Surgical Care Affiliates, Inc., through its subsidiary, Surgical Care Affiliates, LLC, owns and operates a network of multi-specialty ambulatory surgery centers (ASCs) and surgical hospitals in the United States of America. The company provides solutions to physicians, health systems, and payors to optimize surgical care. As of December 31, 2013, the company operated in 34 states and had an interest in and/or operated 171 ASCs, 5 surgical hospitals, and 1 sleep center with 11 locations, with a concentration of facilities in California, Indiana, and Texas. It owned and operated facilities in partnership with 43 health systems and approximately 2,000 physician partners. The company’s health system partners include Indiana University Health, Inc.; MemorialCare; Sutter Health; Texas Health Resources; and others. It offers tools and systems in the areas of clinical benchmarking, clinical best practices, operating efficiency, care coordination, and supply chain management. Affiliated Facilities The company’s network of facilities comprises: ASCs: The company’s ASCs provide the facilities, equipment, supplies, and clinical support staff necessary to provide non-emergency surgical services to patients not requiring hospitalization. Surgical Hospitals: The company’s surgical hospitals allow physicians to perform a range of surgical procedures, including various complex surgeries, and allow patients to stay in the hospital for approximately three days. Hospital Surgery Departments: The company also contracts with hospitals to manage in-hospital surgery departments, which could focus on supporting physicians in the performance of surgeries on patients who do not require hospitalization (on an outpatient basis) or provide a range of surgeries, including emergency surgeries, as well as surgeries on hospital inpatients and patients who would be admitted post-procedure. Physicians at the company’s facilities provide surgical services in various specialties, including orthopedics, ophthalmology, gastroenterology, pain management, otolaryngology (ear, nose, and throat), urology, spine, and gynecology, as well as other general surgery procedures. As of December 31, 2013, the company consolidated the operations of 87 of its 177 affiliated facilities, had 60 nonconsolidated affiliated facilities, and held no ownership in 30 affiliated facilities that contract with the company to provide management services. It provides management services to all but 2 of its 177 facilities. Operations The company’s affiliated facilities provide the space, equipment, and medical support staff necessary for physicians to perform non-emergency surgical procedures. Its ASC is a freestanding facility with fully-equipped operating and procedure rooms and ancillary areas for reception, preparation, recovery, and administration. Its affiliated facilities have service agreements with anesthesiologists and certified registered nurse anesthetists to provide anesthesiology services. The company assists each of its affiliated facilities with marketing, payor contracting, purchasing, and other strategic and operational services, including the preparation of financial statements. Clinical and Operating Systems The company has developed various tools to track and compare results from its affiliated facilities and across its network. Its clinical education system, the Clinical Excellence Universe, provided tailored education programs to its approximately 2,900 clinicians across the country as of December 31, 2013. The company’s operating systems provide detailed benchmarking of key operational measures (including on-time starts, turn-times, staffing ratios, and supply expense metrics). The company’s case-costing system, the ECOSystem, provides detailed labor cost, supply cost, and contribution margin data by procedure code, physician, facility, and payor. This ECOSystem data allows the company to work with its physicians to benchmark their performance on a detailed level and show them precise steps they could take to optimize clinical, operational, and financial results. Facility Level Ownership Structure The company’s facilities are organized as limited partnerships or general partnerships, and limited liability companies or limited liability partnerships. Resyndications The company periodically provides physicians who use its facilities the opportunity to purchase ownership interests (or increase their ownership interests) in those facilities, which the company calls ‘resyndication’. In addition to selling its equity interest, a major component of its resyndication strategy is repurchasing equity interests from existing physician partners and re-selling that equity to non-partner physicians or to other existing physician partners. Marketing The company’s sales and marketing efforts are directed primarily at physicians, who are principally responsible for referring patients to its facilities. It markets its facilities to physicians. Business Strategy The major components of the company’s strategy include delivering outstanding patient care and clinical outcomes; driving strong and consistent same-site performance; capitalizing on existing health system partnerships poised for growth; developing new health system partnerships; utilizing its core competencies to expand into new service lines; establishing partnerships that take advantage of new payment models; and consolidating a fragmented industry. Its growth strategy includes entering into strategic relationships with hospitals and health systems. Seasonality The company’s facilities have experienced a disproportionate allocation of payor mix throughout the year. Its facilities see a relatively higher percentage of patients with governmental payors in the first half of the year (year ending February 2014) and a relatively higher percentage of patients with commercial payors in the second half of the year.
surgical care affiliates inc
(SCAI:Consolidated Issue Listed on NASDAQ Global Select )
520 Lake Cook Road
Deerfield, IL 60015
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