A February 29 webinar titled “ASCs – Key Strategic and Business Issues for 2012” discussed five key factors in strengthening an ASC’s profitability and internal growth.
1. Focus on ongoing physician recruitment. Recruiting new physician investors is one of the most important aspects of growing an ASC, said Jeff Peo, vice president of acquisitions and development at ASCOA.
Physician recruitment should be an ongoing, full time process that relies heavily on input from existing partners.
“When recruiting physicians, it's easiest to go to existing physician partners and ask them if they want someone approached in particular,” said Donna Greene, vice president of acquisitions and development at ASCOA.
On average, it takes 30 days to sell a physician on becoming an investor and performing cases at the center, she added. The exact timing can vary, as some surgeons are ready in just several weeks, whereas recruiting a group of physicians can entail a lengthier process.
It's best to exercise caution, however, when considering physicians who already have ownership in and contracts with another center. The enforcement of noncompetes is among the top legal disputes ASCs encounter today, said Ms. Greene.
“You also want to recognize what you're going to get from those doctors,” said Mr. Peo. “In certain markets, every available surgeon has two to three different ownerships in a center, so you have to be realistic about case number expectations.”
The goal is to recruit one new person per year in each center, with surgeon partners ideally making that initial contact, he said.
2. Weigh the benefits of a hospital partnership. A hospital partnership can lead to better rates on contracts with vendors and payors, said Mr. Cross, but it is ultimately a market-specific decision.
“The trend is leaning toward having a hospital partner,” he said, “but you can be successful without one.”
A hospital partnership doesn't necessarily require a large percentage of ownership. According to Mr. Peo, hospital ownership of an ASC can range from 10 percent to 50 percent to full, outright ownership.
“It depends on a hospital's strategy,” he said.
3. Grow a multi-specialty center. ASCs looking to increase revenue should make it a priority to add at least one new, high revenue-generating specialty to the center.
“Everybody is talking about building centers around spine,” said Jimbo Cross, also a vice president of acquisitions and development at ASCOA. “It doesn't take a tremendous volume of spine cases to generate significant revenues.”
If a center is focusing primarily on GI and pain, for instance, contemplate adding specialties in spine and orthopedics.
“Go market by market to see what's available,” Mr. Cross said. “You no longer have a market with a dozen physicians available across all specialties.”
Multi-specialty ASCs also help to mitigate risk. If insurance reimbursement for Medicare and Medicaid drops on one particular specialty, for instance, the ASC is less vulnerable if it has several other key specialties to bring in revenue than if it were wholly dependent on one type of case.
4. Hire a highly-organized administrator. With the amount of responsibility and multiple roles they often handle, administrators should be chosen wisely and not necessarily based on the years of experience they bring. According to Ms. Greene, an effective administrator should have two key qualities: organization and diplomacy.
Because administrators encounter situations ranging from handling case outcomes to ordering center equipment, it is important that they are comfortable interacting with physicians and vendors alike.
“Those qualities would supersede their experience,” said Mr. Cross. “We'd prefer someone with less experience but this skill set, than someone who's done this for 25 years but who does things their own way.”
5. Prepare for the decline of out-of-network cases. ASCs not contracted with an insurance company can still thrive in certain locations, but the prognosis is market driven.
“The demise of out-of-network is coming, but it's slower than expected,” said Mr. Cross. “It's a strategy you can use if you need to try to get better payor contracts. But people are leaving out-of-network just because of the trouble it is to get their cases scheduled.”
As Ms. Greene pointed out, ASCs can also use a blended out-of-network strategy to secure payor contracts. A center can spend several months building case volume while using out-of-network to negotiate payor contracts, and once the contracts are in place and favorable, switch to an in-network strategy.
However, out-of-network centers can be frustrating to potential physician recruits, Mr. Peo said, because many of their patients may have insurance contracts that disallow them from coming to the center.
“It can be demotivating to people you’re recruiting because they'll think it's too difficult and not worth the effort,” he said. “So you need to be careful.”
1. Focus on ongoing physician recruitment. Recruiting new physician investors is one of the most important aspects of growing an ASC, said Jeff Peo, vice president of acquisitions and development at ASCOA.
Physician recruitment should be an ongoing, full time process that relies heavily on input from existing partners.
“When recruiting physicians, it's easiest to go to existing physician partners and ask them if they want someone approached in particular,” said Donna Greene, vice president of acquisitions and development at ASCOA.
On average, it takes 30 days to sell a physician on becoming an investor and performing cases at the center, she added. The exact timing can vary, as some surgeons are ready in just several weeks, whereas recruiting a group of physicians can entail a lengthier process.
It's best to exercise caution, however, when considering physicians who already have ownership in and contracts with another center. The enforcement of noncompetes is among the top legal disputes ASCs encounter today, said Ms. Greene.
“You also want to recognize what you're going to get from those doctors,” said Mr. Peo. “In certain markets, every available surgeon has two to three different ownerships in a center, so you have to be realistic about case number expectations.”
The goal is to recruit one new person per year in each center, with surgeon partners ideally making that initial contact, he said.
2. Weigh the benefits of a hospital partnership. A hospital partnership can lead to better rates on contracts with vendors and payors, said Mr. Cross, but it is ultimately a market-specific decision.
“The trend is leaning toward having a hospital partner,” he said, “but you can be successful without one.”
A hospital partnership doesn't necessarily require a large percentage of ownership. According to Mr. Peo, hospital ownership of an ASC can range from 10 percent to 50 percent to full, outright ownership.
“It depends on a hospital's strategy,” he said.
3. Grow a multi-specialty center. ASCs looking to increase revenue should make it a priority to add at least one new, high revenue-generating specialty to the center.
“Everybody is talking about building centers around spine,” said Jimbo Cross, also a vice president of acquisitions and development at ASCOA. “It doesn't take a tremendous volume of spine cases to generate significant revenues.”
If a center is focusing primarily on GI and pain, for instance, contemplate adding specialties in spine and orthopedics.
“Go market by market to see what's available,” Mr. Cross said. “You no longer have a market with a dozen physicians available across all specialties.”
Multi-specialty ASCs also help to mitigate risk. If insurance reimbursement for Medicare and Medicaid drops on one particular specialty, for instance, the ASC is less vulnerable if it has several other key specialties to bring in revenue than if it were wholly dependent on one type of case.
4. Hire a highly-organized administrator. With the amount of responsibility and multiple roles they often handle, administrators should be chosen wisely and not necessarily based on the years of experience they bring. According to Ms. Greene, an effective administrator should have two key qualities: organization and diplomacy.
Because administrators encounter situations ranging from handling case outcomes to ordering center equipment, it is important that they are comfortable interacting with physicians and vendors alike.
“Those qualities would supersede their experience,” said Mr. Cross. “We'd prefer someone with less experience but this skill set, than someone who's done this for 25 years but who does things their own way.”
5. Prepare for the decline of out-of-network cases. ASCs not contracted with an insurance company can still thrive in certain locations, but the prognosis is market driven.
“The demise of out-of-network is coming, but it's slower than expected,” said Mr. Cross. “It's a strategy you can use if you need to try to get better payor contracts. But people are leaving out-of-network just because of the trouble it is to get their cases scheduled.”
As Ms. Greene pointed out, ASCs can also use a blended out-of-network strategy to secure payor contracts. A center can spend several months building case volume while using out-of-network to negotiate payor contracts, and once the contracts are in place and favorable, switch to an in-network strategy.
However, out-of-network centers can be frustrating to potential physician recruits, Mr. Peo said, because many of their patients may have insurance contracts that disallow them from coming to the center.
“It can be demotivating to people you’re recruiting because they'll think it's too difficult and not worth the effort,” he said. “So you need to be careful.”
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