Bill Heath, chief development officer at Practice Partners in Healthcare, helps turn around underperforming ASCs. Mr. Heath says these facilities are not "train wrecks" in serious financial trouble but they do have a few fundamental problems that he sees time and again. Here he lists three of the most typical problems and what can be done about them.
1. Overbuilt. Facilities tend to have too many ORs and a great deal of expensive amenities such as marble or hardwood flooring and a swanky décor created by high-paid interior designers. Unless ASC income is improved, "They're going to be paying for this the rest of their lives," Mr. Heath says. It's nice to have a few extra ORs, but they need to be filled so they can pay for themselves.
The center needs to recruit more physicians and raise volume to justify the OR space and pay back the loan for the marble flooring. Typically, the center is completely owned by one group practice without the necessary volume to do this. They need to recruit doctors from competing groups, but that can be difficult for a rival to do. A management company, however, can present itself as a neutral third party and offer an equal partnership and dedicated block times to the new group.
2. Overstaffed. "If I come in and see four nurses standing around the nurses station and only two cases in the OR for the morning, I know you are overstaffed," Mr. Heath says. Similarly, the ASC also doesn't need four people up front answering phones and doing the scheduling. These employees should learn to multitask, he says.
Rather than coming in and immediately firing a lot of the staff, which is very disruptive, Mr. Heath prefers finding other work for unneeded staff or putting them on part-time status. For example, some of the full-time nurses could be put into a pool and be called up on busy days.
3. Underpaid. The ASC is often being underpaid either because payor contracts were not negotiated well or because the kinds of cases done there are poorly reimbursed. In the case of payor contracts, for example, an ASC might not take the cost of implants into account.
The center needs to renegotiate payor contracts, based on reliable data on costs per case. More fundamentally, it needs to examine its case mix. There are certain cases that pay too little for the ASC to make money. The facility may decide to eat the loss, but then these money-losing cases need to be supplemented with high-paying procedures.
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Read more practical guidance from leadership of Practice Partners in Healthcare.
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