Joan Rivers settlement underscores risks of ASCs

BVWireIssue #164-4
May 25, 2016

When valuing an ASC, experts need to be aware of potential serious risks these entities face, especially with older patients, who represent a major segment of ASC customers. The high-profile case of Joan Rivers illustrates this, as a visit to an endoscopy clinic for a routine procedure ended in her death. The clinic has just settled a lawsuit filed by Rivers’ family (terms not disclosed), according to reports.

Risk assessment tool: In addition to treatment-related risks, valuation experts need to examine other risks. In the BVR Training Library, a webinar by Todd Sorensen and Kevin McDonough (both with VMG Health) discusses the valuation of ASCs and presents a tool for assessing the risks inherent in ASCs. The ASC Risk-Assessment Matrix measures risk along the following lines: contracting, service-area growth, competition, physician ownership, nonowner utilization, concentration by specialty, out-of-network concentration, staff and supplies efficiency, location and condition of the facility, and equipment.

The tool produces a single score but gives different weights to different categories and subcategories based on their relative importance to measuring risk. The weighting may be adjusted based on specific facts and circumstances, but, typically, the highest weights are assigned to categories that directly affect volume and reimbursement expectations (e.g., the physician utilization profile, market reimbursement risk analysis, and market competition).

Extra: Sorenson is the author of a chapter on valuing ASCs in the new BVR/AHLA Guide to Healthcare Industry Finance and Valuation, 4th edition, which is now available from BVR.

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