1. Evolving the ASC Concept for a New Future George M. Goodwin

2. Topics How did we get here? Upheaval and changes in the Industry Which way do we go from here? Questions and discussion

3. Goals Provide an overview of how the ASC industry evolved and has developed Describe a view of the current upheaval and changes in the industry Present options to evolve and adapt for the future

4. How did we get here? First hospitals built – why? Hospital reimbursement history Medicare – cost plus reimbursement DRG’s in 1983 First ASC in Phoenix, Arizona in 1970 ASC’s reimbursed as a percentage of HOPD

5. Procedures and number of facilities 3500 different procedures 5300 Medicare certified facilities in US Symbion - 58 facilities in 25 states

6. Upheaval and changes in the Industry Physician behavior Patient Protection and Affordable Care Act Cover California “How puzzling all these changes are! I’m never sure what I’m going to be from one minute to another.” Lewis Carroll, Alice’s Adventures in Wonderland.

7. Physician behavior Employment by hospitals 2010 – 211,500 up 34% from 2000 Total physicians increased from 733,000 to 858,000 for the same period Last of the entrepreneurs

8. Affordable Care Act - ACO’s Signed into law March 23, 2012 Healthcare Exchanges ACO’s Confusion – the Secretary shall determine Delays! – Employer mandate

9. Cover California Two goals Cover 3.25 million uninsured - people who qualify for MediCal Cover 1.45 million individuals currently covered by individual plans Effect of this on your center? Additional volume - maybe? Lower reimbursement – most likely

10. Which way do we go from here? Accountable Care Organizations Joint Ventures Evolve and Adapt Business Models of the Future “We must first honestly recognize where we are now.” – Martin Luther King

11. Accountable Care Organizations – how to position your ASC What is an ACO? Who wins the ACO battle? Is a joint venture the answer? Contracting with the ACO winner

12. What is an ACO? Coordinated providers Ties reimbursement to quality and reduction in cost Capitation model of the 1980’s “This is like déjà vu all over again” – Yogi Berra “If history repeats itself and the unexpected always happens, how incapable must Man be of learning from experience” – George Bernard Shaw

13. California ACO’s Medicare Pioneer ACO’s – 6 Look-alike ACO-Contract w/Health Plan for Non-State Sponsored Program – 18 Medicare ACO-Shared Savings Program – 15 Medicare ACO-Advanced Payment Model - 2

14. Who wins the ACO battle? Health plans or Healthcare systems? Another winner – physician groups? Who you pick as the winner will set your strategy

15. Contracting with the ACO winner Low cost high quality provider Ability to contract Invert the funnel

16. Joint Venture - Is a joint venture the answer? Healthcare systems or Health plans? Who has the infrastructure to manage the data?

17. Lessons learned from ASC joint ventures with Healthcare Systems Conversion of an ASC to a HOPD Minority investment in an ASC by a Healthcare System Controlling interest in an ASC purchased by a Healthcare System

18. Evolve and adapt New procedures/higher acuity procedures Quality of services Cost of services

19. New procedures/higher acuity procedures Spine procedures Lap bands Sling procedures Pacemakers for incontinence Minimally invasive general surgery Laparoscopic assisted vaginal hysterectomies Arthroplasties on shoulders Spinal cord stimulators

20. Quality of services Reporting initiative Physician viewpoint – infection, efficient, quicker return to normal activity How not to do surgery! “Remove the wrench”

21. Cost of services Know and manage your costs Implants – purchase or use third parties Competitive nature of contracting

22. Business models of the future Extended care facilities Bundled payments High volume contracted facilities Consumer-driven healthcare

23. Extended care capabilities Licensed facilities ASC ‘s with 72 hour stay Demonstration projects – Illinois Non-licensed facilities

24. Bundled payments What is included in the bundled payment? Key issues of a bundled payment program

25. What is included in the bundled payment? Professional fee Facility fee Anesthesia fee Extended care Travel

26. Key issues of a bundled payment program Who holds the contract with the payer Contracting Managing the funds Negotiating with your physician partners

27. High volume contracted facilities OR’s are us! ACO’s, Health plan, Heath care systems Efficiency for employed physicians Lower level of service Lower cost

28. Consumer driven health care Direct to consumer marketing Internet strategy Price comparisons Two tier system – insured patients and cash pay

29. Questions and discussion No need to be politically correct – all opinions are welcome!