The ambulatory surgery center (ASC) sector of the healthcare industry is showing signs of maturity. Growth in the number of new centers, overall surgical volumes, and the number of surgeons who are not currently affiliated with an ASC has hit a plateau. Yet despite the maturity, the only constant we see within the industry is change itself. Historically, ASC’s were viewed as standalone centers performing “minor outpatient surgery”. Over time, thanks to advancement in both technology and pharmaceuticals, today’s surgery centers are dealing with higher acuity cases while providing an efficient and cost-effective setting. While the number of new centers has declined, the market itself is always changing and those centers that do not adapt do not survive. Regent has specific expertise in “turning around” surgery centers that are not meeting the current needs of the investor. Failure to meet the needs of the referring physician can be based on both clinical and financial outcome. We have found that ASC’s, many that opened in the early 90’s and were once successful, are now stagnant in terms of growth and financial performance. The past few years have been challenging, to say the least, for all of us. As a company we measure our performance against industry benchmarks. A key determinate of success is growth in same store sales. We are proud of the chart, below, that measures Regent ASCs’ collective performance as compared to competing organizations. The economy has taken its toll on the industry, but despite the challenges Regent has outperformed the industry. Below is a chart that delineates performance. In 2008- 2009 surgical volumes grew 3%. In 2009-2010 surgical volumes increased 8%. Year to date Regent centers are on pace to increase 12% in 2011. The growth in the volume of cases can be attributed to 3 key elements with each of our centers; a) ability to expand service lines and attract higher acuity cases, b) ability to accommodate existing physician demand to increase individual productivity and c) ability to expand the physician referral base via the recruitment of new users. A surgery center partnership is no different than any other business; customers come and customers go. Physician satisfaction surveys indicate that we accommodate physician need better than most hospitals. However, overtime, physician practice patterns change, physicians retire, groups add new members and some physicians simply elect to pursue opportunities outside of the immediate service areas. Part of our success is instilling a sense of entrepreneurship within our administrators. Regent leadership, in conjunction with our administrators, continually monitors how a local surgery center is positioned in the market to attract new customers. It is imperative that our team is cognizant of the local physician market and is diligent in identifying opportunities for growth. When deciding to add new partners, we will work to actively recruit new surgeons to our centers. Our greatest asset in recruiting new physicians is the support of the current physician base. A partner with a shared commitment to quality and success is the most effective recruitment strategy. When evaluating market opportunity we will prioritize our efforts and concentrate on specific specialties that could benefit from having access to an ambulatory surgery center. Over the years our focus has changed. Specialties that were historically tied to the inpatient setting, (neurosurgery and cardiology) need to accommodate patient, and payer, demand for convenient, cost effective facilities. The opportunity to invest and own a component of their private practice is of additional benefit. While we concentrate on the “business” of healthcare we also realize that we are a healthcare provider and physicians expect us to provide the highest standard of care and to never compromise on quality. A center’s ability to demonstrate clinical competency and collective skill in caring for higher acuity patients gives us a sustainable advantage when meeting with new physicians. The addition of neurosurgery and cardiology to our service lines has had a profound impact not only on our centers financial performance but our clinical competency as well. Our centers are positioned to succeed despite the uncertainty associated with healthcare reform legislation. Center Consolidation: As the industry matures, and with further consolidation of the payer community, some surgery centers will want, or need, to consolidate operations and partner with existing surgery centers or a strategic partner. Currently half of our partnerships include a local hospital as a strategic partner. While we live in a society that values quality, we also live in a society that values convenience and efficiency even more. Greater demands are being placed on our physicians colleagues. The cost to operate a medical practice continues to accelerate, while reimbursement for professional services continues to decline. Greater demands are being placed on physicians to increase productivity. A surgery center needs to focus on accommodating not only the physician but his or her scheduler who determines where and when cases will be scheduled. When recruiting new physicians, the center that can demonstrate its ability to minimize paperwork, repetitive calls etc, at the actual site of service (physician’s office) and can accommodate physician demand for convenience will grow their business. To the current physician owners, new physicians represent new revenue. The healthcare economy demands that we all look at our business differently and, where practical, find better ways to increase surgical volume. We have heard of centers turning away volume because they didn’t want to open another room, or asking partners to consider moving their block time to accommodate growth. Turning away cases undermines the financial stability of the center. Certainly no one wants to move block time, but the partners at Regent centers do an excellent job of thinking like business owners rather than surgical space renters. Working with the administrator and anesthesiologists to accommodate new doctors is one of the keys to Regent’s growth in this challenging economy. Group Practices Adding New Physicians: Specialty practices continually add new physicians, locations and services to their practice. It is imperative that an administrator not only knows the business of his or her partners within the center but also what is going on within the physicians practice itself. Are they seeing more patients, are new surgical procedures being advanced that could attract additional patients, etc. Working with your physician partners is a constant exercise. If left unattended physicians will seek other providers and establish referral patterns that might not necessarily include the surgery center. One needs to be diligent in working with the physician partners. The successful administrator will find ways to be a resource to his physician partners. Historically Inpatient Procedures: In an effort to reduce the cost of providing care to the growing Medicare population, the Federal government and private insurers are now reimbursing for procedures that historically were referred to the inpatient setting. A small, but growing, part of our success in increasing same store sales is the recruitment of specialties that provide care to higher acuity patients. In the past year Regent has focused its recruitment efforts on Ortho/Neuro Spine Surgeons, Cardiologists, and Retinal Surgeons who historically were restricted from accessing ASC’s. When recruiting new surgeons it is imperative we educate them as to clinical matters. Physicians are scientists and respond to data. The ability to document outcomes, cost, and convenience is imperative when meeting with the physician for the first time. Some physicians will want to invest in a center. The first point of the discussion should be; does the center work for you? Are you and your patients being accommodated? Is there anything we can do better to enhance your experience? Partnership is predicated on having a physician who cares about the business and the collective success of his or her colleagues. Surgery centers are a fluid business. To grow volume existing partners have to look at the larger medical community to find ways to attract new surgeons. Everyone needs to think like an owner and be part of the solution in improving quality while lowering the cost to provide care.