1. Anatomy of an ASC:
Syndication & Physician Recruitment
July 20, 2012
Presenters
Blayne Rush Curtis Bernstein
President Managing Director
Ambulatory Alliances Sinaiko Healthcare
Consulting
Moderated by Rob Kurtz of Kurtz Creative

2. What is the difference
between syndication and
physician recruitment?

3. • Syndication – sale of an interest in a surgery
center to physicians
• Recruitment – Convincing physicians to
perform cases at the surgery center without
any ownership interest

4. What does an ASC need do
to prepare to recruit new
physicians and/or
syndicate?

5. When should a surgery
center recruit physicians,
undergo syndication or re-
syndication?

6. What are some strategies
a surgery center might
utilize in recruiting new
physician users?

7. How does a surgery center
value the shares being sold
during syndication?

8. • Market Approach – multiple of EBITDA less
percentage of funded debt
• Income Approach – future value of projected
cash flows based on expected level of risk of
achieving those cash flows
• Asset approach is generally not applicable
because minority shareholders are unable to
liquidate assets or change the way controlling
shareholders utilize assets

9. What can an ASC do to
lower the cost of the
shares or units being sold?
Why would a center want
to devalue its shares?

10. • Take on more debt
• Reduce cash flow through capital
expenditures

11. Why are the multiples less
of minority interest
purchase compared to
control interest purchase?

12. • Discount for lack of control
– Discount taken because the interest holder has no ability to
change what a controlling interest holder does with the business
• Lower if no true controlling shareholder
• Lower if business is historically run in a manner in which the minority
interest holder would operate it
• Discount for lack of marketability
– Discount taken because the investment is privately held and the
interest holder may incur significant selling costs and have a
lengthy holding period before the interest can be sold
• Lower if the interest continues to earn distributions or capital gain
over the holding period
• Higher when the number of potential buyers is very low

13. What are some of the
regulatory risks associated
with physician recruitment
and syndications?

14. • Fair market value requirement under the Anti-
Kickback Law
• Cannot sell interests based on level of referrals

15. Q&A
Blayne Rush Curtis Bernstein
Ambulatory Alliances Sinaiko Healthcare Consulting
(469) 385-7792 (720) 240-4440
blayne@ambulatoryalliances.com curtis.bernstein@sinaiko.com
www.AmbulatoryAlliances.com www.AltegraHealth.com
Rob Kurtz
Kurtz Creative
robert@kurtzcreative.com
www.kurtzcreative.com