9 unchanged sentences
• Our ability to provide medical services at our facilities would be impaired and our revenue reduced if we are not able to maintain good relationships with affiliated physicians who utilize our surgical facilities.
−Removed: • Physician treatment methodologies and governmental or private insurance controls designed to reduce the number of surgical procedures may reduce our revenue and profitability.
• Our growth strategy depends in part on our ability to integrate operations of acquired surgical facilities, attract new physician partners, and to acquire and develop additional surgical facilities on favorable terms.
3 unchanged sentences
• Competition for physicians and clinical personnel, including nurses, shortages of qualified personnel or other factors could increase our labor costs and adversely affect our revenue, profitability and cash flows.
−Removed: • If any of our existing health care facilities lose their accreditation status or any of our new facilities fail to receive accreditation, such facilities could become ineligible to receive reimbursement under Medicare or Medicaid or other third-party payors.
• Growth of patient receivables or deterioration in the ability to collect on these accounts, due to changes in economic conditions or otherwise, could have a material adverse effect on our business, prospects, results of operations and financial condition.
34 unchanged sentences
We depend upon private and governmental third-party sources of payment for the services provided by physicians in our physician network and to patients in our surgical facilities, including surgical hospitals.
−Removed: We derived approximately 42%, 42% and 43% in 2023, 2022 and 2021, respectively, of our revenue from government payors, including Medicare and Medicaid programs.
−Removed: The amounts that we receive from the Medicare and Medicaid programs for our services are subject to statutory and regulatory changes, administrative rulings, interpretations and determinations concerning patient eligibility requirements, funding levels and the method of calculating payments or
−Removed: reimbursements, among other things;
+Added: We derived approximately 41% of our revenue from government payors, including Medicare and Medicaid programs in 2024 and 42% in both 2023 and 2022.
+Added: The amounts that we receive from the Medicare and Medicaid programs for our services are subject to statutory and regulatory changes, administrative rulings, interpretations and determinations concerning patient eligibility requirements, funding levels and the method of calculating payments or reimbursements, among other things;
refinements to the Medicare Ambulatory Surgery Center payment system and refinements made by CMS to Medicare’s reimbursement policies;
1 unchanged sentence
and federal and state funding restrictions;
−Removed: any of which could materially adversely affect payments we receive from these government programs, as well as affect the timing of payments to our facilities.
+Added: could materially adversely affect payments we receive from these government programs, as well as affect the timing of payments to our facilities.
During the past several years, health care payors, such as federal and state governments, insurance companies and employers, have undertaken initiatives to revise payment methodologies and monitor health care costs.
2 unchanged sentences
Similarly, private third-party payors may be successful in negotiating reduced reimbursement schedules with our facilities.
+Added: Controls imposed by Medicare, Medicaid and private insurance payors designed to reduce surgical and other procedure volumes, in some instances referred to as "utilization review," could adversely affect our facilities.
+Added: Although we are unable to predict the effect these changes will have on our operations, significant limits on the scope of services reimbursed and on reimbursement rates and fees may reduce our revenue and profitability.
+Added: Additionally, trends in physician treatment protocols and private insurance plan design, such as plans that shift increased costs and accountability for care to patients, could reduce our surgical and other procedure volumes in favor of lower intensity and lower cost treatment methodologies, each of which could, in turn, have a material adverse effect on our business, prospects, results of operations and financial condition.
Fixed fee schedules, capitation payment arrangements, exclusion from participation in or inability to reach agreements with private insurance organizations, reduction or elimination of payments or an increase in the payments at a rate that is less than the increase in our costs, or other factors affecting payments for health care services over which we have no control could have a material adverse effect on our business, prospects, results of operations and financial condition.
2 unchanged sentences
Most of these payments came from private insurance payors with which our facilities have contracts.
−Removed: Managed care companies such as HMOs and PPOs, which offer prepaid and discounted medical service packages, represent a growing segment of private insurance payors.
If we fail to enter into favorable contracts or maintain satisfactory relationships with private insurance organizations, our revenue may decrease.
Our competitive position has been, and will continue to be, affected by initiatives undertaken during the past several years by major purchasers of health care services, including insurance companies and employers, to revise payment methods and monitor health care expenditures in an effort to contain health care costs.
−Removed: For instance, private insurance payors may lower reimbursement rates in response to increased obligations on payors imposed by the Affordable Care Act or future reductions in Medicare reimbursement rates.
−Removed: Further, private insurance payors may narrow their provider networks in response to the need to negotiate lower reimbursement rates with providers.
−Removed: If we are unable to maintain strong relationships with these payors, we may not be able to participate in these narrow provider networks.
Some of our payments from private insurance payors come from payors with which our facilities or subsidiaries do not have a contract.
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If the proportion of our services subject to out-of-network fee schedules increases, we may experience a decrease in volume at our ASCs or other facilities due to fewer referrals of out-of-network patients.
−Removed: Additionally, payments from workers’ compensation payors represented approximately 4%, 4% and 5% of our patient service revenue in 2023, 2022 and 2021, respectively.
+Added: Additionally, payments from workers’ compensation payors represented approximately 4% of our patient service revenue in 2024, 2023 and 2022.
A majority of states have implemented workers’ compensation provider fee schedules.
3 unchanged sentences
Our results may change from period to period due to fluctuations in payor mix or case mix or other factors relating to the type of cases performed at our facilities.
−Removed: Payor mix refers to the relative share of total cases provided to patients with no insurance, private insurance, Medicare coverage and Medicaid coverage.
Since, generally speaking, we receive relatively higher payment rates from private insurers than Medicare, Medicaid and other government-funded programs, a significant shift in our payor mix toward a higher percentage of Medicare and Medicaid cases, which could occur for reasons beyond our control, could have an adverse effect on our business, prospects, results of operations and financial condition.
−Removed: Case mix refers to the relative share of total cases performed by specialty, such as GI, general surgery, ophthalmology, orthopedic and pain management.
−Removed: Generally speaking, certain types of our cases, such as orthopedic cases, generate relatively higher revenue than other types of cases, such as pain management and GI cases.
−Removed: Therefore, a significant shift in our case mix toward a higher percentage of lower revenue cases, which could occur for reasons beyond our control, could result in a material adverse effect on our business, prospects, results of operations and financial condition.
+Added: A significant shift in our case mix toward a higher percentage of lower revenue cases, which could occur for reasons beyond our control, could result in a material adverse effect on our business, prospects, results of operations and financial condition.
Our case volume and surgical case mix may be adversely affected by patients’ unwillingness to pay for procedures in our facilities.
Higher numbers of unemployed individuals generally translates into more individuals without health care insurance to help pay for procedures, thereby increasing the potential for persons to elect not to have procedures performed.
−Removed: Even procedures normally thought to be non-elective may be delayed or may not be performed if the patient cannot afford the procedure due to a lack of insurance or money to pay their portion of our facilities’ fee.
+Added: Even procedures normally thought to be
+Added: non-elective may be delayed or may not be performed if the patient cannot afford the procedure due to a lack of insurance or money to pay their portion of our facilities’ fee.
It is difficult to predict the degree to which our business will continue to be impacted by economic conditions in the future.
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Rather, these shifts may be concentrated within certain markets due to local competitive factors.
−Removed: Therefore, the results of our individual affiliated facilities, including facilities that are material to our results, may be volatile, which could result in a material adverse effect on our business, prospects, results of operations and financial condition.
+Added: In addition, we are unable to predict the results of an increasing trend towards value based payment on our reimbursement.Therefore, the results of our individual affiliated facilities, including facilities that are material to our results, may be volatile, which could result in a material adverse effect on our business, prospects, results of operations and financial condition.
Our ability to provide medical services at our facilities would be impaired and our revenue reduced if we are not able to maintain good relationships with affiliated physicians who utilize our surgical facilities.
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In addition, any damage to the reputation of a key physician or group of physicians or the failure of these physicians to provide quality medical care or adhere to professional guidelines at our surgical facilities could damage our reputation, subject us to liability and significantly reduce our revenue.
−Removed: Physician treatment methodologies and governmental or private insurance controls designed to reduce the number of surgical procedures may reduce our revenue and profitability.
−Removed: Controls imposed by Medicare, Medicaid and private insurance payors designed to reduce surgical and other procedure volumes, in some instances referred to as "utilization review," could adversely affect our facilities.
−Removed: Although we are unable to predict the effect these changes will have on our operations, significant limits on the scope of services reimbursed and on reimbursement rates and fees may reduce our revenue and profitability.
−Removed: Additionally, trends in physician treatment protocols and private insurance plan design, such as plans that shift increased costs and accountability for care to patients, could reduce our surgical and other procedure volumes in favor of lower intensity and lower cost treatment methodologies, each of which could, in turn, have a material adverse effect on our business, prospects, results of operations and financial condition.
Our growth strategy depends in part on our ability to integrate operations of acquired surgical facilities, attract new physician partners, and to acquire and develop additional surgical facilities on favorable terms.
5 unchanged sentences
In addition, our growth strategy includes the acquisition and development of existing surgical facilities and the development of new surgical facilities jointly with local physicians and, in some cases, health care systems and other strategic partners.
−Removed: We are currently evaluating potential acquisitions and development projects and expect to continue to evaluate acquisitions and development projects in the foreseeable future.
If we are unable to successfully execute on this strategy in the future, our future growth could be limited.
−Removed: We may be unable to identify suitable acquisition and development opportunities, or to complete acquisitions and new projects in a timely manner and
−Removed: on favorable terms.
−Removed: Further, the businesses or assets we acquire in the future may not ultimately produce returns that justify our related investment.
+Added: We may be unable to identify suitable acquisition and development opportunities, or to complete acquisitions and new projects in a timely manner and on favorable terms.
Our acquisition and development activities require substantial capital resources, and we may need to obtain additional capital or financing, from time to time, to fund these activities.
−Removed: Historically, we have funded acquisition and development activities through our credit facilities.
As a result, we may take actions to fund future acquisitions and development activities that could have a material adverse effect on our business, prospects, results of operations and financial condition, including incurring substantial debt with certain restrictive terms.
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If we experience the loss of key personnel or if the effort devoted to the integration of acquired facilities diverts significant management or other resources from other operational activities, our operations could be impaired.
−Removed: Additionally, in some acquisitions, we may have to renegotiate, or risk losing, one or more of the facility’s private insurance contracts.
+Added: Additionally, in some acquisitions, we
+Added: may have to renegotiate, or risk losing, one or more of the facility’s private insurance contracts.
We may also be unable to immediately collect the accounts receivable of an acquired facility while we align the payors’ payment systems and accounts with our own systems.
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These hospitals have established relationships with physicians and payors.
−Removed: In addition, other companies either currently are in the same or similar business of developing, acquiring and
−Removed: operating surgical facilities or may decide to enter our business.
+Added: In addition, other companies either currently are in the same or similar business of developing, acquiring and operating surgical facilities or may decide to enter our business.
Many of these companies have greater resources than we do, including financial, marketing, staff and capital resources.
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In some markets, the lack of availability of clinical personnel, such as nurses, has become a significant operating issue facing all health care providers.
−Removed: This shortage may require us to continue to enhance wages and benefits to recruit and retain qualified personnel or to contract for more expensive temporary personnel.
−Removed: For the year ended December 31, 2023, our salary and benefit expenses represented approximately 29% of our revenue.
+Added: This shortage may require us to continue to enhance wages and benefits to recruit and retain qualified personnel or to contract for more expensive
+Added: temporary personnel.
We also depend on the available labor pool of semi-skilled and unskilled workers in each of the markets in which we operate.
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Certain proposed changes in federal labor laws and the National Labor Relations Board’s modification of its election procedures could increase the likelihood of employee unionization attempts.
−Removed: Although none of our employees are currently represented by a collective bargaining agreement, to the extent a significant portion of our employee base unionizes, it is possible our labor costs could increase materially.
Our failure to recruit and retain qualified management and medical personnel, or to control our labor costs, could have a material adverse effect on our business, prospects, results of operations and financial condition.
−Removed: Some jurisdictions preclude us from entering into non-compete agreements with our physicians, and other non-compete agreements and restrictive covenants applicable to certain physicians and other clinical employees may not be enforceable.
−Removed: We have contracts with physicians and other health professionals in many states.
−Removed: Some of our physician services contracts, as well as many of our physician services contracts with hospitals, include provisions preventing these physicians and other health professionals from competing with us both during and after the term of our contract with them.
−Removed: The law governing non-compete agreements and other forms of restrictive covenants varies from state to state.
−Removed: Some jurisdictions prohibit us from entering into non-compete agreements with our professional staff.
−Removed: Other states are reluctant to strictly enforce non-compete agreements and restrictive covenants against physicians and other health care professionals.
−Removed: Furthermore, the FTC published a proposed rule that would prohibit employers from entering into non-compete agreements and nullifying existing non-competes.
−Removed: Therefore, there can be no assurance that our non-compete agreements related to employed or otherwise contracted physicians and other health professionals will be enforceable if challenged in certain states or if the proposed FTC rule is adopted in its current form.
−Removed: In such event, we would be unable to prevent former employed or otherwise contracted physicians and other health professionals from competing with us, potentially resulting in the loss of some of our hospital contracts and other business.
−Removed: Additionally, certain facilities have the right to employ or engage our providers after the termination or expiration of our contract with those facilities and cause us not to enforce our non-compete provisions related to those providers.
Our surgical facilities are sensitive to regulatory, economic and other conditions in the states where they are located.
−Removed: Our revenue is particularly sensitive to regulatory, economic and other conditions in the states of Texas and Idaho.
−Removed: As of December 31, 2023, we owned and operated three consolidated surgical hospitals and seven consolidated ASCs in Texas.
−Removed: The Texas facilities represented approximately 11% of our revenue in fiscal 2023.
−Removed: In addition, we own and operate three consolidated surgical hospitals and four consolidated ASCs in Idaho, representing approximately 28% of our revenue during fiscal 2023.
+Added: Our revenue is particularly sensitive to regulatory, economic and other conditions in the state of Idaho.
+Added: As of December 31, 2024, we owned and operated three consolidated surgical hospitals and four consolidated ASCs in Idaho, representing approximately 29% of our revenue during fiscal year 2024.
These surgical facilities also provide ancillary services, including physician practices, radiation oncology and anesthesia services.
If there were an adverse regulatory, economic or other development in any of the states in which we have a higher concentration of facilities, including Idaho, our case volumes could decline in such states or there could be other unanticipated adverse impacts on our business in those states, which could have a material adverse effect on our business, prospects, results of operations and financial condition.
−Removed: If any of our existing health care facilities lose their accreditation status or any of our new facilities fail to receive accreditation, such facilities could become ineligible to receive reimbursement under Medicare or Medicaid or other third-party payors.
−Removed: The construction and operation of health care facilities are subject to extensive federal, state and local regulation relating to, among other things, the adequacy of medical care, equipment, personnel, operating policies and procedures, fire prevention, rate-setting and compliance with building codes and environmental protection.
−Removed: Additionally, such facilities are subject to periodic inspection by government authorities and accreditation organizations to assure their continued compliance with these various standards.
−Removed: All of our facilities are deemed certified, meaning that they are accredited, properly licensed under the relevant state laws and regulations and certified under the Medicare program or are in the process of applying for such accreditation, licensing or certification.
−Removed: The effect of maintaining certified facilities is to allow such facilities to participate in the Medicare and Medicaid programs.
−Removed: We believe that all of our facilities are in material compliance with applicable federal, state, local and other relevant accreditation and certification regulations and standards.
−Removed: However, should any of our health care facilities lose their deemed certified status and thereby lose certification under the Medicare or Medicaid programs, such facilities would be unable to receive reimbursement from either or both of those programs, and possibly from other third-party payors, and our business could be materially adversely affected.
Certain of our partnership and operating agreements contain provisions giving rights to our partners and other members that may be adverse to our interests.
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These different payors typically have different billing requirements that must be satisfied prior to receiving payment for services rendered.
−Removed: Reimbursement is typically conditioned on our documenting medical necessity and correctly applying diagnosis codes.
+Added: Reimbursement is typically conditioned on our documenting medical
+Added: necessity and correctly applying diagnosis codes.
Incorrect or incomplete documentation and billing information could result in non-payment for services rendered.
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A pandemic, epidemic or outbreak of a contagious disease in the markets in which we operate or that otherwise impacts our facilities could adversely impact our business.
−Removed: If a pandemic, epidemic or outbreak of an infectious disease, including another outbreak of respiratory illness caused by the coronavirus known as COVID-19, or other public health crisis were to affect the areas in which we operate, our business, including our revenue, profitability and cash flows, could be adversely affected.
+Added: If a pandemic, epidemic or outbreak of an infectious disease or other public health crisis were to affect the areas in which we operate, our business, including our revenue, profitability and cash flows, could be adversely affected.
If any of our facilities were involved, or perceived to be involved, in treating patients with a highly contagious disease, or there was an outbreak of a highly contagious disease in areas in which our surgical centers are located, our patients might cancel or defer elective procedures or otherwise avoid medical treatment.
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We may be unable to locate replacement supplies, and ongoing delays could require us to reduce procedure volume or cause temporary shutdowns of our facilities.
−Removed: Although we have disaster plans in place and operate pursuant to infectious disease protocols, the extent to which COVID-19 or another public health crisis will impact our business is difficult to predict and will depend on many factors beyond our control, including the speed of contagion, the development and implementation of effective preventative measures and possible treatments, the scope of governmental and other restrictions on travel and other activity, and public reactions to these factors.
+Added: Although we have disaster plans in place and operate pursuant to infectious disease protocols, the extent to which a public health crisis will impact our business is difficult to predict and will depend on many factors beyond our control, including the speed of contagion, the development and implementation of effective preventative measures and possible treatments, the scope of governmental and other restrictions on travel and other activity, and public reactions to these factors.
Financial and Accounting Risks
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Our leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under our outstanding indebtedness.
−Removed: As of December 31, 2023, we and our subsidiaries had approximately $2.8 billion aggregate principal amount of indebtedness outstanding, which includes approximately $1.4 billion principal amount of senior secured term loans (the "Term Loan") outstanding, $185.0 million senior unsecured notes due 2025 (the "2025 Unsecured Notes") and $320.0 million senior unsecured notes due 2027 (the "2027 Unsecured Notes").
−Removed: As of December 31, 2023, we had no outstanding borrowings under our $703.8 million senior secured revolving credit facility (the "Revolver") and, together with the Term Loan, the "New Secured Credit Facilities" and, together with the 2025 Unsecured Notes and the 2027 Unsecured Notes, the "Senior Indebtedness").
+Added: As of December 31, 2024, we and our subsidiaries had approximately $3.4 billion aggregate principal amount of indebtedness outstanding, which includes approximately $1.4 billion principal amount of senior secured term loans (the "Term Loan") outstanding and $800.0 million senior unsecured notes due 2032 (the "2032 Unsecured Notes").
+Added: As of December 31, 2024, we had $192.0 million of outstanding borrowings under our $703.8 million senior secured revolving credit facility (the "Revolver" and, together with the Term Loan, the "New Secured Credit Facilities" and, together with the 2032 Unsecured Notes, the "Senior Indebtedness").
After giving effect to the $10.3 million principal amount of outstanding letters of credit issued under our Revolver, we had $501.5 million of unused commitments available to be borrowed under the Revolver.
−Removed: In addition to the Senior Indebtedness, our aggregate principal amount of indebtedness outstanding includes approximately $898.8 million of notes payable and finance lease obligations primarily related to property and equipment for operations.
+Added: In addition to the Senior Indebtedness, our aggregate principal amount of indebtedness outstanding includes approximately $1.0 billion of notes payable and finance lease obligations primarily related to property and equipment for operations.
Our level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness.
−Removed: addition, subject to applicable restrictions under our Senior Indebtedness, we may incur significant additional indebtedness, which may be secured, from time to time, which could have important consequences, including:
+Added: In addition, subject to applicable restrictions under our Senior Indebtedness, we may incur significant additional indebtedness, which may be secured, from time to time, which could have important consequences, including:
• making it more difficult for us to satisfy our obligations with respect to our indebtedness;
37 unchanged sentences
We and our subsidiaries may be able to incur additional indebtedness in the future, including secured indebtedness.
−Removed: Although the credit agreement governing the New Credit Facilities and the indentures governing each of the 2025 Unsecured Notes and 2027 Unsecured Notes, respectively, contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial.
+Added: Although the credit agreement governing the New Credit Facilities and the indentures governing the 2032 Unsecured Notes contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial.
In addition, as of December 31, 2024, we had approximately $501.5 million available for additional borrowings under the Revolver (after giving effect to the $10.3 million aggregate principal amount of outstanding letters of credit issued under our Revolver at such time).
9 unchanged sentences
Local physicians, physician groups and health care systems also own an interest many of these partnerships and limited liability companies.
−Removed: In the partnerships in which we are the general partner, we are liable for 100% of the debts and other obligations of the partnership, even if we do not own all of the partnership interests.
For some of our surgical facilities, indebtedness at the partnership level is funded through intercompany loans that we provide.
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Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.
−Removed: Borrowings under the New Credit Facilities are at variable rates of interest and expose us to interest rate risk.
+Added: Borrowings under the Credit Facilities are at variable rates of interest and expose us to interest rate risk.
If interest rates increase, our debt service obligations on variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.
3 unchanged sentences
Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.
−Removed: The Term Loan bears interest at a rate per annum equal to (x) the forward-looking term rate based on Secured Overnight Financing Rate (“Term SOFR”) plus 3.50% per annum or (y) an alternate base rate (which will be the highest of (i) the prime rate plus, (ii) 0.50% per
−Removed: annum above the federal funds effective rate and (iii) Term SOFR plus 1.00% per annum (the alternate base rate shall be subject to a floor of 1.00%)) (the "Base Rate") plus 2.50% per annum.
−Removed: The Revolver bears interest at a rate per annum equal to (x) Term SOFR plus 3.25% per annum or (y) the Base Rate plus 2.25% per annum.
We may be limited in our ability to utilize, or may not be able to utilize, net operating loss carryforwards to reduce our future tax liability.
1 unchanged sentence
federal net operating loss ("NOL") carryforwards of approximately $529.0 million and state NOL carryforwards of approximately $630.7 million, which may be limited annually due to certain change in ownership provisions of Section 382 of the Internal Revenue Code of 1986 ("Section 382"), as amended (the "Code").
−Removed: In addition, as a result of the Symbion acquisition, approximately $111.8 million in NOL carryforwards are subject to an annual Section 382 base limitation of $4.9 million, and, as a result of the Novamed acquisition, approximately $6.8 million in NOL carryforwards are subject to an annual Section 382 base limitation of $4.9 million.
−Removed: As a result of our acquisition of NSH Holdco, Inc.
−Removed: ("NSH") on August 31, 2017, approximately $24.7 million in NOL carryforwards are subject to an annual Section 382 base limitation of $2.8 million.
−Removed: Further, the sale of H.I.G.
−Removed: Surgery Centers, LLC's ("H.I.G.") shares to Bain Capital in connection with the Transactions resulted in an ownership change as defined in Section 382.
−Removed: As a result, we will not be able to use our pre-ownership-change NOLs in excess of the limitation imposed by Section 382.
−Removed: These limitations, when combined with amounts allowable due to net unrecognized built in gains, are not expected to impact the realization of the deferred tax assets associated with these NOLs.
+Added: The Company has Section 382 limitations due to certain historical acquisitions;
+Added: however, these limitations, when combined with amounts allowable due to net unrecognized built in gains, are not expected to impact the realization of the deferred tax assets associated with these NOLs.
The Company has $434.3 million of federal NOL carryforwards that will begin to expire in 2030 and will completely expire in 2037.
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Ongoing implementation of administrative, physical and technical safeguards, maintenance of policies and procedures governing use and disclosure of PHI, and oversight of compliance with HIPAA requirements involves significant time, effort and expense.
−Removed: While we undertake substantial efforts to secure the PHI we maintain, use and disclose in electronic form, a cyber-attack or other intrusion that bypasses our information security systems causing an information security breach, loss of protected health information or other data subject to privacy laws or a material disruption of our operational systems could result in a material adverse impact on our business, along with potentially substantial fines and penalties.
−Removed: HIPAA also requires our surgical facilities to use standard transaction code sets and identifiers for certain standardized health care transactions, including billing and other claim transactions.
−Removed: We have undertaken significant efforts involving substantial time and expense
−Removed: to implement these requirements, and we anticipate that continual time and expense will be required to submit standardized transactions and to ensure that any newly acquired facilities can submit HIPAA-compliant transactions.
−Removed: HIPAA requires covered entities to report breaches of unsecured protected health information to affected individuals without unreasonable delay and in no case later than 60 days after the discovery of the breach by the covered entity or its agents.
−Removed: Notification must also be made to HHS and, in certain situations involving large breaches, to the media.
−Removed: The HIPAA rules created a presumption that all non-permitted uses or disclosures of unsecured protected health information are breaches.
−Removed: HIPAA imposes mandatory civil and criminal penalties for violations of its requirements ranging up to $50,000 per violation, with a maximum civil penalty of $1.5 million in a calendar year for violations of the same requirement.
−Removed: However, a single breach incident can result in violations of multiple requirements, resulting in possible penalties well in excess of $1.5 million.
−Removed: In addition, the HITECH Act authorized state attorneys general to bring civil actions seeking either an injunction or damages in response to violations of HIPAA privacy and security regulations that threaten the privacy of state residents.
−Removed: HIPAA also authorizes state attorneys general to bring civil actions seeking either an injunction or damages in response to violations of HIPAA privacy and security regulations that threaten the privacy of state residents.
−Removed: While HIPAA does not create a private right of action allowing individuals to sue us in civil court for violations of HIPAA’s requirements, its standards have been used as a basis for the duty of care in state civil suits, such as those for negligence or recklessness in the handling of PHI.
−Removed: In addition, HIPAA mandates that the Secretary of HHS conduct periodic compliance audits of HIPAA covered entities such as us.
−Removed: In addition, many states in which we operate may impose laws that are more protective of the privacy and security of PII than HIPAA.
+Added: A cyber-attack or other intrusion that bypasses our information security systems causing an information security breach, loss of protected health information or other data subject to privacy laws or a material disruption of our operational systems could result in a material adverse impact on our business, along with potentially substantial fines and penalties.
+Added: Please see Item 1.
+Added: “Business-Governmental Regulation-Federal and State Privacy and Security Requirements” included elsewhere in this Annual Report.
+Added: Many states in which we operate may impose supplemental laws that are more protective of the privacy and security of PII than HIPAA.
Where these state laws are more protective than HIPAA, we have to comply with their stricter provisions.
2 unchanged sentences
Both state and federal laws are subject to modification or enhancement of privacy protection at any time.
+Added: For example, HHS issued a Notice of Proposed Rulemaking on January 6, 2025, which proposes changes to the HIPAA security regulations aimed at enhancing cybersecurity protections in the healthcare sector.
Our facilities will continue to remain subject to any federal or state privacy-related laws that are more restrictive than the privacy regulations issued under HIPAA.
6 unchanged sentences
The health care industry is heavily regulated and we are subject to many laws and regulations at the federal, state and local government levels in the markets in which we operate.
−Removed: These laws and regulations require that our facilities meet various licensing, accreditation, certification and other requirements, including, but not limited to, those relating to:
+Added: These laws and regulations require that our facilities meet various licensing, certification and other requirements, including, but not limited to, those relating to:
• ownership and control of our facilities;
9 unchanged sentences
• workplace health and safety;
−Removed: • licensure, certification and accreditation;
−Removed: • fee-splitting and the corporate practice of medicine;
−Removed: • handling of medication;
+Added: • licensure and certification handling of medication;
• confidentiality, data breach, identity theft and maintenance and protection of health-related and other personal information and medical records;
7 unchanged sentences
In addition, some of the governmental and regulatory bodies that regulate us are considering or may in the future consider enhanced or new regulatory requirements.
−Removed: These authorities may also seek to exercise their supervisory or enforcement authority in new or more robust ways.
+Added: These authorities may also seek to exercise their supervisory or
+Added: enforcement authority in new or more robust ways.
All of these possibilities, if they occurred, could detrimentally affect the way we conduct our business and manage our capital, either of which, in turn, could have a material adverse effect on our business, prospects, results of operations and financial condition.
4 unchanged sentences
Depending on how the Affordable Care Act continues to be interpreted, implemented or changed, it could have a material adverse effect on our business, prospects, results of operations and financial condition.
−Removed: If laws governing the corporate practice of medicine or fee-splitting change, we may be required to restructure some of our relationships, which may result in a significant loss of revenue and divert other resources.
−Removed: The laws of various states in which we operate or may operate in the future do not permit business corporations to practice medicine, to exercise control over or employ physicians who practice medicine or to engage in various business practices, such as fee-splitting with physicians (i.e., sharing in a percentage of professional fees).
−Removed: The interpretation and enforcement of these laws vary significantly from state to state.
−Removed: We provide management services to a network of physicians.
−Removed: If our arrangements with this network were deemed to violate state corporate practice of medicine, fee-splitting or similar laws, or if new laws are enacted rendering our arrangements illegal, we may be subject to civil and/or criminal penalties and could be required to restructure or terminate these arrangements, any of which may result in a significant loss of revenue and divert management and business resources.
If regulations change, we may be obligated to purchase some or all of the ownership of our physician partners or renegotiate some of our partnership and operating agreements with our physician partners and management agreements with surgical facilities.
Upon the occurrence of various fundamental regulatory changes or changes in the interpretation of existing regulations, we may be obligated to purchase all of the ownership of the physician investors in most of the partnerships or limited liability companies that own and operate our surgical facilities and/or hospitals.
−Removed: The purchase price that we would be required to pay for the ownership is specified in our partnership agreements and is typically based on either a multiple of the surgical facility’s EBITDA, as defined in our partnership and operating agreements with these surgical facilities and hospitals, or the fair market value of the ownership as determined by a third-party appraisal.
The physician investors in some of our surgical facilities and hospitals can require us to purchase their interests in exchange for cash or shares of our common stock if these regulatory changes occur.
In addition, some of our partnership agreements with our physician partners and management agreements with surgical facilities and hospitals require us to attempt to renegotiate the agreements upon the occurrence of various fundamental regulatory changes or changes in the interpretation of existing regulations and provide for termination of the agreements if renegotiations are not successful.
−Removed: Regulatory changes that could create purchase or renegotiation obligations include changes that:
−Removed: • make illegal the referral of Medicare or other patients to our surgical facilities and hospitals by physician investors;
−Removed: • create a substantial likelihood that cash distributions to physician investors from the partnerships or LLCs through which we operate our surgical facilities and hospitals would be illegal;
−Removed: • make illegal the ownership by the physician investors of interests in the partnerships or LLCs through which we own and operate our surgical facilities and hospitals;
−Removed: • require us to reduce the aggregate percentage of physician investor ownership in our hospitals.
−Removed: We do not control whether or when any of these regulatory events might occur.
+Added: We do not control whether or when regulatory events might occur.
In the event we are required to purchase all of the physicians’ ownership, our existing capital resources would not be sufficient for us to meet this obligation.
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In addition, many of the states in which we operate have also adopted laws, similar to the Anti-Kickback Statute, that prohibit payments to physicians in exchange for referrals, some of which apply regardless of the source of payment for care.
−Removed: These statutes typically impose criminal and civil penalties, including the loss of a license to do business in the state.
+Added: These state laws typically impose criminal and civil penalties, including the loss of a license to do business in the state.
The "Investment Interest" safe harbor and the "Personal Services and Management Contracts" safe harbor apply to business arrangements similar to those used in connection with our surgical facilities.
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Because our management fees are generally based on a percentage of revenue, our management agreements do not typically meet the Personal Services and Management Contracts safe harbor.
−Removed: We have implemented formal compliance programs designed to safeguard against overbilling and believe that our management agreements comply with the requirements of the Anti-Kickback Statute.
−Removed: However, we cannot assure you that the OIG would find our compliance programs to be adequate or that our management agreements would be found to comply with the Anti-Kickback Statute.
+Added: We cannot assure you that the OIG would find our compliance programs to be adequate or that our management agreements would be found to comply with the Anti-Kickback Statute.
The surgery center safe harbor protects four types of investment arrangements:
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Therefore, our business arrangements with our surgery centers, surgical hospitals and physician groups do not qualify for the expanded safe harbor protection from government review or prosecution under the Anti-Kickback Statute.
−Removed: However, we believe that we are in compliance with the requirements of the Anti-Kickback Statute.
−Removed: We employ dedicated marketing personnel whose job functions include the recruitment of physicians to perform surgery at our facilities.
−Removed: These employees are paid a base salary plus a productivity bonus.
−Removed: We believe our employment arrangements with these employees are consistent with a safe harbor provision designed to protect payments made to employees.
−Removed: However, a government agency or private party may assert a contrary position.
−Removed: We also enter into lease agreements with physicians from time to time for the rental of space for our surgical facilities.
−Removed: We seek to structure these lease agreements so that they are in compliance with the Anti-Kickback Statute safe harbor provision regarding real estate leases.
−Removed: However, a government agency or private party may assert a contrary position.
−Removed: If any of our business arrangements with physicians or sales and marketing personnel were alleged or deemed to violate the Anti-Kickback Statute or similar laws, or if new federal or state laws were enacted rendering these arrangements illegal, it could have a material adverse effect on our business, prospects, results of operations and financial condition.
−Removed: In addition to the physician ownership in our surgical facilities, other financial relationships of ours with potential referral sources could potentially be scrutinized under the Anti-Kickback Statute.
−Removed: Certain of our ASCs have entered into arrangements for professional services, including arrangements for anesthesia services.
−Removed: The OIG scrutinizes certain arrangements it deems to be “suspect Contractual Joint Ventures,” including arrangements between anesthesiologists and physician owners of ASCs.
−Removed: We believe our arrangements for anesthesia services are distinguishable from those described in Advisory Opinion 12-06 (May 25, 2012) and are in compliance with the requirements of the federal Anti-Kickback Statute.
−Removed: However, we cannot assure you that regulatory authorities would agree with that position.
−Removed: The Eliminating Kickbacks in Recovery Act may affect our financial relationships with referral sources utilizing our clinical laboratories.
−Removed: In addition to the Anti-Kickback Statute, the Eliminating Kickbacks in Recovery Act, or EKRA, contains certain exceptions similar to the Anti-Kickback Statute Safe Harbors, those exceptions are more narrow than the Anti-Kickback Statute Safe Harbors.
−Removed: As a result, the operations at our clinical laboratories may be impacted by the EKRA.
+Added: Nevertheless, we believe that we are in compliance with the requirements of the Anti-Kickback Statute.
If we fail to comply with physician self-referral laws as they are currently interpreted or may be interpreted in the future, or if other legislative restrictions are issued, we could incur substantial monetary penalties and a significant loss of revenue.
−Removed: The Stark Law prohibits certain self-referrals for health care services unless an exception applies.
−Removed: Under the current Stark Law and related regulations, services provided at an ASC are not covered by the statute, even if those services include imaging, laboratory services or other Stark designated health services, provided that (i) the ASC does not bill for these services separately, or (ii) if the center is permitted to bill separately for these services, they are specifically exempted from Stark Law prohibitions.
−Removed: These are generally radiology and other imaging services integral to performance of surgical procedures that meet certain requirements and certain outpatient prescription drugs.
−Removed: Services provided at our facilities licensed as hospitals are covered by the Stark Law.
−Removed: We attempt to structure our relationship with physicians who refer to our hospitals to meet an exception to the Stark Law where required, but the regulations implementing the exceptions are detailed and complex, and we cannot guarantee that every relationship complies fully with the Stark Law.
+Added: We attempt to structure our relationship with physicians who refer to our hospitals to meet an exception to the Stark Law where required, but the regulations implementing the exceptions are detailed and complex, and we cannot guarantee that every relationship
+Added: complies fully with the Stark Law.
We also believe that certain services provided by our managed physician network are covered by the Stark Law, but referrals for those services are exempt from the Stark Law under its "in-office ancillary services exception," among others.
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In addition, the OIG and the DOJ have, from time to time, undertaken national enforcement initiatives that focus on specific billing practices or other suspected areas of abuse.
−Removed: In its 2013 Work Plan, the OIG stated its intention to review the safety and quality of care for Medicare beneficiaries having surgeries and procedures in ASCs and hospital outpatient departments.
The federal government may impose criminal, civil and administrative penalties on any person or entity that files a false claim for payment from the Medicare or Medicaid programs and other federal and state health care programs.
−Removed: Claims filed with private insurers can also lead to criminal and civil penalties, including, but not limited to, penalties relating to violations of federal mail and wire fraud statutes, as well as penalties under the anti-fraud provisions of the HIPAA.
−Removed: While the criminal statutes are generally reserved for instances of fraudulent intent, the federal government is applying its criminal, civil and administrative penalty statutes in an ever-expanding range of circumstances, including claiming payment for unnecessary services if the claimant merely should have known the services were unnecessary and claiming payment for low-quality services if the claimant should have known that the care was substandard.
−Removed: In addition, a violation of the Stark Law or the Anti-Kickback Statute can result in liability under the federal False Claims Act (the "FCA").
−Removed: Over the past several years, the federal government has investigated an increasing number of health care providers for potential FCA violations, which, among other things, prohibits a person from knowingly presenting, or causing to be presented, a false or fraudulent claim to the federal government.
+Added: Claims filed with private insurers can also lead to criminal and civil penalties, including, but not limited to, penalties relating to violations of federal mail and wire fraud statutes, as well as penalties under the anti-fraud provisions of HIPAA.
+Added: In addition, a violation of the Stark Law or the Anti-Kickback Statute can result in liability under the federal False Claims Act (the "FCA"), which, among other things, prohibits a person from knowingly presenting, or causing to be presented, a false or fraudulent claim to the federal government.
The statute defines "knowingly" to include not only actual knowledge of a claim’s falsity, but also reckless disregard for or intentional ignorance of the truth or falsity of a claim.
Violators of the FCA are subject to severe financial penalties, including treble damages and per claim penalties in excess of $10,000.
−Removed: Because our facilities perform hundreds or thousands of similar
−Removed: procedures each year for which they are paid by Medicare, and since the statute of limitations for such claims extends for six years under normal circumstances (and possibly as long as ten years in the event of failure to discover material facts), a repetitive billing error or cost reporting error could result in significant, material repayments and civil or criminal penalties.
−Removed: Moreover, another trend impacting health care providers is the increased use of the FCA, particularly by individuals who bring actions under that law.
−Removed: Under the "qui tam," or whistleblower, provisions of the FCA, private parties may bring actions on behalf of the federal government.
−Removed: If the government intervenes and prevails in the action, the defendant may be required to pay three times the actual damages sustained by the government, plus mandatory civil monetary penalties of between $12,526 and $25,076 for each false claim submitted to the government.
+Added: Because our facilities perform hundreds or thousands of similar procedures each year for which they are paid by Medicare, and since the statute of limitations for such claims extends for six years under normal circumstances (and possibly as long as ten years in the event of failure to discover material facts), a repetitive billing error or cost reporting error could result in significant, material repayments and civil or criminal penalties.
+Added: Moreover, individuals are increasingly using the "qui tam" or whistleblower provisions of the FCA, which permit private parties to bring actions on behalf of the federal government.
+Added: If the government intervenes and prevails in the action, the defendant may be required to pay three times the actual damages sustained by the government, plus mandatory civil monetary penalties for each false claim submitted to the government.
These private parties, often referred to as relators, are entitled to share in any amounts recovered by the government through trial or settlement.
−Removed: Both direct enforcement activity by the government and whistleblower lawsuits under the FCA have increased significantly in recent years;
−Removed: thus, the risk that we will have to defend a false claims action, pay significant fines or be excluded from the Medicare and Medicaid programs has increased.
−Removed: In addition, the Fraud Enforcement and Recovery Act of 2009 ("FERA") further expanded the scope of the FCA to create liability for knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government and FERA, along with statutory provisions found in the Acts, created federal False Claims Act liability for the knowing failure to report and return an overpayment within 60 days of the identification of the overpayment or, in certain cases, the date by which a corresponding cost report is due, whichever is later.
−Removed: Governmental authorities have and may continue to challenge or scrutinize our operations.
An allegation or determination that we have violated the law could have a material adverse effect on our business, prospects, results of operations and financial condition.
−Removed: HIPAA also created new federal criminal statutes that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any health care benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services.
−Removed: Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
In addition, a person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration, including waivers of co-payments and deductible amounts (or any part thereof), that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of Medicare or Medicaid payable items or services may be liable for civil monetary penalties of up to $20,000 for each wrongful act.
−Removed: Moreover, in certain cases, providers who routinely waive copayments and deductibles for Medicare and Medicaid beneficiaries can also be held liable under the Anti-Kickback Statute and civil False Claims Act, which can impose additional penalties associated with the wrongful act.
Although this prohibition applies only to federal health care program beneficiaries, the routine waivers of copayments and deductibles offered to patients covered by commercial payors may implicate applicable state laws related to, among other things, unlawful schemes to defraud, excessive fees for services, tortious interference with patient contracts and statutory or common law fraud.
To the extent our patient assistance programs or other discount policies are found to be inconsistent with applicable laws, we may be required to restructure or discontinue such programs, or be subject to other significant penalties.
−Removed: To enforce compliance with the federal laws, the DOJ has increased its scrutiny of interactions between health care companies and health care providers, which has led to a number of investigations, prosecutions, convictions and settlements in the health care industry.
−Removed: Dealing with investigations can be time and resource consuming and can divert management’s attention from the business.
−Removed: In addition, settlements with the DOJ or other law enforcement agencies have forced health care providers to agree to additional compliance and reporting requirements as part of a consent decree or corporate integrity agreement.
−Removed: Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.
−Removed: We are also subject to various state laws and regulations, as well as contractual provisions with commercial payors that prohibit us from submitting inaccurate, incorrect or misleading claims.
−Removed: We cannot be sure that none of our surgical facilities’ claims will ever be challenged.
−Removed: If we were found to be in violation of a state’s laws or regulations, or of a commercial payor contract, we could be forced to discontinue the violative practice and be subject to recoupment actions, fines and criminal penalties, which could have a material adverse effect on our business, prospects, results of operations and financial condition.
All payors are increasingly conducting post-payment audits.
For example, CMS has implemented the RAC program, involving Medicare claims audits nationwide, and employs MICs to perform post-payment audits of Medicaid claims and identify overpayments.
−Removed: In addition to RACs and MICs, the state Medicaid agencies and other contractors have increased their review activities.
+Added: addition to RACs and MICs, the state Medicaid agencies and other contractors have increased their review activities.
We are regularly subject to these external audits and we also perform both internal and third-party audits and monitoring.
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From time-to-time we are involved in lawsuits, claims, audits and investigations, including those arising out of services provided, personal injury claims, professional liability claims, billing and marketing practices, employment disputes and contractual claims.
−Removed: become subject to future lawsuits, claims, audits and investigations that could result in substantial costs and divert our attention and resources and adversely affect our business condition.
+Added: We may become subject to future lawsuits, claims, audits and investigations that could result in substantial costs and divert our attention and resources and adversely affect our business condition.
In addition, since our current growth strategy includes acquisitions, among other things, we may become exposed to legal claims for the activities of an acquired business prior to our acquisition of such business.
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Additionally, payments to hospitals are adjusted based on the hospital’s performance on these quality measures.
−Removed: A substantial portion of hospital payment is at risk depending on its individual performance relative to benchmarks and other hospitals’ performance.
+Added: A substantial portion of hospital payment is at risk depending on its individual performance
+Added: relative to benchmarks and other hospitals’ performance.
There is a substantial risk that our Medicare payments could be reduced if our hospitals fail to perform adequately on these measures.
−Removed: Additionally, there is a risk that Medicare payments could be reduced if our facilities (hospitals and ASCs) fail to adequate report data as required by CMS.
+Added: Additionally, there is a risk that Medicare payments could be reduced if our facilities (hospitals and ASCs) fail to adequately report data as required by CMS.
ASC payments are not yet adjusted based on performance against quality measures, but there is a substantial risk that Congress may soon link ASC Medicare payments to actual performance, in addition to reporting.
1 unchanged sentence
State efforts to regulate the construction, acquisition or expansion of health care facilities could prevent us from acquiring additional surgical facilities, renovating our existing facilities or expanding the breadth of services we offer.
−Removed: Some states require prior approval for the construction, acquisition or expansion of health care facilities or expansion of the services the facilities offer.
+Added: Some states are increasingly scrutinizing healthcare mergers, acquisitions, joint ventures, and other strategic transactions.
+Added: Several states have recently enacted or are contemplating statutes that broadly focus on assessing and regulating the transactional impacts on healthcare quality, cost, equity, and accessibility.
+Added: This trend of increased scrutiny and expanded regulatory oversight of healthcare transactions is anticipated to persist, typically requiring regulatory approval.
+Added: Additionally, some states require prior approval for the construction, acquisition or expansion of health care facilities or expansion of the services the facilities offer.
In giving approval, these states consider the need for additional or expanded health care facilities or services, as well as the financial resources and operational experience of the potential new owners of existing health care facilities.
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Our amended and restated certificate of incorporation designates courts in the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
−Removed: Our amended and restated certificate of incorporation (the "Certificate of Incorporation") provides that, subject to certain exceptions and to the fullest extent permitted by applicable law, the Court of Chancery of the State of Delaware (the "Court of Chancery") will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the General Corporation Law of the State of Delaware, our Certificate of Incorporation or our amended and restated bylaws or (iv) any other action asserting a claim against us that is governed by the internal affairs doctrine (each, a "Covered Proceeding").
+Added: Our amended and restated certificate of incorporation (the "Certificate of Incorporation") provides that, subject to certain exceptions and to the fullest extent permitted by applicable law, the Court of Chancery of the State of Delaware (the "Court of Chancery") will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a
+Added: fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the General Corporation Law of the State of Delaware, our Certificate of Incorporation or our amended and restated bylaws or (iv) any other action asserting a claim against us that is governed by the internal affairs doctrine (each, a "Covered Proceeding").
In addition, the Certificate of Incorporation states that this exclusive forum provision does not apply to actions in which the Court of Chancery concludes that an indispensable party is not subject to the jurisdiction of the Delaware courts and can be subject to the jurisdiction of another court within the U.S.
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Under such circumstances, our Certificate of Incorporation holds that such actions may properly be filed in a court other than the Court of Chancery.
−Removed: Any person or entity purchasing or otherwise acquiring any
−Removed: interest in shares of our stock shall be deemed to have notice of and to have consented to these provisions in our Certificate of Incorporation.
+Added: Any person or entity purchasing or otherwise acquiring any interest in shares of our stock shall be deemed to have notice of and to have consented to these provisions in our Certificate of Incorporation.
These provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.