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Investments in Unconsolidated Affliliates
9 Months Ended
Sep. 30, 2014
Equity Method Investments and Joint Ventures [Abstract]  
Investments in Unconsolidated Affiliates
Investments in Unconsolidated Affiliates

Investments in unconsolidated affiliates in which the Company exerts significant influence but does not control or otherwise consolidate are accounted for using the equity method.  These investments are included as investments in unconsolidated affiliates in the accompanying consolidated balance sheets. The Company’s share of the profits and losses from these investments is reported in equity in earnings of unconsolidated affiliates in the accompanying consolidated statement of operations.  The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the companies and records reductions in carrying values when necessary.

Partnerships with Health Systems - Ambulatory Services

During the nine months ended September 30, 2014, the Company entered into certain transactions whereby it contributed its controlling interests in four centers in exchange for approximately $1.7 million and noncontrolling interests in three separate entities each jointly owned by a hospital that, after the completion of the transactions, controls the contributed centers. Additionally, during the nine months ended September 30, 2014, the Company paid $0.5 million in exchange for a noncontrolling interest in an entity jointly owned by a hospital that controls a center. During the nine months ended September 30, 2013, the Company entered into a transaction whereby it contributed $0.3 million plus a controlling interest in one center in exchange for a noncontrolling interest in an entity jointly owned by a hospital that, after the completion of the transaction, controlled the contributed center and one additional center. Management of the Company believes these structures provide both economies of scale and potential future growth opportunities in the markets in which the centers are located. 

As a result of these transactions, the Company recorded in the accompanying consolidated balance sheets, as a component of investments in unconsolidated affiliates, the fair value of the noncontrolling interest in the entities which control the contributed centers of approximately $7.0 million and $5.2 million as of the nine months ended September 30, 2014 and 2013, respectively. Additionally, the Company also recorded its share of the profits and losses from these investments of $2.1 million and $2.2 million, as a component of equity in earnings of unconsolidated affiliates in the accompanying consolidated statement of operations, during the nine months ended September 30, 2014 and 2013, respectively.

In each of these transactions, the gain or loss on deconsolidation was determined based on the difference between the fair value of the Company’s noncontrolling interest in the new entity and the carrying value of both the tangible and intangible assets of the contributed centers immediately prior to each transaction. During the nine months ended September 30, 2014, the fair value of the Company’s noncontrolling interest was based on estimates of the expected future earnings, and in certain cases, the Company evaluated likely scenarios which were weighted by a range of expected probabilities of 5% to 35%. Accordingly, the Company recognized a net gain on deconsolidation in the accompanying consolidated statements of operations of approximately $3.4 million and $2.2 million during the nine months ended September 30, 2014 and 2013, respectively. There was no deconsolidation activity during the three months ended September 30, 2014 and 2013, respectively.

Partnerships with Health Systems - Physician Services

As part of the Sheridan acquisition, the Company acquired an interest in an arrangement with HCA Holdings, Inc. (“HCA”) in which each company shares ownership of an entity that was formed to provide hospital-based physician services to HCA affiliates. In conjunction with the acquisition of Sheridan, the Company recorded its preliminary estimate of the fair value of its investment of $49.1 million on the acquisition date. The Company's investment in this entity is reflected in the accompanying consolidated balance sheets as a component of investments in unconsolidated affiliates. The Company owns 51% of the entity and, under the terms of the limited liability and related agreements, earns billing and management fees and receives its share of earnings distributions. The Company has no other material obligations or guarantees related to the entity. The Company determined that the entity is a variable interest entity due to the Company’s equity interest, billing and management fees, and earnings distributions received; however, it is not the primary beneficiary of the entity as it does not have the power to direct the activities that most significantly impact the entity's economic performance as a result of its shared control with HCA. Therefore, the Company has accounted for its investment in the entity under the equity method of accounting.

The Company has recorded its share of the entity's earnings of $1.4 million as a component of equity in earnings of unconsolidated affiliates in the accompanying consolidated statement of operations during the three months ended September 30, 2014. In addition, the Company recognized management and billing fees totaling $2.2 million during the three months ended September 30, 2014, which are included in net revenue in the accompanying consolidated statement of operations. Additionally, the Company has recorded a receivable from the entity in the amount of $4.3 million as of September 30, 2014 for certain operating expenses incurred on behalf of the entity. This receivable is included in other current assets in the accompanying condensed balance sheets.