1. Healthcare reform. Healthcare reform continues to place a substantial cloud over the healthcare provider universe. It is possible that if there is not a “public option,” and if healthcare reform does not cause substantial increase in deficits, that a healthcare reform package will not do undue harm to the country and to surgery centers. However, as the debate continues to evolve, it continues to place tremendous uncertainty on the healthcare industry.
2. Reimbursement. Surgery centers are facing challenges on reimbursement on several different fronts. Medicaid reimbursement is very low, out-of-network reimbursement is getting much tougher and we are seeing the end of contracts which pay discounts from usual and customary charges.
3. Case volumes. While case volumes are holding reasonably steady, the recruitment of new physician and replacement physicians is not getting any easier. Increasingly, hospitals are looking to employ specialists. Also, in many markets, surgical specialists are already aligned with center.
4. Acquisition market. The acquisition market for surgery centers seems to be rapidly picking up pace. While the multiples at which transactions are completed are not what they were a couple years ago, there is a renewed interest in acquiring surgery centers on many fronts.
5. Cost containment and great management. As revenues become just a little bit tougher, there is an increased emphasis on outstanding management. This includes the management of staffing costs and supplies. This also includes smart buying of equipment and smart managed care contracting. The surgery center as a whole is holding its own. It is an extremely self-sustaining industry and an industry to be proud of.
Very truly yours,
Scott Becker