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35 Types of ASC Contracts

Ambulatory surgery centers (ASCs) must enter into hundreds of contractual agreements to operate. This article identifies 35 of the most common types of ASC contractual agreements.

  1. Operating agreement & amendments are the core agreements that ASC owners and investors use to govern and manage their business. Board authority, management duties, and ownership rights are all spelled out in the operating agreement.
  2. Stock transfer agreements document the transfer of ownership interests between ASC investors. The restrictions, procedures, and pricing methodologies of ownership transfers are likely governed by the operating agreement, but individual transfers are documented in the transfer agreement for each transaction.
  3. Employment agreements usually represent ASCs’ single largest expense category. Everyone from the housekeeper up to the administrator has employment agreements specifying their terms of employment.
  4. Real estate lease agreements usually represent ASCs’ second largest expense category. ASC buildouts and improvement costs make these leases very expensive. The customized HVAC and emergency generator expenses alone will make most landlords cringe. Ten (10) to 15-year leases are common terms for arrangements that require major recoupments of capital investments.
  5. Managed care contracts are critical for ASCs to bill health insurance carriers for services. Credentialing, reimbursement, carveouts, audit procedures, and denial appeal processes are all spelled out in managed care contracts.
  6. Management agreements detail the roles and responsibilities of professional management companies. National firms like Surgical Care Affiliates and USPI have clearly demonstrated the value that third-party management brings to ASC joint ventures between physicians and hospitals.
  7. Information system agreements have predominantly shifted from software agreements to Software-as-a-Services (SaaS) agreements. Nobody misses having servers in their ASC, but customer service and training are key terms and expectations you should exploit to get the most out of your SaaS vendors.
  8. Promissory notes or loan agreements represent a key way in which ASCs pay for major equipment, instruments, and facility improvements without sacrificing owner distributions. If you are borrowing a lot of money from a local lender, do not be surprised if they want to go to board meetings to monitor their investment.
  9. Equipment lease agreements are the other means by which ASCs stretch out payments for major equipment. Capital leases immediately hit the balance sheet of the as owned property of the ASC, while operating leases circumvent the balance sheet and only touch the income statement as pure expenses.
  10. Equipment purchase agreements memorialize the transfer of ownership of major equipment. When you purchase new equipment, like endoscopes, you should always push to include 12 months of maintenance and repairs at no additional cost.
  11. Preventive maintenance agreements are considered mandatory for all major equipment. It is inexcusable to have anesthesia machines, monitors, and endoscopes stop working unexpectedly. Regular preventive maintenance service should be procured for all major equipment after the initial service period included in new equipment purchases expires.
  12. Anesthesia service agreements document the expectations for anesthesiology coverage at your facility. Major anesthesiology services have taken over a lot of the pre-operative patient screening responsibilities of ASCs, but this should be spelled out either way.  Anesthesiologists and CRNAs usually bill patients’ insurance directly for anesthesia services.
  13. Laundry service is a standard need of all major medical facilities for linen and scrubs. Service is typically paid by weight.
  14. Medical gas service is not glamorous, but surgery cannot take place without it.
  15. Medical waste service is another specialized service that all ASCs must engage. Used surgical supplies and needle sticks cannot go in regular trash cans.
  16. Radiation monitoring services read the badges worn by staff exposed to radiation from x-rays and C-arm devices. It is not an optional service.
  17. Collection services agreements define the service fees and methods for collecting delinquent balances from patients and payors. ASCs are responsible for the conduct of their collection contractors, so choose your collection service wisely.
  18. Accounting services are especially important for partnerships wherein investors are issued K-1 tax documents every year. Annual audits are probably not necessary, but bookkeeping, annual reviews, and periodic audits are commonplace.
  19. Legal service agreements are always a good idea for small businesses that have so many contractual arrangements. Hardly any administrator, nor nurse, is qualified to review the language of so many types of legal agreements. A good healthcare law practice will have specialists for the various types of healthcare-focused contracts.
  20. Housekeeping service agreements can be relied on intermittently or long-term depending on your preferences. If you have housekeeper on staff, you still want a backup service to keep your facility sterile when the staff housekeeper call in sick and takes vacations.
  21. Distribution agreements with multiple vendors are necessary in multi-specialty ASCs to procure of the pharmaceuticals, supplies, and implantable surgical devices you will need. You will get familiar with McKesson, Cardinal, Owens & Minor, Bausch & Lomb, Alcon, Zimmer Biomet, Stryker, and Abbvie Allergan.
  22. Medical director agreements ensure that your facility has medical oversight by a licensed physician. The medical director will typically run the medical executive committee that credentials physicians for privileges to operate at your ASC.
  23. Clearinghouse and statement services are fairly critical components of your revenue cycle. The clearing house scrubs claims before they are submitted to insurance carriers.
  24. Training & continuing education is a regular part of operating a medical facility. Aside from continuing education for nursing staff, you can save a lot of time by subscribing to standard training services for harassment, discrimination, safety, compliance, and ethics.
  25. Payroll, benefit, background check services are inexpensive and easily accessible through big firms like ADP and Insperity.
  26. Business banking services include timesavers like lockboxes, as well as income generators like sweep accounts.
  27. Dictation and transcription services generate surgeons’ written operative notes for each case.
  28. Professional coding services provide trained and certified coders to convert surgeons’ operative notes into diagnosis and procedure codes that insurance carriers will process.
  29. Mobile lithotripsy services will bring expensive shockwave lithotripters to your facility periodically for urology.
  30. Transfer agreements with local hospitals ensure that you can quickly and easily transfer a patient needing emergency care.
  31. Security monitoring services, like ADT, will immediately alert you and law enforcement if your facility is broken into after hours.
  32. Document storage service needs should be shrinking with the advent of Electronic Health Records, but if your facility is still on paper, you will need a service, like Iron Mountain, to store old patient charts.
  33. Shred services collect and destroy confidential documents in bulk.
  34. Satisfaction survey services for patients, staff, and physicians are standard and regular chores for all healthcare organizations. Fortunately, services like Press Ganey have been administering these surveys for years.
  35. Courier services are necessary to transport tissue samples, allografts, and other time- and temperature-sensitive deliveries. This is a service you will use constantly, so pick a reliable one.

If your ASC has lots of contracts, it is time to upgrade to a real contract management system like Health-Contract.com.