational strategies to meet the challenge
Operational Audit — thorough review ofall systems
Business office operations, A/R, A/P, collections
Retroactive payer contract analysis
Current debt financing — % and terms
Clinical staffing, compensation & productivity
Supply & drug costs, cost/case, comparison to benchmarks
All costs using critical management benchmarks
Operational Issues
Review service contracts
Equipment costs
Review rent and CAM charges
Physician recruitment
Physician buy-out
Operational strategies to meet the challenge
Develop a new Business Plan
Term sheet
Transition plan
Prioritize issues
biggest economic boost soonest
easy to accomplish & economically beneficial
specific tasks with realistic deadlines and responsibilities
Operational strategies to meet the challenge
Financing
Review options
Plan Real estate
Leasehold improvement
Equipment
Non-recourse
Equity percent
Operational strategies to meet the challenge
Guidelines for
ASC Success
Operational strategies to meet the challenge
12 Key Processes for Success
1. Scheduling
2. Insurance verification
3. Coding
4. Billing
5. Collections
6. Accounts payable
Operational strategies to meet the challenge
12 Key Processes for Success (continued)
7.
8.
9.
10.
11.
12.
Cash management
Inventory management purchasing
Staffing
Compliance
Risk management
Medical records
Operational strategies to meet the challenge
For more information
Robert ZasaPrincipal
Woodrum / Ambulatory Systems Development
626.403.9555
www.WoodrumASD.com
Operational strategies to meet the challenge
Turnaround your ASC through legal re-structuring
Overview of Federal ASC Safe Harbor
Federal Anti-Kickback Statute 42 USCS 1320a-7(b)
1999 ASC Safe Harbor
ASCs meeting each aspect of safe harbor are 100% immune
Is your ASC structured properly?
Turnaround your ASC through legal re-structuring
Safe Harbor Provision 1
Terms of investment in the ASC must not be related toservices rendered by the investors or their expectedvolume of referrals.
Turnaround your ASC through legal re-structuring
Safe Harbor Provision 2
ASC or any party connected to the ASC must not loaninvestors any amount for buy-in.
Investors must be at risk.
Turnaround your ASC through legal re-structuring
Safe Harbor Provision 3
Investor distributions must be directly proportionate toinvestor’s capital investment.
Turnaround your ASC through legal re-structuring
Safe Harbor Provision 4
At least 1/3 of investor’s medical practice income must beMedicare approved ASC procedures.
Turnaround your ASC through legal re-structuring
Safe Harbor Provision 5
Multi-specialty centers:
Physician investors must perform at least 1/3 of their
surgeries at the ASC.
Passive investors not regularly using the ASC donot meet Safe Harbor guidelines.
Turnaround your ASC through legal re-structuring
Passive Investors
Are an economic drain on the ASC
Place ASC at risk for violating Safe Harbor
Turnaround your ASC through legal re-structuring
Legal Turnaround
Legal documents must comply with Safe Harbor
Governing body must be able to force a buy-out
Turnaround your ASC through legal re-structuring
Buy-out Provisions
Step 1
ASC must have governing documents with Safe Harbor
applications.
Turnaround your ASC through legal re-structuring
Buy-out Provisions
Step 2
Structure documents to include adverse and
non-adverse terminating events.
Turnaround your ASC through legal re-structuring
Buy-out Provisions
Step 3
Documents include method for valuing ownership interests.
+Formula for redeeming interest in the event of an adverseor non-adverse terminating event.
Typically: 40% less for an adverse event.
Turnaround your ASC through legal re-structuring
Turnarounds mean governance documentrestructuring
Include Safe Harbor compliance and adverse & non-adverse terminating events
Non-compete clause
Members of investor groups must be individually bound and accountable
Streamlined management & governance
Turnaround your ASC through legal re-structuring
Please Contact
Doug FreePartner
Kessenick, Phillips & Gamma, LLP
415.362.6414
www.KPGLegal.com
Turnaround your ASC through legal re-structuring
Overturn Financial Burdens
Dynamics of today’s economy
Credit world is tightening
Cash is king
Protect your business with a new cash flow strategy
Do you have a strategy?
Overturn Financial Burdens
Sound Strategies for Protecting Cash
1. Total debt restructuring of your center
2. Prepare for the unseen—you don’t know what youdon’t know
You may be profitable, but not have enough cashflow to grow.
Overturn Financial Burdens
Strategy 1: Total Debt Restructuring
Reimbursements going down
Costs of goods and services are going up
There is less cash to grow your center
One strategy is total debt restructuring.
Overturn Financial Burdens
Impact of Current Debt Example: XYZ Surgery Center Current Debt
$16,300$730,000Totals:$581,400
$5,3003660$265,0007.5%Various190,800
$4,4003660$220,0007.2%Various158,400
$1,9004860$95,0006.9%Various91,200
$141,000$4,7003036$150,0008%C-arm
BalanceMonthlyPayment
MonthsRemaining
OriginalTerm
OriginalAmount
InterestRate
Equipment
Overturn Financial Burdens
Impact of Debt RestructuringExample: XYZ Surgery Center Debt Restructured
$7,100120120$581,4008.0%
$8,2009696$581,4008.0%
MonthlyPayment
MonthsRemaining
OriginalTerm
OriginalAmount
InterestRate
Overturn Financial Burdens
Your Monthly Payment
$16,300
Or $8,200
Or $7,100
Cash flow can increase up to 50%
Overturn Financial Burdens
Strategy 2: Prepare for the Unseen
Things happen that you can’t foresee
Environmental catastrophes
Staff turnover
How can you prepare?
Overturn Financial Burdens
Increase cash flowthrough a line of credit
“Cheap” Money
Cost – prime (currently 5%) + 2 = 7%
$100,000 from line of credit = payment $600/month
Overturn Financial Burdens
What is the best use of a line of credit?Not for equipment (depreciating asset)
For working capital—operations
Adding staff
Repairs or redoes
Purchasing position of power— rather than stress.
Overturn Financial Burdens
Financing EquipmentTo be competitive, you must have the latest equipment
C-arm
Other radiological equipment
You don’t have to take money from yourpartners – lease.
Overturn Financial Burdens
Economic advantages of leasing
Typically no out-of-pocket money
Predictable, structured payments
Allows for obsolescence — you always have the latest and greatest
Overturn Financial Burdens
Tax Incentives for leasing
Government stimulus bill doubled the depreciation for thecost of an asset acquired in 2008.
If you plan to lease equipment — do it now.
Overturn Financial Burdens
Use your receivables to improvecash flow
Accounts receivables line . . . or factoring
Overturn Financial Burdens
Accounts receivables line of credit
Advance capital on your receivables
A lean on your receivables
You manage billing and collections
Line of credit requires personal guarantees
Overturn Financial Burdens
Factoring AR
Receivables company buys receivables from you
They manage your billing and collections
Formula can be negotiated
Usually does not require personal guarantees
Overturn Financial Burdens
Impact of receivables deals
Expensive money – typically 2 to 2.5% per month
Relieves stress of slow reimbursements andslow pay.
Overturn Financial Burdens
Consider mix of
line of credit + receivables program
Overturn Financial Burdens
Conclusion
Foresight & Strategy
Leads to profitability with greater cash flow, less stress& more growth.
Overturn Financial Burdens
Thank you for joining us
To learn more about us or download articles visit us at:
Ed Mannwww.OrthoPracticeSolutions.com
Doug Freewww.KPGLegal.com
Robert Zasawww.WoodrumASD.com
One of the nation’s experts on ASCbusiness. Experienced in all levels ofbusiness development, management,expansion, acquisition, legal structuring,marketing and business revitalization. Ina variety of settings—multi-servicecenters, ambulatory care, grouppractices, ASCs and hospitals—acrossthe nation.
A founder of Woodrum/AmbulatorySystems Development, and its ongoingexecutive leader, manager anddeveloper.
Founder, president and CEO of PremierAmbulatory Systems, recognized as oneof the nation’s 500 fastest growingprivate companies (1995, Inc.magazine), ranking sixth for growth in 3years with over $35 million in revenues.
Earlier highlights: Alternacare Corp(founding & public offering), AmericanMedical International (VP corporate, COOof ambulatory centers), BrookwoodMedical Center (administrator), OchsnerClinic (administrator), and hospitals inAlabama.
Zasa earned a Masters in hospital andhealth administration from the U ofAlabama, with graduate studies inmarketing at UCLA and LoyolaUniversity. He is a fellow in the AmericanCollege of Medical Practice Executives,lecturer and author, and served on theeditorial boards of the Journal offAmbulatory Care Management andSurgery Network.
About the PresentersRobert Zasa, MSHHA, FACMPE
Free’s law practice is focusedexclusively on the legal and businessneeds of physicians. He regularlyadvises in all areas of physicianbusiness law, including corporate, tax,and regulatory matters. He has abackground in professional liabilitydefense, and real estate andcommercial leases.
He helped found Kessenick, Phillips &Gamma in 2006 and was named apartner in 2008. Formerly, he was withHanson, Bridgett, Marcus, Vlahos &Rudy; and the Law Offices of CharlesO’Brien(general counsel to The DoctorsCompany, a major physicianmalpractice insurance company).
Free has served as general counsel tothe California Society of PlasticSurgeons since 1997, and hasrepresented many physicians andmedical groups throughout California.
Free is a graduate of Santa ClaraUniversity School of Law, andobtained his undergraduate fromBoston College.
About the PresentersDoug Free
Mann serves a dual role. He isco-founder of Ortho Practice Solutions,providing financial and educationalsupport to the orthopedic surgerycommunity. As president of RC Leasing& Consulting, he facilitates leases andvendor programs for medical practices,organizations and hospitals worldwide.
In all his vast and varied experience,Mann has focused on finance andleasing. He began his career in the familyauto dealership, Future Motors, thelargest volume dealership in the US in the1970s. He then founded RECOM whichbecame the largest originator oftransportation leases in the Northeast.
He created marketing programs forAmerican Express, which advanced thecorporation’s entry into the officeproducts division. In 2003, Mann honedhis focus to the medical community,creating RC Leasing & Consulting.
Mann is a graduate of C.W. PostCollege.
About the PresentersEd Mann