Which key strategies elevate an ASC to a level of profitability, and keep it there?
Healthcare professionals offered insights on how to maintain a profitable surgery center in the current healthcare landscape during a panel titled, "Keys to Keeping Surgery Centers a Profitable Business," at Becker's 14th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference + The Future of Spine.
Naya Kehayes, principal and ambulatory surgery practice leader of Seattle-based Eveia Health, a division of ECG Management Consultants; Larry Taylor, president and CEO of Hoover, Ala.-based Practice Partners in Healthcare; Roe Riggio, vice president of national accounts of Mundelein, Ill.-based Medline Industries; and Jeffrey Péo, chief development officer of Hanover, Mass.-based Ambulatory Surgical Centers of America, spoke on the panel.
Sidestepping 4 common mistakes
Contracts
Look at a potential contract, and then, look at it again. ASCs may fall prey to contracts that are not reasonable for their particular services. "Don't sign a contract just to get the volume in the door, because the surgery doesn't have value without appropriate reimbursement," advised Ms. Kehayes.
If considering adding a new service line, don't commit until thoroughly reviewing your contracts.
Costs
Successful ASCs know every cost, right down to the minute in the operating room.
"Know your costs — if you don't know how much it's costing you to do a procedure, you're missing the boat," said Mr. Riggio.
Vendors
Establish a partnership with a vendor, and ensure the ASC's goals and business objectives align with the vendor's goals. Mr. Riggio suggested meeting with your vendor on a quarterly, semi-annually or annually basis.
"They need to hear what your challenges are and you need to hear what their challenges are," said Mr. Riggio. "Treat your vendors like a partner, but more importantly, challenge them."
Overcommitting
Surgery centers with an overwhelmed staff probably won't succeed. If someone else performs a task better than an ASC team member, hire that person or company — it's worth the cost and will likely result in higher profitability.
"Thinking like a hospital, staying open 40 hours a week and taking in every case; that's a big problem," said Mr. Péo. "You get paid like a surgery center, so you need to think and act like a surgery center."
Recruiting physicians
To maintain a strong patient base, an ASC requires excellent surgeons. Often, an ASC only receives one opportunity to meet a physician, so prepare for these interactions, said Mr. Péo.
"If you're a struggling ASC, talk about value — why adding them, for a very low buy-in, can have a very high return on investment," added Mr. Péo. Utilize your center's physicians, as they can easily pinpoint potential additions.
Mr. Taylor added it's imperative to understand where the surgeon currently works. An ASC will need to spin its pitch based on the surgeon's previous employment, whether that's in a hospital or another surgery center.
"Constantly be recruiting," said Mr. Péo. "Continuously look for ways to keep your center evergreen."
Dealing with payers
Profitable ASCs will set fee schedules, ensuring no money falls to the wayside. Then, a center ensures it's properly reimbursed.
Ms. Kehayes added you never want to be the last one at the table with the payer, because it will impact rates. It's imperative to establish a relationship with payers early on, resulting in better negotiations with them later.
A successful ASC will demonstrate savings to payers especially in a hospital dominated market.
"Partner with the payer and empower them to understand why you are a solution for them," said Ms. Kehayes.
Boosting a struggling ASC
Differentiating a surgery center proves crucial to survival in a competitive market.
"You're going to have to differentiate your care in the future or you're going to be on the sidelines," said Mr. Taylor.
Some centers may find success in new service lines, but Ms. Kehayes cautioned contract rates are critical to determining which cases will enhance an ASC's bottom line. If considering adding new cases, understand the incremental operating costs as well as necessary equipment, capital requirements and additional staff the procedures will require.
"We're all looking for something to add, but just be careful," added Mr. Péo. "It's a dangerous cliff at times if you don't look at it carefully."
If bringing new surgeons into the center to handle new cases, vet them well. Know their OR times, complication rates and personalities.
Additionally, a center's physician investors must understand how their decisions impact the bottom line if an ASC is to maintain profitability — from OR time to requested supplies.
"Patient care is number one, but there's nothing wrong with talking to your surgeons about potential savings," said Mr. Riggio.
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