SEC Filings

AMSURG CORP filed this Form 10-12G/A on 05/09/1997
Entire Document
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owns a majority interest. Individual physicians who practice in the medical
specialty on which the network is focused own the minority interests in the
network. These minority physician owners, who may or may not be affiliated with
an AmSurg surgery center or physician practice, will provide the medical
services to the patient population covered by the contracts the network will
enter into with managed care payors.
     As part of its network development strategy, in January 1996 AmSurg
acquired, a 70% ownership interest in the assets of Gastroenterology Group of
South Florida ("GGSF") in Miami, Florida, a gastroenterology and primary care
practice currently comprised of seven gastroenterologists and five primary care
physicians that provides gastroenterology physician and outpatient endoscopy
services under a contract with a large managed care payor which covers
approximately 120,000 lives. AmSurg and certain GGSF physicians have been
partners in a practice-based endoscopy center that provides outpatient endoscopy
services to this base of covered lives and to other patients. Using GGSF as a
base, AmSurg has developed a gastroenterology physician network in south Florida
and expects to add additional surgery centers and covered lives as a result of
this expansion. In addition, AmSurg has established two ophthalmology/eye care
networks located in Knoxville, Tennessee and Montgomery, Alabama.
     Also as part of its network development strategy, in January 1997 AmSurg
acquired a 60% ownership interest in the assets of Miami Urological Associates,
a urology practice comprised of three urologists and seven additional contract
physicians in Miami, Florida. The practice has contracts with two managed care
payors to provide physician and certain outpatient procedures for approximately
170,000 covered lives. AmSurg and Miami Urological Associates have entered into
a partnership to develop an ambulatory surgery center for the urology practice.
     AmSurg's principal source of revenues is a facility fee charged for
surgical procedures performed in its surgery centers. This fee varies depending
on the procedure, but usually includes all charges for operating room usage,
special equipment usage, supplies, recovery room usage, nursing staff and
medications. Facility fees do not include the charges of the patient's surgeon,
anesthesiologist or other attending physicians, which are billed directly to
third-party payors by such physicians. AmSurg's other significant source of
revenues is the fees for physician services performed by the two physician group
practices in which AmSurg owns a majority interest.
     Practice-based ambulatory surgery centers and physician practices such as
those in which AmSurg owns a majority interest depend upon third-party
reimbursement programs, including governmental and private insurance programs,
to pay for services rendered to patients. AmSurg derived approximately 36% of
its net revenues from governmental healthcare programs including Medicare and
Medicaid in 1996. The Medicare program presently pays ambulatory surgery centers
and physicians in accordance with fee schedules which are prospectively
determined. There may be continuing legislative and regulatory initiatives to
limit the rate of increase in expenditures under the Medicare and Medicaid
programs in an effort to curtail or reduce the federal budget deficit. These
limitations, if enacted, may negatively impact AmSurg's revenues and operations.
     In addition to payment from governmental programs, ambulatory surgery
centers derive a significant portion of their net revenues from private
healthcare reimbursement plans. These plans include both standard indemnity
insurance programs as well as managed care structures such as PPOs, HMOs and
other similar structures. The strengthening of managed care systems nationally
has resulted in substantial competition among providers of services, including
providers of surgery center services with greater financial resources and market
penetration than AmSurg, to contract with these systems. AmSurg believes that
all payors, both governmental and private, will continue their efforts over the
next several years to reduce healthcare costs and that their efforts will
generally result in a less stable market for healthcare services. While no
assurances can be given concerning the ultimate success of AmSurg's efforts to
contract with healthcare payors, AmSurg believes that AmSurg's position as a
low-cost alternative for certain surgical procedures should enable AmSurg
centers to compete effectively in the evolving healthcare marketplace.
     Approximately 10% of AmSurg's revenues for 1996 were generated by capitated
payment contracts with HMOs. These revenues were attributable to contracts held
by a physician practice in which AmSurg holds a