To succeed in the fiercely competitive market, ASCs are relying on sound business planning and high-quality strategy execution to succeed.
Birmingham, Ala.-based Practice Partners in Healthcare President and CEO Larry D. Taylor spoke about how top ASCs manage their budgets and stick to a successful business planning strategy.
Mr. Taylor is speaking on a panel titled "Business planning and strategy execution for ASCs" at the Becker's 15th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference + The Future of Spine, June 22 to 24, 2017 in Chicago. Click here to learn more and register.
Q: How has your ASC's business approach and strategy evolved over the last five years?
Larry Taylor: In the last five years, our development and management of centers has continued to grow. One of the greatest attributes of our approach is flexibility. We often say we treat every center like a thumb print. That is each center is unique and requires a unique approach and solutions based on facts and findings.
The ASC industry has experienced continued consolidation and for some centers this is the correct solution; for others remaining in control and physicians retaining majority has significant benefits. Our approach is to be and advocate but not a raving fan. We are approached by some groups that do not have the basis in volume, reimbursement or controls to start their own ASC. In these situations, we suggest alternatives or advancing existing centers rather than venturing out on a potential failing center.
Our business approach is to assure the financial, clinical, operational and cultural success of every venture. We have also experienced both new center development as well as turn-around opportunities in the ASC environment. When Practice Partners engages we utilize our capabilities and resources as a one stop shop. We have the expertise and talent to handle ASC needs that follow the owner's direction, vision and desired outcomes.
Q: How do you make sure to spend money wisely as you navigate constantly-improving techniques and technologies?
LT: Weather we manage, manage and own minority interest, or manage, own and bill and collect we view two functions for our partners. We seek to increase the physician’s W2 by advancing case adoption, greater volumes and facilitated turn times to increase production and produce greater clinic and free time for the physicians. On the investment side or K12 we work for decreased costs for implant and supplies, enhancing reimbursement, greater productivity producing lower labor costs as well as controlling the environment. By controlling the environment, we put the best solutions in the hands of the surgeons, not necessarily the newest to market.
Reps and introduction to new technology must first filter through the management team allowing for research and reimbursement trends. Often, we see new products in the market place that are advanced but not changing the reimbursement landscape. Then the question is associated benefits, decreased OR time, facilitated outcomes, improved techniques and lower total case costs. Technology is very daunting to staff and those managing centers. We always question the need, cost and benefit for changing technology and assure that physicians have this information prior to any demo or trial periods.
The other aspects revolve around new, used, refurbished and manufactured refurbished equipment. Value is the key; for the price is there warranty? If so, what is the coverage and term? Does the equipment in consideration have a life span of less than three years? Will it be supported in the future? Is there trade in value? Ask similar questions for each device or equipment.
Q: Who should handle business planning and strategy execution at an ASC?
LT: Short answer is Practice Partners. Long answer is a quality organization that has the expertise and track record in the type of center you are seeking to initiate or advance. Having a team that can speak clinically, business acumen and financially is needed to plan an ASC and then execute on a market strategy. Our approach begins by listening and seeking the goals of the organization and physicians. In new centers, we start with the development of a proforma. We execute a non-disclosure agreement to protect the data and develop the initial revenue streams.
We then layer in expenses and determine if building ownership or leasing is the direction by the group. After fine tuning of the proforma and conservative projections are produced, we then follow state guidelines for both CON and non-CON states. If a small core group has initiated the project we often recruit other physicians for ownership or utilization of the center. Practice Partners also develops the equipment plan and works with architects and contractors for the greatest value and control of fixed costs.
We also ready the facility for operations in a turn key process to first case. For existing centers, we review the operations of the center and spend several days onsite in review to develop a comprehensive plan for implementation. Market strategy takes into account a number of factors based on the surgery center and the surgeons involved in the center. We deploy this strategy to gain market share and a prominent position in the healthcare market. At times a unique approach to pricing and potential bundled or at risk models may be appropriate. All of these and other aspects are developed for consideration by the owners or board.
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