ter on Mondays and Wednesdays as Mid America Spine Center, while
the plastic surgeon operates on Tuesdays, Thursdays and Fridays as
Seven Oaks Surgery Center. Cathy Montgomery, RN, of the
Excellentia Advisory Group in St. Peters, Mo., who helped develop the
project, calls the timeshare model "a wonderful opportunity for physi-
cians who want to remain independent."
Ms. Kirchner points out that younger surgeons often can't come up
with the capital needed to invest in established facilities with high
market values and, even if they can, won't see a return on their invest-
ments for many years. Under the dual-licensed model, a group of
young docs could establish a lessee surgery center and generate rev-
enue quickly by operating only on certain days a month in a host cen-
ter.
Negotiating the red tape
After the host center lessor and the ASC lessee secure separate licens-
es from the state health department for the days they'll operate the
center, they have to agree on a lease fee. Negotiating the lease agree-
ment is one of the biggest challenges of establishing a dual-licensed
ASC, says Ms. Kirchner. "One party is leasing an existing facility for a
specific amount of time at fair market value," she says.
What's fair market value? That depends on the host center's operat-
ing expenses and the financial factors in specific geographical areas.
When setting up the Functional Neurosurgical ASC, Ms. Kirchner cal-
culated daily operational overhead expenses to the penny and then
added a 32% mark-up, which was in accordance with rates negotiated
during Littleton Adventist's previous joint ventures.
The lease agreement also has to be very specific about the days
each entity will work and the overhead the lessee will use — from the
Business Advisor
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