Learn practical strategies.

3. Strategies for reviving struggling ASCs
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 Fee schedule outdated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

4. Operational Strategies to
Meet the Challenge

5. Operational strategies to meet the challenge
Operational Audit — thorough review of
all 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

6. Operational strategies to meet the challenge
Operational Issues
 Review service contracts
 Equipment costs
 Review rent and CAM charges
 Physician recruitment
 Physician buy-out

7. 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

8. Operational strategies to meet the challenge
Financing
 Review options  Equipment
 Plan  Non-recourse
 Real estate  Equity percent
 Leasehold improvement

9. Operational strategies to meet the challenge
Guidelines for
ASC Success

10. 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

11. Operational strategies to meet the challenge
12 Key Processes for Success (continued)
7. Cash management
8. Inventory management purchasing
9. Staffing
10. Compliance
11. Risk management
12. Medical records

12. Operational strategies to meet the challenge
For more information
Robert Zasa
Principal
Woodrum / Ambulatory Systems Development
 626.403.9555
 www.WoodrumASD.com

13. Turnaround your ASC through legal re-structuring

14. 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?

15. Turnaround your ASC through legal re-structuring
Safe Harbor Provision 1
Terms of investment in the ASC must not be related to
services rendered by the investors or their expected
volume of referrals.

16. Turnaround your ASC through legal re-structuring
Safe Harbor Provision 2
ASC or any party connected to the ASC must not loan
investors any amount for buy-in.
Investors must be at risk.

17. Turnaround your ASC through legal re-structuring
Safe Harbor Provision 3
Investor distributions must be directly proportionate to
investor’s capital investment.

18. Turnaround your ASC through legal re-structuring
Safe Harbor Provision 4
At least 1/3 of investor’s medical practice income must be
Medicare approved ASC procedures.

19. 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 do
not meet Safe Harbor guidelines.

20. Turnaround your ASC through legal re-structuring
Passive Investors
 Are an economic drain on the ASC
 Place ASC at risk for violating Safe Harbor

21. 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

22. Turnaround your ASC through legal re-structuring
Buy-out Provisions
Step 1
ASC must have governing documents with Safe Harbor
applications.

23. Turnaround your ASC through legal re-structuring
Buy-out Provisions
Step 2
Structure documents to include adverse and
non-adverse terminating events.

24. 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 adverse
or non-adverse terminating event.
Typically: 40% less for an adverse event.

25. Turnaround your ASC through legal re-structuring
Turnarounds mean governance document
restructuring
 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

26. Turnaround your ASC through legal re-structuring
Please Contact
Doug Free
Partner
Kessenick, Phillips & Gamma, LLP
 415.362.6414
 www.KPGLegal.com

27. Overturn Financial Burdens

28. 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?

29. 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 you
don’t know
You may be profitable, but not have enough cash
flow to grow.

30. 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.

31. Overturn Financial Burdens
Impact of Current Debt
Example: XYZ Surgery Center Current Debt
Equipment Interest Original Original Months Monthly Balance
Rate Amount Term Remaining Payment
C-arm 8% $150,000 36 30 $4,700 $141,000
Various 6.9% $95,000 60 48 $1,900
91,200
Various 7.2% $220,000 60 36 $4,400
158,400
Various 7.5% $265,000 60 36 $5,300
190,800
Totals: $730,000 $16,300
$581,400

32. Overturn Financial Burdens
Impact of Debt Restructuring
Example: XYZ Surgery Center Debt Restructured
Interest Original Original Months Monthly
Rate Amount Term Remaining Payment
8.0% $581,400 96 96 $8,200
8.0% $581,400 120 120 $7,100

33. Overturn Financial Burdens
Your Monthly Payment
 $16,300
 Or $8,200
 Or $7,100
Cash flow can increase up to 50%

34. Overturn Financial Burdens
Strategy 2:
Prepare for the Unseen
Things happen that you can’t foresee
 Environmental catastrophes
 Staff turnover
How can you prepare?

35. Overturn Financial Burdens
Increase cash flow
through a line of credit
“Cheap” Money
Cost – prime (currently 5%) + 2 = 7%
$100,000 from line of credit = payment $600/month

36. 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.

37. Overturn Financial Burdens
Financing Equipment
To be competitive, you must have the latest equipment
 C-arm
 Other radiological equipment
You don’t have to take money from your
partners – lease.

38. 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

39. Overturn Financial Burdens
Tax Incentives for leasing
Government stimulus bill doubled the depreciation for the
cost of an asset acquired in 2008.
If you plan to lease equipment — do it now.

40. Overturn Financial Burdens
Use your receivables to improve
cash flow
Accounts receivables line . . . or factoring

41. 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

42. 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

43. Overturn Financial Burdens
Impact of receivables deals
Expensive money – typically 2 to 2.5% per month
Relieves stress of slow reimbursements and
slow pay.

44. Overturn Financial Burdens
Consider mix of
line of credit + receivables program

45. Overturn Financial Burdens
Conclusion
Foresight & Strategy
Leads to profitability with greater cash flow, less stress
& more growth.

46. Overturn Financial Burdens
Please Contact
Ed Mann
 415.831.1234
 RCLeasing@comcast.net

47. Thank you for joining us
To learn more about us or download articles visit us at:
Robert Zasa Doug Free
www.WoodrumASD.com www.KPGLegal.com
Ed Mann
www.OrthoPracticeSolutions.com

48. Robert Zasa, MSHHA, FACMPE About the Presenters
One of the nation’s experts on ASC Earlier highlights: Alternacare Corp
business. Experienced in all levels of (founding & public offering), American
business development, management, Medical International (VP corporate, COO
expansion, acquisition, legal structuring, of ambulatory centers), Brookwood
marketing and business revitalization. In Medical Center (administrator), Ochsner
a variety of settings—multi-service Clinic (administrator), and hospitals in
centers, ambulatory care, group Alabama.
practices, ASCs and hospitals—across
the nation. Zasa earned a Masters in hospital and
health administration from the U of
A founder of Woodrum/Ambulatory Alabama, with graduate studies in
Systems Development, and its ongoing marketing at UCLA and Loyola
executive leader, manager and University. He is a fellow in the American
developer. College of Medical Practice Executives,
lecturer and author, and served on the
Founder, president and CEO of Premier editorial boards of the Journal off
Ambulatory Systems, recognized as one Ambulatory Care Management and
of the nation’s 500 fastest growing Surgery Network.
private companies (1995, Inc.
magazine), ranking sixth for growth in 3
BZasa@WoodrumASD.com
years with over $35 million in revenues.

49. Doug Free About the Presenters
Free’s law practice is focused Free has served as general counsel to
exclusively on the legal and business the California Society of Plastic
needs of physicians. He regularly Surgeons since 1997, and has
advises in all areas of physician represented many physicians and
business law, including corporate, tax, medical groups throughout California.
and regulatory matters. He has a
background in professional liability Free is a graduate of Santa Clara
defense, and real estate and University School of Law, and
commercial leases. obtained his undergraduate from
Boston College.
He helped found Kessenick, Phillips &
Gamma in 2006 and was named a
partner in 2008. Formerly, he was with DFree@KPGLegal.com
Hanson, Bridgett, Marcus, Vlahos &
Rudy; and the Law Offices of Charles
O’Brien(general counsel to The Doctors
Company, a major physician
malpractice insurance company).

50. Ed Mann About the Presenters
Mann serves a dual role. He is He created marketing programs for
co-founder of Ortho Practice Solutions, American Express, which advanced the
providing financial and educational corporation’s entry into the office
support to the orthopedic surgery products division. In 2003, Mann honed
community. As president of RC Leasing his focus to the medical community,
& Consulting, he facilitates leases and creating RC Leasing & Consulting.
vendor programs for medical practices,
organizations and hospitals worldwide. Mann is a graduate of C.W. Post
College.
In all his vast and varied experience,
Mann has focused on finance and
leasing. He began his career in the family RCLeasing@comcast.net
auto dealership, Future Motors, the
largest volume dealership in the US in the
1970s. He then founded RECOM which
became the largest originator of
transportation leases in the Northeast.