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ASD Management’s Randy Todorovich Receives Award for Advancing Relationships between California Surgery Centers and Health Plans

The California Association of Ambulatory Surgery Associations (CASA) has awarded The Richard LeBlanc Award to Randy Todorovich, ASD Management Senior Vice President of Managed Care. Originally called “The President’s Award,” the honor is given to a CASA member who has given tirelessly to the volunteer organization, above the call of duty. The award has been given only 11 times in CASA’s 30-year history. CASA President Deborah Miller made the award to Todorovich on September 5 at the 2018 CASA Conference in Huntington Beach, CA. President Miller acknowledged Todorovich’s active leadership role and committed volunteerism in the development of relationships between the ambulatory surgery center (ASC) association and managed care industries throughout California. “The ASC industry owes many of the strides it’s made forward to (Randy’s) efforts,” stated President Miller. “He has been instrumental in developing payer relationships, and is now working toward engaging the large employer community to discuss (health premium) benefit design and the advantage of utilizing the ASC model. At times these conversations have been difficult, but Randy remains the consummate gentleman, and his character and mild demeanor are a credit to this success.” CASA is a leading and pro-active volunteer organization in the ambulatory surgery industry, with a mission of advancing communications and education, appropriate legislative and regulatory actions, and continuous enhancement of excellence in the ASC industry as it embraces the challenges of the 21st century. “We believe strongly in forging relationship with health plans, payers and other health related entities so they understand the value of surgery centers,” said Todorovich. “Over the years, they have come to understand not only the value of surgery centers, but also the resources that CASA offers in advancing quality and cost-effective health care delivery.” Through Todorvich’s leadership, CASA has staged executive level conferences bringing together health plans, large surgery center companies and business groups on health, where they can meet face-to-face about key issues on all sides. “This really helped educate us all,” he said, “and now, after 10 years, the health plans find ASCs a viable part of the health delivery chain.” Todorovich, along with other CASA Board members, is now focusing on developing relationships between surgery centers and large employers with self-funded health plans. CASA is developing objective data to demonstrate that ASCs are not only a lower cost alternative to hospitals, but are also the highest quality provider for non-urgent, outpatient procedures. “The quality piece of the puzzle,” Todorovich said, “is critically important to employers.” Todorovich’s volunteerism on behalf of the industry dovetails his role at ASD Management, where he promotes and maintains relationships between the firm’s surgery centers and the managed care providers with which they contract. “Through CASA, I have had the good fortune to work with executive level professionals of the health plans, and these connections and resources broaden what I can bring to our surgery centers.”   Download This Article

Increasing the Value of an ASC

From the Ambulatory M&A Advisor Selling an ASC at the highest possible multiple is the main goal for physician owners looking to make a profit off their years of labor at a particular center or business. The Ambulatory M&A Advisor takes a look at some of the ways that owners can strive to obtain said multiple by taking certain steps in the years before selling, that could help the ASC’s value increase. Robert Zasa, founding and managing partner of ASD Management explains that competition in the area, ability to perform services, and the kind of services that are offered in the area are considered valuable to buyers shopping around for an ASC. Zasa says that one of the typical reasons these areas are of value is because it helps the potential buyer assess how many new doctors or what new services they could add to the center to further increase the value. “For example, we have a center in a very competitive area in Los Angeles. What we are trying to do is grow the center. We have a new cardiovascular service that we are adding to selected centers. The decision to add this service is dependent upon the demographics in the area, the competition in the area, and the types of physicians in the area that might do these procedures,” Zasa says. “We are looking at this particular location and have found that nobody is offering cardiology. There happens to be a very good interventional cardiology group and it fit. We were able to syndicate, sell them shares in the center; it is going to increase the revenue significantly for our center. You look at those types of opportunities. Whether we are acquiring a center, or whether we are looking to add revenue to a center; to add to the value, we are either recruiting new physicians, or adding new services like retina, spine and cardiovascular.” Zasa adds that other opportunities to increase the value of an ASC can be seen when examining a center in a remote location. Zasa explains that it is very difficult to add new physicians to a remote area because there are not a lot of physicians in the area, and the ones that are present, are most likely involved in other deals. Zasa says in order to increase the value of an ASC in this situation, adding in new services is the best bet. “In another situation, we have an area that has not been picked over. We are just adding 4 or 5 doctors a year. That’s how we are increasing the value of the center,” Zasa says. Although it may seem like an ideal way to increase the value of an ASC, Zasa says that cutting the costs in a center is not going to significantly increase the value. In his experience, increasing value is really a revenue generation proposition and how much an operator can do that by either adding new services or adding new doctors. Matthew Muller, ASA,Manager with HealthCare Appraisers is on the side that cutting costs can be a way for a surgery center to increase its value. According to Muller, many physician-owned surgery centers have one or more of its physician owners directly involved with managing certain areas of operation of the center, though these physicians may already have their hands busy managing their clinical caseloads. He suggests that it would be worthwhile to spend time reviewing the centers expense structure in detail to confirm there is no waste occurring. Muller says that such attention to detail should already be in place, but this is a simple exercise that may result in additional operating profitability to a surgery center and, in turn, a higher value. Muller explains that staffing and supplies expenses would be two key areas for management to review. An overstaffed surgery center could quickly negatively affect a center’s profitability, especially with payroll related benefits such as health insurance continuing to rise in recent years. Along with payroll, supplies would be a second key expense category to review, he says. “Obviously, that’s a big expense for any surgery center, and we have seen many surgery centers comment on notable annual increases in supply costs from their vendors in recent years. Sometimes, a center may have no choice but to accept these higher costs. However, anything you can do to attempt to renegotiate any of those contracts, or even look to see if there are other vendors to use for some of your main supply expenses, may go a long way in helping to keep supply costs under control. I think supplies and staffing are typically the two biggest expenses a surgery center faces, so making sure those items are getting attention by management is key,” Muller says. On the revenue side, he says that one thing to keep in mind when having a valuation completed is that there is less risk related to positive developments that have already occurred at a center and are supported by historical data, as compared to those that are anticipated to occur. In an example he provides, a surgery center may have recently gone in-network with a new commercial payer it had previously not been doing any cases with. By going in-network, center management may anticipate a material increase in case volume related to patients insured by this payer. “If a valuation of the center occurred before any of these anticipated new cases materialized, the uncertainty surrounding how positive an affect these cases may have on the surgery center would result in higher risk to a potential purchaser of the center, which would be factored into the valuation. Thus, it may be more advantageous to have a valuation completed after there has been an established history of those incremental cases from this new payer. The established history of these cases materializing as management anticipated would lower risk, and have a positive effect on the value of the center,” Muller says. As far as adding new physicians like Zasa suggests, Muller says if a multi-specialty surgery center is looking to add new physicians to perform more cases, it might be a good idea to bring in new cases that have not been established in the center. “This will add some diversity in the case mix, which is typically more appealing to a purchaser. As mentioned previously, it would positively affect value of the center to establish a demonstrated history of these new physicians and cases being performed at the center before having a valuation completed, rather than while these cases were still forthcoming,” he says. Curtis Bernstein of Pinnacle Healthcare Consulting explains that there are several things that can be done in order to increase the value of an ASC. One area that Bernstein says buyers tend to look first is multiples of EBITA. In the case that the buyer is trailing 12 month EBITDA or projected EBITDA, Bernstein says one of the best things an ASC can do to increase value is prove that projected EBITDA is going to be significantly different from trailing EBITDA, and why it’s going to be significantly different. This difference can be seen through recently added services, physicians, etc. When it comes to increasing the number and value of offers, there are also things that can be proactively done, he says. “Just because a potential buyer has a separate valuation done on your ASC, that doesn’t necessarily mean that the offer they present is the maximum number. In order to ensure that you are receiving the best possible number, it is a good idea to go out and entertain different offers,” Bernstein says. “The buyers may not always come back with their highest offer, so you will want to go back to them. The buyers should only go up to the point where they feel comfortable that they’re still paying FMV for that ASC and that interest in the ASC.” Zasa says that focusing on increasing the value of an ASC is something that owners need to be thinking about on a routine basis strategically. “If you are standing still, you are going backwards. Especially in this competitive environment; you want to get every case in your center you can to increase the value. Competitively, we are looking constantly at opportunities to add doctors and services. The third thing is to have a thorough review of the managed care contracts that the center pulls,” he says. Zasa explains that a center’s contracts are also a key factor in estimating and increasing the value of the ASC in question. “We have, what we call at our company, a ‘retroactive contract analysis’. Because many of these surgery center contracts have been negotiated at different times and different years; oftentimes, unless you take a look at all of them, and compare the volume, you are getting paid from that payer by your top 20 CPT codes, and the discount that you give them,” Zasa says. “What we do is have the top 20 procedures listed on the left hand column. Then we have the different payers by plan. We put below that the volume per year, or quarter, etc. that we get from that payer. It’s incredible, because what happens sometimes is you find you are getting less of a discount from one that does more volume and, worse, you are getting a bigger discount for one that does small volume.” Zasa stresses that the payment of the contracts is very important. Not only in terms of fees but in terms of payment terms and other terms. Good contracts increase the value of the center, and that should be reviewed on a routine basis. Richard Romero The Ambulatory M&A Advisor

ASDManagement publishes first comprehensive book on ASC development and management.

After 30+ years in the business, and 1 year in word processing, ASD Management has published the first book taking a systematic approach to the strategies and details of developing and managing an ASC. In the words of co-author Joseph Zasa of ASD Management, “Many articles are published every year, but few describe a proven, systematic approach written by people who are successful developers and operators of surgery centers.” “There are now over 5,000 ASCs in the U.S.,” writes co-author Robert Zasa of ASD Management. “The low cost of ASCs with very high quality of care have fostered the creation of these centers in almost every area of the country.” Yet, not every surgery center is successful in meeting the prime directives of high quality patient care and safety within a profitable center.   Order Now > Developing & Managing Ambulatory Surgery Centers is the first book dedicated to the cornerstones of ASC operations: patient care, business office processes, risk management programs, payer contracting and revenue management. The cornerstones are detailed in the four book components: ASC predevelopment, development, management and lessons learned from the field. Contents is enriched by contributions from the ASD Management team, and experts revered in the ASC industry: Scott Becker JD and Amber Walsh JD of McGuire Woods, Ken Seip of Siemens Financial, Aaron Murski of VMG Health, Joe Baugh of CG/Medvest, Randy Bishop of Surgical Notes, Durr Boyles, Steven Dobias of Somerset CPA and Steve Sorey. And ASC physician leaders: Dr. T K Miller, Dr. John Fitz, Dr. Michael Latham and Dr. Alan Valadie. Informative, current and entertaining, a must for seasoned professionals as well as industry newcomers, instructors and students. First edition published in March 2016.

Robert Zasa and ASD Management Awarded for Excellence

Los Angeles Business Journal has recognized Robert Zasa, managing and founding partner of ASD Management as an outstanding healthcare leader. Mr. Zasa received the 2015 Healthcare Leadership award on behalf of ASD Management for its positive impact on the Los Angeles business community.

ASDM Founder and Managing Partner Robert Zasa named a Top UAB Business Alumni

Robert Zasa, MSHHA, FACMPE, has been named to the Top 25 in the UAB Excellence in Business by the University of Alabama at Birmingham National Alumni Society. The distinction recognizes and celebrates the success of the top 25 businesses owned and operated by UAB alumni. Nominees for the award came from a wide spectrum and were ranked by a rigid criteria. Mr. Zasa, an alumnus of the UAB School of Health Professionals, was recognized during the awards luncheon on March 10, 2015 in the UAB Alumni House.


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