Ron Brank, group vice president of finance for Symbion in Nashville, Tenn., reviews the advantages and disadvantages of operating several ambulatory surgery centers in one geographic market.
Advantages
1. Direct oversight. Symbion manages seven surgery centers in the Memphis, Tenn., market. All seven are within two hours of Symbion's Memphis regional office, allowing for easy access by the regional team. No flights or hotel bookings are needed to make a visit. "In Memphis, regional managers can have a more focused market view," Mr. Brank says. In addition, one person does payroll for all seven facilities and one CPA firm closes the books for four of the facilities.
2. Centers can share clinical staff. The same part-time clinical staff can work at several different centers if needed. Centers in close proximity to each other can set up common PRN pools. "Staff can easily move between centers because policies and procedures are the same," Mr. Brank says. Specialty can be a limiting factor in exchanging clinical staff, but in Symbion's case, all but one of its centers in the Memphis region are multispecialty.
3. Managers can work closely together. Managers at each center can share ideas and quickly resolve any problems that arise. "Management at each facility can meet with each other face-to-face, and the issues they discuss will be familiar to all of them," Mr. Brank says. Since many aspects of the market are the same for all centers, managers can work through issues quickly. And if a key manager goes on leave, a counterpart at another center could fill in, driving back and forth between the centers on the same day.
4. Opportunities for promotion. Staff members looking to move up the organizational ladder could find opportunities without having to move their families to a new region. For example, a clinical manager at one ASC could move up to become administrator at another facility in the same market.
5. Shared managed care contracts. While each ASC would still sign its own contracts with managed care payors, the organization might be able to negotiate the same basic contract for all centers. Symbion uses this arrangement with Blue Cross Blue Shield of Tennessee for all its surgery centers across the state.
6. Physicians could work in several centers. Since credentialing and other policies would be similar, physicians could operate at more than one center. This can be very convenient for the physicians as well as their patients. The disadvantages of this arrangement will be addressed below.
7. Sharing supplies. If one center lacks a particular item, staff might be able to get it from another center. "If you can call three or four other centers, it's quite likely one of them will have what you need," Mr. Brank says. "This is less costly than putting in a special order for supplies to arrive the next day." With quick access to supplies at other centers, it might also be possible for member ASCs to cut back inventory levels and save money on supplies.
8. Sharing equipment. Some large equipment, such as a C-arms or ultrasound, could be moved between centers, eliminating the need to purchase one for each center. Other large pieces of equipment that involve a great deal of recalibration could not be moved, however.
9. Shared training. Both clinical and operational training could be done among larger groups, thus reducing the cost and improving availability. Training could include updates on state regulations.
10. Contracting with vendors. While each ASC would probably have to sign separate contracts, the centers would still have many vendors in common, including supply companies, consulting firms, temp agencies, pharma companies and waste management vendors. Centers would be able to trade insights about working with each vendor and getting a better deal.
Disadvantages
1. Intramural competition. Marketing efforts on behalf of one center could run up against another center. For instance, recruiters for one facility might lure physicians away from a sister center. This could be a particular problem among multispecialty centers with many overlapping specialties. "The danger is that you could end up marketing against yourself," Mr. Brank says.
2. Potential partner conflicts. Physicians at sister facilities could start talking and compare distributions at each center. Physicians at one center who saw significantly lower distributions might become alarmed. On the other hand, news that another center had higher distributions could be a useful teaching moment that motivates physicians to boost their volumes.
3. Compliance issues. Under federal law, at least one-third of a physician-partner's total surgical procedures need to be performed in an outpatient setting, and at least one-third of those cases need to be done at an ASC where the physician is a partner. A physician who is a partner at two different centers would have to carefully monitor his volume at each center to keep it above the minimum.
4. Risk of duplicating equipment. If physicians at each center insisted on having their own equipment, the economies of scale that come from sharing equipment would be lost. In order to share, physicians from all centers would need to be trusting and cooperative with each other.
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