Andrew Schrage of MoneyCrashers discusses how surgery centers can build and maintain a positive cash flow in today's healthcare market.
Q: What factors can add positive cash flow to a surgery center?
Andrew Schrage: The biggest factor that can add positive cash flow to a surgery center is effective collection practices. If payroll is impeding cash flow, surgery centers can also look to outsource some of their less vital work. Reducing what is spent on supplies can positively affect cash flow and having an efficient, effective work schedule for staff members can also improve it.
Q: How can a struggling surgery center strengthen those factors to achieve a positive cash flow?
AS: One way to improve a struggling center's cash flow is to outsource some of the work (such as accounting and payroll) to prevent the need to hire full-time staff members. Another idea is to review the surgery center's collection procedures to ensure that past due customers are being contacted for payment. Keeping supply costs at a minimum helps as well, as can reviewing employee scheduling to look for ways to trim hours.
Q: What techniques are important for maintaining a positive cash flow?
AS: One of the best ways to maintain a positive cash flow is to stay in touch with paying clients by sending friendly bill reminders. Discounts can also be offered to those who make early payments. Another key to managing cash flow is to reduce expenses. The less money going out, the easier it is to maintain a positive cash flow. In extreme cases, a business could also delay paying its vendors until more cash starts coming in, so long as late payment fees are not incurred.
Q: What steps can different types of surgery centers take to build a strong foundation for positive cash flow?
AS: Since it's safe to assume that rural and single specialty surgery centers generally have less traffic than urban and multispecialty surgery centers, this makes it even more important to manage and build a positive cash flow. On a good note, the staff at these facilities likely have a more personable relationship with their clients, which could make collections easier.
Unfortunately, it may become necessary to keep services at a minimum in order to manage cash flow. After all, it's better to remain open in a rural area or as a single-specialty center with limited services than to have to cease operations. Cross-training staff to reduce payroll is an option as well. A multispecialty surgery center or one in an urban area with a larger staff could improve cash flow by streamlining operations and instituting ore effective policies, reducing debt and possibly renegotiating managed care contracts.
More Articles on Surgery Centers:
Becoming a Better ASC Administrator in 2013: 5 Steps to Improve Your Leadership
Prepare Your Surgery Center for Coming Healthcare Changes: Q&A With Dr. Virginia Feldman of Hudson Valley Ambulatory Surgery
5 Steps to Optimize Online Marketing for ASCs
Q: What factors can add positive cash flow to a surgery center?
Andrew Schrage: The biggest factor that can add positive cash flow to a surgery center is effective collection practices. If payroll is impeding cash flow, surgery centers can also look to outsource some of their less vital work. Reducing what is spent on supplies can positively affect cash flow and having an efficient, effective work schedule for staff members can also improve it.
Q: How can a struggling surgery center strengthen those factors to achieve a positive cash flow?
AS: One way to improve a struggling center's cash flow is to outsource some of the work (such as accounting and payroll) to prevent the need to hire full-time staff members. Another idea is to review the surgery center's collection procedures to ensure that past due customers are being contacted for payment. Keeping supply costs at a minimum helps as well, as can reviewing employee scheduling to look for ways to trim hours.
Q: What techniques are important for maintaining a positive cash flow?
AS: One of the best ways to maintain a positive cash flow is to stay in touch with paying clients by sending friendly bill reminders. Discounts can also be offered to those who make early payments. Another key to managing cash flow is to reduce expenses. The less money going out, the easier it is to maintain a positive cash flow. In extreme cases, a business could also delay paying its vendors until more cash starts coming in, so long as late payment fees are not incurred.
Q: What steps can different types of surgery centers take to build a strong foundation for positive cash flow?
AS: Since it's safe to assume that rural and single specialty surgery centers generally have less traffic than urban and multispecialty surgery centers, this makes it even more important to manage and build a positive cash flow. On a good note, the staff at these facilities likely have a more personable relationship with their clients, which could make collections easier.
Unfortunately, it may become necessary to keep services at a minimum in order to manage cash flow. After all, it's better to remain open in a rural area or as a single-specialty center with limited services than to have to cease operations. Cross-training staff to reduce payroll is an option as well. A multispecialty surgery center or one in an urban area with a larger staff could improve cash flow by streamlining operations and instituting ore effective policies, reducing debt and possibly renegotiating managed care contracts.
More Articles on Surgery Centers:
Becoming a Better ASC Administrator in 2013: 5 Steps to Improve Your Leadership
Prepare Your Surgery Center for Coming Healthcare Changes: Q&A With Dr. Virginia Feldman of Hudson Valley Ambulatory Surgery
5 Steps to Optimize Online Marketing for ASCs