Due to a range of economic factors and insurance challenges, the ambulatory surgery center industry has seen less than one percent volume growth each of the last two years. In this climate, ASCs must be increasingly strategic when identifying sources for center growth.
According to Chris Bishop, senior vice president of acquisitions and business development with Blue Chip Surgical Center Partners, the key to double-digit surgery center growth rests on two factors: assessing a surgery center's capacity for additional cases and targeting prospective physician partners to fill the open space.
1. Measure the surgery center's capacity. The first step in assessing a surgery center's potential for profitability is to determine whether or not the center has the capacity to host additional cases and ensuring your physician board is in agreement that we should pursue new surgeons.
The majority of centers are at less than 50 percent capacity, Mr. Bishop says. If a center has two rooms open on Monday and Thursday afternoons, for example, and if existing physician partners are on board with recruiting new physicians, a surgery center should begin identifying and recruiting physicians to fill the OR space.
2. Ensure that payor contracts allow the center to profit on targeted specialties. A center that is considering adding a new specialty should first examine its payor contracts to ensure that its current rates do not present a roadblock to profitability, says Mr. Bishop. Surgery centers' initial payor contracts may neglect specialties that the center does not currently focus on, and unless those rates are renegotiated to secure greater reimbursements, they can prevent the center from recruiting physicians for new specialties.
"We're very focused on the spine community, for example," says Mr. Bishop. "Since most centers don't perform spine, they might have an insurance contract that focused the majority of their negotiating efforts on endoscopy and ENT. In that case, you have to be mindful of going back to payors and redoing these contracts, because the current contract rate for spine may be so low, it doesn't make sense to recruit spine doctors."
3. Ask existing physician partners to target prospective physician investors. Existing physician partners can be a vital source of information when it comes to assessing other physicians in the surrounding community, says Mr. Bishop. They may know which physicians have a good reputation, which physicians are dissatisfied with their current hospital or center and which physicians perform procedures that could be easily added to the center.
Anesthesia providers and OR nurses can make particularly useful sources for targeting prospective physicians as well because they often work at multiple sites, hospitals and surgery centers, Mr. Bishop adds. As a result, they may interact with a wider variety of physicians on a daily basis and can provide valuable background information.
Once the prospects have been identified by physicians or nurses, the ASC board members should discuss and give approval prior to the outreach process. The nominating physicians or nurses can then contact the prospects and arrange for them to visit the surgery center.
4. Gather detailed background information to engage the physician in the initial meeting. It is best to be over-prepared with information when inviting the prospective physician to visit the surgery center, Mr. Bishop says. The physician partner who made the initial contact with the prospect should pass on key information to the meeting coordinator, including where the prospect went to school, where they were trained, and where their "pain" is — essentially, why they are frustrated with their current facility.
"Are the physician's cases getting bumped because of emergency cases?" says Mr. Bishop. "Are his start times really starting at 8:15 instead of the scheduled 7:30? A lot of hospitals can average an hour in turnover time, but our ASCs should average 10 minutes or less."
Based on the information gathered about the prospective physician and any difficulties he may be having with his current facility, Mr. Bishop says it is useful to prepare a list of five questions to engage the physician in conversation and discuss the advantages to switching to the surgery center. The center should be presented as a solution to the physician's present difficulties, he says.
The initial meeting also serves as an opportunity to discuss a physician's interest in making an investment in the center. An ASC should be prepared to discuss the estimated return that a physician can anticipate on his investment based on how the center has performed historically, Mr. Bishop says.
5. Set up a trial period. If the physician and the ASC appear compatible in the first meeting, the physician should plan to participate in a 60-day trial at minimum, says Mr. Bishop. The trial, during which the physician performs cases at the center and interacts with the staff, is a chance for both parties to assess whether he can succeed at the ASC.
"Do they show up on time? Do they treat the staff well? Are their clinical outcomes good?" says Mr. Bishop. "Look at case costs — are their cases profitable in the center? This period gives us an opportunity to see how profitable they are for the center."
The trial period also allows the prospective physician to gauge their compatibility with the center. "We want them to trial us," says Mr. Bishop. "We want to make sure they feel like Thursday morning starts at 7:30 a.m. are what they're looking for. If not, committed physician partners may be willing to shift their schedule to bring the new physician prospect in."
If, by the end of the trial period, a physician has performed a number of successful cases and has interacted well with the staff, he should be invited to a board meeting to ask physician partners any outstanding questions and to receive a glimpse into the governance of the surgery center, says Mr. Bishop. If the physician partners and the prospect mutually agree on compatibility, the physician will then be offered a subscription agreement to review, sign and complete investment.
Ultimately, according to Mr. Bishop, measuring a surgery center's open capacity and filling that space with additional physician partners will maximize the surgery center's potential for double-digit growth.
9 Points for ASCs on Achieving Financial Solvency
Which Procedures Do Surgery Centers Perform Most? 40 Statistics on 4 Common Specialties
According to Chris Bishop, senior vice president of acquisitions and business development with Blue Chip Surgical Center Partners, the key to double-digit surgery center growth rests on two factors: assessing a surgery center's capacity for additional cases and targeting prospective physician partners to fill the open space.
1. Measure the surgery center's capacity. The first step in assessing a surgery center's potential for profitability is to determine whether or not the center has the capacity to host additional cases and ensuring your physician board is in agreement that we should pursue new surgeons.
The majority of centers are at less than 50 percent capacity, Mr. Bishop says. If a center has two rooms open on Monday and Thursday afternoons, for example, and if existing physician partners are on board with recruiting new physicians, a surgery center should begin identifying and recruiting physicians to fill the OR space.
2. Ensure that payor contracts allow the center to profit on targeted specialties. A center that is considering adding a new specialty should first examine its payor contracts to ensure that its current rates do not present a roadblock to profitability, says Mr. Bishop. Surgery centers' initial payor contracts may neglect specialties that the center does not currently focus on, and unless those rates are renegotiated to secure greater reimbursements, they can prevent the center from recruiting physicians for new specialties.
"We're very focused on the spine community, for example," says Mr. Bishop. "Since most centers don't perform spine, they might have an insurance contract that focused the majority of their negotiating efforts on endoscopy and ENT. In that case, you have to be mindful of going back to payors and redoing these contracts, because the current contract rate for spine may be so low, it doesn't make sense to recruit spine doctors."
3. Ask existing physician partners to target prospective physician investors. Existing physician partners can be a vital source of information when it comes to assessing other physicians in the surrounding community, says Mr. Bishop. They may know which physicians have a good reputation, which physicians are dissatisfied with their current hospital or center and which physicians perform procedures that could be easily added to the center.
Anesthesia providers and OR nurses can make particularly useful sources for targeting prospective physicians as well because they often work at multiple sites, hospitals and surgery centers, Mr. Bishop adds. As a result, they may interact with a wider variety of physicians on a daily basis and can provide valuable background information.
Once the prospects have been identified by physicians or nurses, the ASC board members should discuss and give approval prior to the outreach process. The nominating physicians or nurses can then contact the prospects and arrange for them to visit the surgery center.
4. Gather detailed background information to engage the physician in the initial meeting. It is best to be over-prepared with information when inviting the prospective physician to visit the surgery center, Mr. Bishop says. The physician partner who made the initial contact with the prospect should pass on key information to the meeting coordinator, including where the prospect went to school, where they were trained, and where their "pain" is — essentially, why they are frustrated with their current facility.
"Are the physician's cases getting bumped because of emergency cases?" says Mr. Bishop. "Are his start times really starting at 8:15 instead of the scheduled 7:30? A lot of hospitals can average an hour in turnover time, but our ASCs should average 10 minutes or less."
Based on the information gathered about the prospective physician and any difficulties he may be having with his current facility, Mr. Bishop says it is useful to prepare a list of five questions to engage the physician in conversation and discuss the advantages to switching to the surgery center. The center should be presented as a solution to the physician's present difficulties, he says.
The initial meeting also serves as an opportunity to discuss a physician's interest in making an investment in the center. An ASC should be prepared to discuss the estimated return that a physician can anticipate on his investment based on how the center has performed historically, Mr. Bishop says.
5. Set up a trial period. If the physician and the ASC appear compatible in the first meeting, the physician should plan to participate in a 60-day trial at minimum, says Mr. Bishop. The trial, during which the physician performs cases at the center and interacts with the staff, is a chance for both parties to assess whether he can succeed at the ASC.
"Do they show up on time? Do they treat the staff well? Are their clinical outcomes good?" says Mr. Bishop. "Look at case costs — are their cases profitable in the center? This period gives us an opportunity to see how profitable they are for the center."
The trial period also allows the prospective physician to gauge their compatibility with the center. "We want them to trial us," says Mr. Bishop. "We want to make sure they feel like Thursday morning starts at 7:30 a.m. are what they're looking for. If not, committed physician partners may be willing to shift their schedule to bring the new physician prospect in."
If, by the end of the trial period, a physician has performed a number of successful cases and has interacted well with the staff, he should be invited to a board meeting to ask physician partners any outstanding questions and to receive a glimpse into the governance of the surgery center, says Mr. Bishop. If the physician partners and the prospect mutually agree on compatibility, the physician will then be offered a subscription agreement to review, sign and complete investment.
Ultimately, according to Mr. Bishop, measuring a surgery center's open capacity and filling that space with additional physician partners will maximize the surgery center's potential for double-digit growth.
Related Articles on ASC Turnarounds:
7 Steps for Keeping Physicians On Time at ASCs9 Points for ASCs on Achieving Financial Solvency
Which Procedures Do Surgery Centers Perform Most? 40 Statistics on 4 Common Specialties