By: Nick Taglioli and Dylan Alexander
The following article was published by Becker’s ASC Review.
As buyers and sellers are considering a transaction in the ambulatory surgery center (ASC) marketplace, all involved parties must consider and quantify potential revenue impacts as they relate to that ASC’s contracted managed care reimbursement.
Payor contract reimbursement is a critical component of revenue, as is an understanding of the impact that an acquirer’s managed care contracts have on a target’s revenue. A “black box” reimbursement analysis can help assess the overall impact on revenue by comparing the target’s and acquirer’s managed care reimbursement (as applied to the target’s utilization data) while maintaining the confidentiality of each party’s payor contracts and allowable rates. In addition, black box analyses can offer insight into why an acquirer’s managed care contracts perform favorably or unfavorably when applied to a target’s utilization.
Contract Pitfalls: Why One Party’s Contracts Perform Better Than Another’s
There are several reasons why an acquirer’s contracts may perform more or less advantageously when applied to the target’s utilization data. Often, we hear expectations like, “we know our rates are better,” but there is far more to it than that. The primary reasons are: case mix, payor mix, and contract structure (payment logic).
