Ambulatory surgery centers may want to partner with hospitals or management companies for several reasons, such as greater access to resources, skill-sharing and cheaper supplies. Chuck Peck, MD, FACP, president and CEO of Health Inventures, and Michael Patterson, chief administrative officer of Trinity Rock Island (Ill.) and vice president of hospital operations and chief nurse executive of Rock Island, Ill.-based Trinity Regional Health System, offer seven ways to make an ASC more attractive to a hospital or management company.
1. Build strong financials. Mr. Patterson, who previously served as an ASC CEO, says strong financials are one of the keys to attracting a hospital or management partner. A strong balance sheet, an average cost per case and streamlined billing, coding and collections processes can increase the value of an ASC for potential partners. Dr. Peck says strong payor contracts are also attractive to hospitals and management companies. "If an ASC came into negotiations with all the right payors and good reimbursements rates, that's a big plus," he says.
A large number of active physician investors is also a sign of an ASC's financial strength and continued viability, according to Dr. Peck. "A larger number of [physician] investors shows doctors' commitment. It [provides] a reason for physicians to bring as many patients as possible." Growing volume is a mark of economic growth in an ASC.
2. Improve operational efficiency. Efficient operations in an ASC also appeal to hospitals and management companies. For example, Mr. Patterson says ASCs should have concise physician scheduling and a high percentage of block utilization.
3. Commit to high quality. ASCs that can show data reflecting high quality, such as few surgical site infections, will increase their value to a potential partner. Mr. Patterson suggests ASCs create a "quality committee of the board or [other] mechanism for peer review and quality tracking. Benchmark nationally through the [Ambulatory Surgery Center Association], then have a strong peer review process so surgeons in those surgery centers can hold each other accountable for quality care."
4. Increase patient satisfaction. High patient satisfaction scores demonstrate a surgery center's success to a hospital or management company. Some factors that may affect patient satisfaction include a convenient location for patients, pleasant surroundings and easy access to services within the center, according to Mr. Patterson.
5. Encourage a collaborative mindset among physicians. Hospitals are attracted to ASCs where physician partners are willing to compromise and be true partners. "A lot of doctors, when they go into deals with somebody else, tend to not think of anything besides the financial opportunity. But the important thing is to want to have a relationship with [the other side], to work with them as a partner," Dr. Peck says. He suggests physicians may not have a partnership mindset because they are accustomed to working one-on-one with a patient, a relationship in which the patient's best interest is the central factor in decision-making. In contrast, in negotiations with a hospital or management partner, physicians will work as part of a group and will need to make decisions based on the best interests of the organization. "Spend a lot of time educating physicians on what it means to be in a partnership with a management company or hospital," Dr. Peck says.
In addition to working collaboratively with an outside organization, ASC physicians that have a good relationship with ASC leadership are more attractive to hospitals and management partners. "Improve physician loyalty to the center by making sure the relationship [with the center] stays collaborative," Dr. Peck says. He suggests fostering strong ASC-physician relationships by including physicians in major strategic and operational decision-making.
6. Form a strategic plan. Mr. Patterson says strategic plans are key indicators for hospitals and companies that an ASC would be a strong partner. Plans should include short-, mid- and long-term goals and show that "physicians that own the surgery center have thought about what they want this company to look like in the future," according to Mr. Patterson.
7. Diversify services. Multispecialty surgery centers are more attractive to potential partners than single specialty centers because they provide security in case of changing reimbursement. If the reimbursement for one specialty declines, a center offering only that specialty will have no recourse, whereas multispecialty centers have a variety of other services to maintain the ASC's financial strength.
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Strategies for Successful Co-Management Relationships With HOPDs
Surgery Center Transactions and Valuation: Thoughts From VMG Health's Kevin McDonough
10 Questions About Selling a Surgery Center
1. Build strong financials. Mr. Patterson, who previously served as an ASC CEO, says strong financials are one of the keys to attracting a hospital or management partner. A strong balance sheet, an average cost per case and streamlined billing, coding and collections processes can increase the value of an ASC for potential partners. Dr. Peck says strong payor contracts are also attractive to hospitals and management companies. "If an ASC came into negotiations with all the right payors and good reimbursements rates, that's a big plus," he says.
A large number of active physician investors is also a sign of an ASC's financial strength and continued viability, according to Dr. Peck. "A larger number of [physician] investors shows doctors' commitment. It [provides] a reason for physicians to bring as many patients as possible." Growing volume is a mark of economic growth in an ASC.
2. Improve operational efficiency. Efficient operations in an ASC also appeal to hospitals and management companies. For example, Mr. Patterson says ASCs should have concise physician scheduling and a high percentage of block utilization.
3. Commit to high quality. ASCs that can show data reflecting high quality, such as few surgical site infections, will increase their value to a potential partner. Mr. Patterson suggests ASCs create a "quality committee of the board or [other] mechanism for peer review and quality tracking. Benchmark nationally through the [Ambulatory Surgery Center Association], then have a strong peer review process so surgeons in those surgery centers can hold each other accountable for quality care."
4. Increase patient satisfaction. High patient satisfaction scores demonstrate a surgery center's success to a hospital or management company. Some factors that may affect patient satisfaction include a convenient location for patients, pleasant surroundings and easy access to services within the center, according to Mr. Patterson.
5. Encourage a collaborative mindset among physicians. Hospitals are attracted to ASCs where physician partners are willing to compromise and be true partners. "A lot of doctors, when they go into deals with somebody else, tend to not think of anything besides the financial opportunity. But the important thing is to want to have a relationship with [the other side], to work with them as a partner," Dr. Peck says. He suggests physicians may not have a partnership mindset because they are accustomed to working one-on-one with a patient, a relationship in which the patient's best interest is the central factor in decision-making. In contrast, in negotiations with a hospital or management partner, physicians will work as part of a group and will need to make decisions based on the best interests of the organization. "Spend a lot of time educating physicians on what it means to be in a partnership with a management company or hospital," Dr. Peck says.
In addition to working collaboratively with an outside organization, ASC physicians that have a good relationship with ASC leadership are more attractive to hospitals and management partners. "Improve physician loyalty to the center by making sure the relationship [with the center] stays collaborative," Dr. Peck says. He suggests fostering strong ASC-physician relationships by including physicians in major strategic and operational decision-making.
6. Form a strategic plan. Mr. Patterson says strategic plans are key indicators for hospitals and companies that an ASC would be a strong partner. Plans should include short-, mid- and long-term goals and show that "physicians that own the surgery center have thought about what they want this company to look like in the future," according to Mr. Patterson.
7. Diversify services. Multispecialty surgery centers are more attractive to potential partners than single specialty centers because they provide security in case of changing reimbursement. If the reimbursement for one specialty declines, a center offering only that specialty will have no recourse, whereas multispecialty centers have a variety of other services to maintain the ASC's financial strength.
Related Articles on ASC Transactions:
Strategies for Successful Co-Management Relationships With HOPDs
Surgery Center Transactions and Valuation: Thoughts From VMG Health's Kevin McDonough
10 Questions About Selling a Surgery Center