Accumulated Depreciation: The sum of all depreciation expense incurred in prior accounting periods for all tangible fixed assets utilized in the normal course of operations. Depreciation is a non-cash expense representing a decrease in value of the PP&E center due to age, wear, and other market conditions.
Administrative Staff: All non-clinical staff employed by the center including but not limited to: front desk, scheduling, insurance verification, medical records, materials management, and administration.
Billing Fees: Defined as third party contract billing fees. These expenses are included in the General & Administrative Expense line item.
Case Mix: Defined as the median percentage of total cases performed within the designated specialty for all centers performing cases in such specialty. Stated differently, it is the median percentage of total cases for all centers which perform the designated specialty. Individual centers included in the sample do not perform cases in all of the specialties listed, therefore the sum of the individual specialties will not equal 100%.
Cash & Equivalents: All cash and cash equivalent securities (e.g., certificates of deposit) which are used to pay the normal operating expenses of the center. Excludes cash held for distribution to shareholders.
Cash as a Percentage of Total Operating Expenses: The Cash & Equivalents divided by the Total Operating Expenses of the center. This metric is utilized to measure the relative amount of cash held by the center.
Common Size Income Statement: An income statement which displays all expense line items as a percentage of total Net Operating Revenue.
Current Liabilities: All non-debt liabilities incurred by the center in the normal course of operation which are expected to be paid within one year (e.g., accrued salaries, accounts payable, etc.).
Current Ratio: Defined as Current Assets divided by Current Liabilities. It is a liquidity ratio which measures the centers ability to pay short term obligations.
Days of Cash on Hand: Calculated by dividing the Cash & Equivalents by the Total Operating Expenses multiplied by the number of days in the period (365). This is another metric which measures the relative amount of cash held by the center.
Days of Accounts Receivable Outstanding: Calculated by dividing the Net Accounts Receivable by the total Net Operating Revenue multiplied by the number of days in the period (365). This is a metric which measures the relative amount of accounts receivable outstanding.
Drugs & Medical Supplies: Represents the cost of all supplies directly utilized during surgery, including implants and minor supplies (e.g., gauze, bandages, etc.).
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): Financial metric utilized to quantify the center’s operating profitability before taking into consideration leverage, capital requirements, or tax expenses. EBITDA is used as a simplified accrual based estimate of cash flow.
EBITDA Margin: Defined as the center’s EBITDA divided by total Net Operating Revenue.
Employee Salaries & Wages: Total salaries for all full time, part time, and contract staff, including overtime and paid time off (“PTO”).
Full Time Equivalent (“FTE”) Employee: Defined as number of paid hours divided by 2,080.
General & Administrative Expenses (“G&A”): Includes all other expenses incurred in the operation of the center including contract Management & Billing fees.
Gross Plant, Property, and Equipment (“PP&E”): Defined as the original acquisition cost of all tangible fixed assets utilized in the normal course of operations. This includes but is not limited to building improvements, medical equipment, office equipment, computer hardware, software, etc. Excludes items such as inventory and other supplies which have a useful life of less than one year.
Hours per Case: Calculated as the total full time equivalent (“FTE”) staff multiplied by 2,080 divided by the total number of cases.
Insurance Expense: Defined as expenses incurred to maintain general liability coverage. Insurance expense does not include professional liability insurance for the center’s physicians.
Management Fees: Defined as third party contract management fees. These expenses are included in the General & Administrative Expense line item.
Net Accounts Receivable: Outstanding amounts owed by patients for services provided after adjusting for contractual allowances and expected bad debt. It should be noted this does not include non-patient receivables.
Net Accounts Receivable as a Percentage of Total Net Operating Revenue: Net Accounts Receivable divided by the total Net Operating Revenue of the center. This metric is utilized to measure the relative amount of accounts receivable outstanding.
Net Operating Revenue: Represents gross charges less adjustments for contractual discounts and bad debt expense. Net Operating Revenue represents the amount of revenue available for collections.
Net Revenue Per Case: Total net operating revenue received for surgical services provided in the designated specialty divided by the number of surgical cases performed in that specialty.
Net Working Capital: Defined as Cash & Equivalents, Net Accounts Receivable, and Other Current Assets less Non-Debt Current Liabilities. It should be noted that centers with cash basis financial statements and abnormally large cash balances (i.e., greater than one year) have been excluded from the working capital analysis.
Net Working Capital Percent of Revenue: Net Working Capital divided by total Net Operating Revenue. This is a metric utilized to measure the relative amount of working capital held by the center.
Net Working Capital Less Cash: Defined as Net Accounts Receivable and Other Current Assets less Non-Debt Current Liabilities. It should be noted that centers with cash basis financial statements have been excluded.
Net Working Capital Less Cash Percent of Revenue: Net Working Capital less Cash divided by total Net Operating Revenue. This is a metric utilized to measure the relative amount of working capital less cash held by the center.
Non-Surgical Cases: Defined as cases that can be performed in a procedure room (i.e., gastroenterology, ophthalmology, and pain management).
Nursing Staff: Defined as all registered nurses (“RNs”) employed in a clinical capacity at the center. This category includes clinical managers and OR supervisors.
Occupancy Cost: Comprised of the center’s facility rental expenses and all other occupancy cost (e.g., utilities, property taxes, janitorial expense, common area maintenance expense, etc.).
Operating Rooms ("OR"): Total active operating rooms currently utilized by the center.
Other Current Assets: Includes all other assets used in the normal operation of the center which are expected to be converted to cash within one year (e.g., inventory, prepaid expenses, etc.).
Other Medical Cost: Includes outsourced medical services (e.g., transcription, laundry & linen, etc.).
Payor Mix: Defined as the percentage of total cases, charges, or collections performed or received from the designated payor. Individual centers included in the sample do not always accept all of the payors listed, therefore the sum of the individual payors will not equal 100%.
Procedure Rooms ("PR"): Total active procedure rooms currently utilized by the center. Procedure rooms are defined as rooms used for the performance of procedures that do not require an aseptic field but may require use of sterile instruments or supplies.
Rental Rate: Defined as the rate paid by the center to lease the facility including all build-outs. The facility rental rate includes common area maintenance and property taxes but excludes other occupancy cost such as janitorial and utilities expense.
Square Feet: Defined as the total area utilized in the normal operations of the facility. Excludes storage areas.
Surgical Cases: Includes all individual procedures performed on the patient during the course of the surgery.
Taxes & Benefits: Includes all employer-paid payroll taxes (i.e., FICA, Medicare, FUTA, SUTA). The expense line item also includes all benefits provided to the center’s support staff including but not limited to health, dental, vision, retirement, and workers compensation insurance.
Technical Staff: All non-RN staff employed in a clinical capacity at the center. This category includes OR scrub techs and perioperative assistants.
Total Current Assets: Total of all Cash & Equivalents, Accounts Receivable, and Other Current Assets.
Total Current Liabilities: Total of all debt and non-debt liabilities incurred in the normal course of operations which are expected to be repaid within one year.
Total Operating Expenses: Defined as all normal operating expenses required to operate the center. Excludes one-time expenses and capital purchases.