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Friday, April 1, 2011

My First Professional Article Published!

ASC A Smart Move Toward Future Stability in an Uncertain Future BY NICOLE SEMERARO
It has been a dynamic year for the ASC management and development industry. 2010 marked the busiest year in Physicians Endoscopy’s (PE) history of ASC development and 2011 is gearing up to top it. Some may wonder how this is possible, considering statistics show that ASC growth has leveled off in the past few years. With the uncertain future of healthcare due to reform, the question is what has caused such an increase of physicians interested in developing new centers or to sell equity ownership in their existing centers?
Nicole Semeraro
There is no single answer to this question. For some, the answer is to gain long-term stability and prepare for any future changes. For others, it is survival. With professional fees on the decline, physicians need to identify other revenue sources to tap in order to grow their practice. The answers can be different for every practice. Each situation is unique and equally complex, but there is a possibility for the positive outcome that the physicians are looking for.
With speculation surrounding healthcare reform and what it will mean, many physicians are recognizing that there’s strength in numbers. At PE we are seeing a large number of physicians that have not yet developed an endoscopy center wanting to do so now. We are also introducing the joint venture concept to hospitals and physicians, as potential new opportunities to encourage a long term relationship that creates increased efficiencies and long term stability. Many of our projects under development are made up of coalitions where physicians are joining forces to develop a center which has been their long-time dream.
When you look at how the market has evolved, you’ll see that a majority of large physician groups have already developed a center. You will also see a number of physicians that have thrived independently for their entire careers and want to retain that independence, while benefitting from ownership in an endoscopy
FEBRUARY 2011
EndoEconomics | 13
center as well. For these physicians, the coalition approach is best suited for their needs. They can preserve their independence on the practice side, while coming together as a team to develop an ASC that provides high-quality care for their patients. It is also an opportunity for long-time independent physicians to forge stronger relationships with their physician colleagues.
This is the case for one of our centers currently under development in a historically challenging Certificate of Need (CON) state, a regulatory process that adds an entirely separate level of complexity to the project. The relationship began nine months ago when two of the physicians decided to set up a meeting with PE to discuss the possibility of developing a center. The physicians were presented an overview of the process, financial illustration, and appropriate next steps to move through the process. At the end of the initial meeting, the physicians knew they needed to do something, and agreed to continue through the due-diligence process to determine if it made financial sense. The end result has been five separate solo physician practices have joined together to develop their own endoscopy center. With the professional guidance necessary to align the physicians, Physicians Endoscopy was able to navigate this complex situation by putting together a business plan whereby all the physicians would benefit as a singular group. When asked why the physicians now decided to come together to develop a center, Co-Medical Director Bill Watkins, MD responded, "This is something that we had been thinking about doing for a long time and should have done years ago. The reason we came together to develop a center now involves a variety of factors, such as declining professional reimbursement. Also, we have seen our patients going to surgery centers outside of our county where they can get the same procedure done at a lower cost. We need to recapture this lost revenue. By bringing in Physicians Endoscopy, an unbiased third-party, to manage everything related to the center, we don’t have to worry about anything but our patients." Banding together five different physicians from five solo practices is no small feat. The most important part of the process for PE is to ensure that all physician concerns are addressed and all parties feel comfortable and confident in the decision. The integral role of a professional management company in these relationships is guidance and sharing its expertise in managing a number of different physicians in separate practices to make for a smooth transition that allows the physician to primarily focus on providing great care to his or her patients. At present the CON application is under review.
The second scenario we are seeing is where existing centers are selling a minority interest to management companies and other physicians. This is not just
Our latest acquisition in Augusta, GA is a prime example of acquisition for growth. An existing, successful endoscopy center sought the opportunity to become even more profitable by adding a management partner and recruiting area physicians. Discussions began a year ago when a group of GI physicians approached PE to help put a plan together. How could we position this acquisition opportunity to be a win for them, the new physicians, and PE? We agreed that the next step would be to identify physicians in the area to potentially join practices and buy into the existing center. In the state of Georgia, under a Letter of Non-Reviewability (LNR), all physicians must be in the same practice in order to do their cases at the endoscopy center. This makes the process a bit more complicated, but the physicians agreed to bring in PE to assist with those issues. Over a year’s time PE went through the offer and negotiating process, the practice merger, and the equity sale in the endoscopy center. Deals like this are extremely complex as there are so many moving pieces on both the practice merger side, as well as the center side. There are many decisions to be made and strategic timing of events in order to get to the final signing. The end result of this project was the merger of two of the largest Augusta
any acquisition; this is what we refer to as "Acquisition for Growth." We have been successful in identifying endoscopy centers within a specific geographic area where there are still physicians that could potentially join forces with the existing center to increase volume, utilization, and efficiencies. By coming together through the acquisition, these new physicians provide value to the existing center because increased historical volume of the newly merged group will increase revenue. The physicians gain a business partner with proven expertise to offer guidance and increase operational efficiencies. It is a sound investment that will secure their financial future.
"We believe that coming together will allow our practice to continue to recruit new physicians, maintain our income, negotiate better as a larger group, and continue to grow."
Assistant Medical Director,
Augusta Endoscopy Center
Rick Hodges, MD14 | EndoEconomics FEBRUARY 2011
area GI practices into one group and subsequently PE and the new physicians’ equity purchase within the endoscopy center. Why did this group decide to do this now? "It is something that we had wanted to do for the past few years. We did it for long-term stability, security, and planning purposes. We have two physicians that will be retiring in the next five years, and we believe that coming together will allow our practice to continue to recruit new physicians, maintain our income, negotiate better as a larger group, and continue to grow," said Rick Hodges, MD, Assistant Medical Director at Augusta Endoscopy Center.
No one knows what the future holds for healthcare. What we do know is that there will be changes, and there needs to be increased efficiencies in the delivery of healthcare at a reduced cost to the system. Endoscopy centers are the perfect solution for increasing efficiency, reducing healthcare costs, and streamlining care through proven methods of benchmarking. The above examples are ways to increase efficiencies and long term stability for the future. Coming together in an "Acquisition for Growth" or with other solo physicians in your area to develop a new center or enhance an existing center are strategic approaches to solidify your position in the market for years to come. This is an exciting and opportune time for you as a physician to make your dream of owning a center become a reality.
Nicole Semeraro, Vice President, New Business Devlopment.
She can be reached at
Ms. Nicole Semeraro joined Physicians Endoscopy in April of 2009, and has been in the healthcare sales arena for the past four years. Prior to joining PE, Ms. Semeraro served as Vascular Access Manager for one of the top five medical device companies in the world, Covidien. Her responsibilities included managing a team of sales representatives to reach company sales goals, generating new physician relationships, consulting with vascular surgeons on new devices, organizing and implementing clinical evaluations for new accounts, and training new members of the organization on key product lines. Ms. Semeraro started her career in pharmaceutical sales with Sanofi-Aventis, focusing on key product lines within the osteoporosis, insomnia marketplace. Ms. Semeraro earned her bachelor’s in marketing from Bentley University in 2005, where she played Division II volleyball. During her time at Bentley, she was a member of the prestigious NCAA Division II Student Athlete Advisory Committee where she represented student athletes from across the country on a variety of legislative topics that directly affected college athletics. Ms. Semeraro spearheaded the first ever NCAA grassroots fundraising campaign in partnership with the Make-A-Wish Foundation which to this day still continues to grow and has thus far contributed over $730,000 to the children’s benefit foundation. nsemeraro@endocenters.com.FEBRUARY 2011 EndoEconomics | 15

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