SOUTH DENVER ANESTHESIOLOGISTSPRESIDENT EVALUATION FORM

2009 President’s Mid Year Update

So far this year the real average income per physician is up about 2.5% compared to last year at this time. We had expected and budgeted for a 3.9% decrease in 2009 physician income based on negative economic assumptions. Granted, revenue over the next seven months remains an unknown. Average fee revenue per unit remains essentially unchanged from last year so our good payer mix does not appear to be decaying.

In order to hedge against a drop in volume we have contracted with Harvard Park Eye Center. We did a good quality analysis of their volume and payer mix over the past year. At this time, Harvard Park represents financially break even daytime work for SDA. Our thinking was that if the local economy slows this could backfill some lost volume. It also puts SDA in a position to benefit if the Center grows under its new corporate owners.

Sometimes no news is good news. So far this year the SDA ship has been sailing in relatively calm waters. I have no information on any real upheavals to report. And that’s just fine.

Although we have recently seen a few of “our” surgeons working occasionally with other anesthesia providers, this has been more than offset by the addition of new surgeons this year. Our daily workload per physician remains high.

We chose not to hire more than three new anesthesiologists for 2009 based on the concern with a drop in volume. If volume does not drop then manpower may be stretched thin. We made a calculated decision to try to protect physician income. If volume drops then we were smart, if not then you can yell at me.

Although it may not look like it, the Board has been somewhat successful in spending its time away from direct managing and more focused on SDA’s future strategies. We are starting to lay the foundations for more exclusive relationships with our current facilities. As a very large sophisticated group, SDA has had some difficulties in acting small in the eyes of our surgeon customers. We are also learning from the occasional successes of our smaller anesthesiologist competitors. It seems “the way it has always been” is more gone now than ever.

From a business housekeeping perspective we have spent the first part of this year bringing many of our corporate documents up to date. I am satisfied that from the regulatory perspective we are in good compliance. These are the things that are invisible until they rear their head as an enormous expensive problem.

To date SDA has not been significantly impacted by Colorado health care reforms. However the great unknown is what Federal mandates will occur late 2009. No one seems to know much more than SDA does at this point and the community consensus is to just wait and see for now. So far the consensus is that any government payer programs will most likely be phased in slowly rather than immediate sweeping change. I wish I could give everyone a better answer but I’m still stumped. With the help of Dr. Slucky we are following this very closely.

Jordan Sankel

President Eval - SDA Board - 06/09