Since the recession started affecting patient finances and ASC budgets in 2008, healthcare facilities have struggled to cut costs, increase case volume and negotiate payor contracts that won't sap their profitability.
But despite the doom and gloom in the newspapers over the past few years, not all ASCs have suffered record losses. Craig Bryan, administrator of Gateway Surgery Center in Concord, N.C., says his ASC has seen double-digit growth in volume and revenue every year since 2008. The center has also experienced record profits every successive year.
"When I speak to my peers, a lot of them say, 'How do you do it? How do you make it happen?'" he says. Here he explains 8 steps Gateway Surgery Center took to not only survive, but flourish during a time of widespread economic decline.
1. Isolate your most profitable service lines and concentrate on those. Mr. Bryan says the key to surviving a recession is to focus on the service lines your surgery center can excel with. He says succeeding with a service line means investing in technology to attract physicians, maintaining strong relationships with the physicians in those specialties, hiring and training for those specific specialties and providing better care and outcomes than anyone else in the market. In an ideal world, an ASC would be able to do this with every service line and procedure that was appropriate for the outpatient setting. However, with realistic resources, surgery centers should focus on 2-4 service lines for which they can become "centers of excellence."
He says his surgery center focuses on GI, ENT, orthopedics and general surgery. He says to decide on those specialties, he looked at the market and identified areas that were not being met or maximized. He says when the ASC makes budgeting decisions, it prioritizes the four key service lines and makes sure the physicians are provided with excellent staff, technology and equipment. "Those key service lines — that's where our capital priorities go," he says. "We do a lot of other things — basically anything you can do on an outpatient surgery basis — but our core model is those key specialties."
2. Soften your collections policy. When the economy took a turn for the worse, many ASC administrators responded by implementing strict collections policies. The logic seemed to make sense: If revenue is all-the-more critical to profitability, you have to make sure patients are paying their bills to make money. However, Mr. Bryan says that when the recession hit, his ASC responded in an unusual way — by softening the collections policy and eliminating the mandate that patients pay up-front.
"You don't want the unintentional consequence of losing revenue stream and business because you try to strong-arm patients into paying you," he says. "You don't want to forfeit a dollar to pick up the time. Even if the patient defaults, you will still collect $1,000 or $2,000 from the insurance company." He also says in this economy, you don't want to spread the idea that your surgery center is "all about the money."
Mr. Bryan says surgery centers can help patients pay their bills by asking for a certain percentage of the bill prior to surgery, a certain percentage on the day of surgery and a certain percentage in the weeks or months that follow. "If you can help the patient set up a payment plan, that alleviates the financial burden," he says. "They're still going to owe that money for the surgery, but you can help them manage the financial burden much more effectively." Setting up a payment plan also makes it more likely that you will actually collect from patients, rather than having to send them to bad debt when they start ignoring your calls.
3. Incentivize staff members to collect from patients. If you soften your collections policy, you need a way to make sure you're collecting money from patients, Mr. Bryan says. His center has started a program that incentivizes staff members to collect from patients without being rude or overly persistent. "It's a competitive program, and whoever is the top collector gets a monthly bonus check," Mr. Bryan says. "Everybody has a chance, from our patient financial counselors to our registration staff to our billing office."
The catch: If a staff member receives even one patient complaint during the month, they are disqualified from the program for that month. "You have to be seen as a patient advocate," Mr. Bryan says. "You can't be forceful in your nature."
4. Move collections in-house. Mr. Bryan says his center has moved collections in-house rather than using a third-party company. He says patients find comfort in talking directly with surgery center staff and are more likely to pay their bills or respond to calls because they don't feel that they're "in trouble" with an outside collector.
"We focus on the patient first and we make sure that the patient feels like we're working for them," he says. "We're not just trying to call and collect money." He says the collections team is very upfront about explaining out-of-pocket responsibilities prior to surgery and going through benefits and coverage with patients.
5. Rework block guidelines to grow volume. Mr. Bryan's surgery center has also reworked block guidelines to grow volume. When he arrived at the center, the entire schedule was completely full, and physicians were only required to maintain a 30 percent utilization rate to keep their block. That meant the surgery center was scheduling block time physicians did not consistently fill with cases. He said the center clearly had a lot of time open in the schedule that could be used to make money.
"If you're only scheduling 50 percent of your cases and leaving the other spots open, you end up scheduling many more cases in that open time," he says. Currently, the center blocks about 60 percent of its time and leaves the other 40 percent open. The center physicians must also maintain a 75 percent utilization rate to keep their block time.
6. Add a new service line if possible. While some surgery centers may not have the option to add a new service line, Mr. Bryan says the addition of ophthalmology to his center helped grow volume and improve profitability. He used an interesting strategy to add the service line: Instead of using a large specialty group in a nearby market that competed with the center's existing partners, he sought out a specialty group in nearby Charlotte.
"We tapped into a market that we hadn't previously been in, and we built the ophthalmology up to 500 cases in year one," he says. "It's a mutually beneficial strategy because the physicians tapped into a new [patient] market and we tapped into a new market, too." He says the specialty group was committed to joining the ASC community and helped the transition by building an office in Concord and making an investment in the surgery center.
7. Focus on employee satisfaction. Employee satisfaction is essential if you don't want to continuously re-hire and re-train staff members — which cost more money than retaining a staff member you already employ. Mr. Bryan says his surgery center focuses on leadership rounding, meaning all managers are out on the floor with staff and listening to conversations to make sure they proactively address issues before these issues become problems. He says the center also conducts annual satisfaction surveys and then puts together departmental focus groups to look at the results.
In these focus groups, staff members come up with their own ways to handle the issues at the center. For example, employee recognition recently recorded lower than on previous year's surveys. To solve the problem, staff decided to form a social committee that plans employee recognition events every month. The center now also has boards throughout the facility where staff members can recognize each other with informal notes. The management sends out gift cards and thank you cards to employees who go "above and beyond," and staff members can approach Mr. Bryan and ask him to personally thank an employee who has been working hard. "This stuff has to come from the staff members because each person enjoys being recognized differently," he says.
8. Focus on high volume specialties when negotiating managed care contracts. When negotiating managed care contracts, Mr. Bryan says "you have to decide who you want to be as a business and where you want your focus to be." You probably won't be able to achieve across-the-board increases for your specialties, so focus again on your "centers of excellence" specialties and try to achieve maximum reimbursement in those. "Focus on those high-volume procedures that will ultimately drive the highest top-line revenue," he says. "Get carve-outs wherever possible and provide your insurers with data so they understand what your costs are."
But despite the doom and gloom in the newspapers over the past few years, not all ASCs have suffered record losses. Craig Bryan, administrator of Gateway Surgery Center in Concord, N.C., says his ASC has seen double-digit growth in volume and revenue every year since 2008. The center has also experienced record profits every successive year.
"When I speak to my peers, a lot of them say, 'How do you do it? How do you make it happen?'" he says. Here he explains 8 steps Gateway Surgery Center took to not only survive, but flourish during a time of widespread economic decline.
1. Isolate your most profitable service lines and concentrate on those. Mr. Bryan says the key to surviving a recession is to focus on the service lines your surgery center can excel with. He says succeeding with a service line means investing in technology to attract physicians, maintaining strong relationships with the physicians in those specialties, hiring and training for those specific specialties and providing better care and outcomes than anyone else in the market. In an ideal world, an ASC would be able to do this with every service line and procedure that was appropriate for the outpatient setting. However, with realistic resources, surgery centers should focus on 2-4 service lines for which they can become "centers of excellence."
He says his surgery center focuses on GI, ENT, orthopedics and general surgery. He says to decide on those specialties, he looked at the market and identified areas that were not being met or maximized. He says when the ASC makes budgeting decisions, it prioritizes the four key service lines and makes sure the physicians are provided with excellent staff, technology and equipment. "Those key service lines — that's where our capital priorities go," he says. "We do a lot of other things — basically anything you can do on an outpatient surgery basis — but our core model is those key specialties."
2. Soften your collections policy. When the economy took a turn for the worse, many ASC administrators responded by implementing strict collections policies. The logic seemed to make sense: If revenue is all-the-more critical to profitability, you have to make sure patients are paying their bills to make money. However, Mr. Bryan says that when the recession hit, his ASC responded in an unusual way — by softening the collections policy and eliminating the mandate that patients pay up-front.
"You don't want the unintentional consequence of losing revenue stream and business because you try to strong-arm patients into paying you," he says. "You don't want to forfeit a dollar to pick up the time. Even if the patient defaults, you will still collect $1,000 or $2,000 from the insurance company." He also says in this economy, you don't want to spread the idea that your surgery center is "all about the money."
Mr. Bryan says surgery centers can help patients pay their bills by asking for a certain percentage of the bill prior to surgery, a certain percentage on the day of surgery and a certain percentage in the weeks or months that follow. "If you can help the patient set up a payment plan, that alleviates the financial burden," he says. "They're still going to owe that money for the surgery, but you can help them manage the financial burden much more effectively." Setting up a payment plan also makes it more likely that you will actually collect from patients, rather than having to send them to bad debt when they start ignoring your calls.
3. Incentivize staff members to collect from patients. If you soften your collections policy, you need a way to make sure you're collecting money from patients, Mr. Bryan says. His center has started a program that incentivizes staff members to collect from patients without being rude or overly persistent. "It's a competitive program, and whoever is the top collector gets a monthly bonus check," Mr. Bryan says. "Everybody has a chance, from our patient financial counselors to our registration staff to our billing office."
The catch: If a staff member receives even one patient complaint during the month, they are disqualified from the program for that month. "You have to be seen as a patient advocate," Mr. Bryan says. "You can't be forceful in your nature."
4. Move collections in-house. Mr. Bryan says his center has moved collections in-house rather than using a third-party company. He says patients find comfort in talking directly with surgery center staff and are more likely to pay their bills or respond to calls because they don't feel that they're "in trouble" with an outside collector.
"We focus on the patient first and we make sure that the patient feels like we're working for them," he says. "We're not just trying to call and collect money." He says the collections team is very upfront about explaining out-of-pocket responsibilities prior to surgery and going through benefits and coverage with patients.
5. Rework block guidelines to grow volume. Mr. Bryan's surgery center has also reworked block guidelines to grow volume. When he arrived at the center, the entire schedule was completely full, and physicians were only required to maintain a 30 percent utilization rate to keep their block. That meant the surgery center was scheduling block time physicians did not consistently fill with cases. He said the center clearly had a lot of time open in the schedule that could be used to make money.
"If you're only scheduling 50 percent of your cases and leaving the other spots open, you end up scheduling many more cases in that open time," he says. Currently, the center blocks about 60 percent of its time and leaves the other 40 percent open. The center physicians must also maintain a 75 percent utilization rate to keep their block time.
6. Add a new service line if possible. While some surgery centers may not have the option to add a new service line, Mr. Bryan says the addition of ophthalmology to his center helped grow volume and improve profitability. He used an interesting strategy to add the service line: Instead of using a large specialty group in a nearby market that competed with the center's existing partners, he sought out a specialty group in nearby Charlotte.
"We tapped into a market that we hadn't previously been in, and we built the ophthalmology up to 500 cases in year one," he says. "It's a mutually beneficial strategy because the physicians tapped into a new [patient] market and we tapped into a new market, too." He says the specialty group was committed to joining the ASC community and helped the transition by building an office in Concord and making an investment in the surgery center.
7. Focus on employee satisfaction. Employee satisfaction is essential if you don't want to continuously re-hire and re-train staff members — which cost more money than retaining a staff member you already employ. Mr. Bryan says his surgery center focuses on leadership rounding, meaning all managers are out on the floor with staff and listening to conversations to make sure they proactively address issues before these issues become problems. He says the center also conducts annual satisfaction surveys and then puts together departmental focus groups to look at the results.
In these focus groups, staff members come up with their own ways to handle the issues at the center. For example, employee recognition recently recorded lower than on previous year's surveys. To solve the problem, staff decided to form a social committee that plans employee recognition events every month. The center now also has boards throughout the facility where staff members can recognize each other with informal notes. The management sends out gift cards and thank you cards to employees who go "above and beyond," and staff members can approach Mr. Bryan and ask him to personally thank an employee who has been working hard. "This stuff has to come from the staff members because each person enjoys being recognized differently," he says.
8. Focus on high volume specialties when negotiating managed care contracts. When negotiating managed care contracts, Mr. Bryan says "you have to decide who you want to be as a business and where you want your focus to be." You probably won't be able to achieve across-the-board increases for your specialties, so focus again on your "centers of excellence" specialties and try to achieve maximum reimbursement in those. "Focus on those high-volume procedures that will ultimately drive the highest top-line revenue," he says. "Get carve-outs wherever possible and provide your insurers with data so they understand what your costs are."