Opportunity Abounds as New Jersey Adopts "One Room" ASC Bill, Partially Lifting ASC Moratorium by Allowing Combinations and Restructuring of Single-Room ASCs

Outgoing New Jersey Gov. Chris Christie recently signed the “One Room Bill” (NJ A4995) into law. This new law requires single-room operating rooms to obtain licensure as ASCs without meeting the stringent physical plant and functional guidelines required of larger New Jersey ASCs. Importantly, single-room ASCs will also be exempt from the New Jersey ASC tax assessment. The bill was signed into law on January 15, 2018.

The adoption of the new law comes when an estimated 170 single-room operating rooms operate in New Jersey, but developing new multi-room ASCs is prohibited per a moratorium under New Jersey’s “Codey Law.” The One Room Bill is expected to provide greatly increased liquidity in the ASC market, as licensing will permit surgeons other than an owner to perform services in single-room operating rooms (increasing their value) and other changes will permit direct investment in single-room ASCs by health systems or management companies.

This liquidity will be a boon to both owners and operators of other single-room ASCs, as the law paves the way for several types of combinations and restructurings to take advantage of the increased flexibility. For example, existing single-room ASCs may now affiliate with existing multi-room ASCs or other single-room ASCs, or existing management relationships with single-room operating rooms may be restructured to include ownership. Despite this new flexibility, however, interested parties are encouraged to review the corporate, tax and fraud and abuse considerations related to restructuring existing, or entering into new, arrangements.