At the 9th Annual Orthopedic, Spine and Pain Management-Driven ASC Conference, Robert Carrera, president of Pinnacle III, Peggy Price, president and COO of Exempla Lutheran Medical Center, Diane Lampron, RN, BSN, CNOR, administrator of Lutheran Campus ASC and director of operations for Pinnacle III, and Nelson Mozia, MD, president of the board of managers at Lutheran Campus Ambulatory Surgery Center, discussed how Pinnacle III worked with surgeons and Exempla Lutheran Medical Center to fix a failing joint venture.
Mr. Carrera began the presentation by describing the joint venture set up by 29 multi-specialty physicians and Exempla Lutheran Medical Center. The surgery center was set up in 2006 and included specialties such as general surgery, pain, plastics, podiatry and gynecology. The partnership "should have been a great match," Mr. Carerra said, but by 2008, it was clear that the ASC was failing. Staff turnover was high, and physicians were dissatisfied with the center's performance. In 2008, the center was performing approximately 170 cases per month and was projected to lose $1.2 million.
Dr. Mozia said the failure of the initial joint venture was a surprise to the surgeons and the hospital; the surgeons involved in the surgery center were loyal and busy, and he was "sure we could not fail." However, once staff turnover started to climb, physicians felt less comfortable bringing cases to the center, and volume dropped considerably.
In 2008, Exempla Lutheran hired Pinnacle III to address the problems in the failing surgery center. Pinnacle had several goals to improve profitability and satisfaction, including:
1. Improving surgery center care.
2. Transitioning the employment model from ASC staff being employed by the management company to staff being employed by the surgery center.
3. Reminding physicians of their responsibilities to bring cases.
4. Improving collections.
5. Acquiring capital to help recoup losses.
In 2009, Ms. Price said the center "cleaned up its operations"; because of its hospital partnership, the ASC already had good payor contracts but needed to increase volume. By 2010, the center needed to make distributions to physicians and change its debt structure by refinancing. The center was also able to achieve a two-year break in rent from its landlord.
Ms. Lampron discussed the strategies she took to turn the center around by improving operations. She said she "dug into accounts payable" to determine where the center's expenses lay and rebuild relationships with vendors and distributors that had soured when the center's accounts payable lapsed. The center brought in outside billing consultants to review the ASC's accounts and made sure payor contracts were loaded correctly into the system.
In 2008, Ms. Lampron said the center's days in A/R were at 108; today, they sit in the 30s.
Ms. Lampron also found that while the center was a member of a group purchasing organization, GPO contracts were often not applied. She ended up changing distributors for many items and hiring new materials staff to effectively manage the center's supplies. The center also updated physician preference cards to ensure the right supplies were being ordered. She also changed scheduling practices to make sure schedulers understood "red flag cases," such as Medicare cases with implants.
Since the center's physicians were not confident in the ability of the operating room staff, Ms. Lampron re-evaluated the necessary experience and education levels for each position and hired experienced ASC staff members to join the facility. She also hired a great OR supervisor, and since the changes, the physicians have noted the staff's expertise.
Learn more about Pinnacle III.
Related Articles on Surgery Center Joint Ventures:
The Christ Hospital Spine Surgery Center: A Case Study in Successful ASC Partnerships
Forming a Successful 3-Way Joint Venture: Lessons From Alegent Health Back & Spine Institute
Healthcare Transactions and Valuation: The Year in Review
Mr. Carrera began the presentation by describing the joint venture set up by 29 multi-specialty physicians and Exempla Lutheran Medical Center. The surgery center was set up in 2006 and included specialties such as general surgery, pain, plastics, podiatry and gynecology. The partnership "should have been a great match," Mr. Carerra said, but by 2008, it was clear that the ASC was failing. Staff turnover was high, and physicians were dissatisfied with the center's performance. In 2008, the center was performing approximately 170 cases per month and was projected to lose $1.2 million.
Dr. Mozia said the failure of the initial joint venture was a surprise to the surgeons and the hospital; the surgeons involved in the surgery center were loyal and busy, and he was "sure we could not fail." However, once staff turnover started to climb, physicians felt less comfortable bringing cases to the center, and volume dropped considerably.
In 2008, Exempla Lutheran hired Pinnacle III to address the problems in the failing surgery center. Pinnacle had several goals to improve profitability and satisfaction, including:
1. Improving surgery center care.
2. Transitioning the employment model from ASC staff being employed by the management company to staff being employed by the surgery center.
3. Reminding physicians of their responsibilities to bring cases.
4. Improving collections.
5. Acquiring capital to help recoup losses.
In 2009, Ms. Price said the center "cleaned up its operations"; because of its hospital partnership, the ASC already had good payor contracts but needed to increase volume. By 2010, the center needed to make distributions to physicians and change its debt structure by refinancing. The center was also able to achieve a two-year break in rent from its landlord.
Ms. Lampron discussed the strategies she took to turn the center around by improving operations. She said she "dug into accounts payable" to determine where the center's expenses lay and rebuild relationships with vendors and distributors that had soured when the center's accounts payable lapsed. The center brought in outside billing consultants to review the ASC's accounts and made sure payor contracts were loaded correctly into the system.
In 2008, Ms. Lampron said the center's days in A/R were at 108; today, they sit in the 30s.
Ms. Lampron also found that while the center was a member of a group purchasing organization, GPO contracts were often not applied. She ended up changing distributors for many items and hiring new materials staff to effectively manage the center's supplies. The center also updated physician preference cards to ensure the right supplies were being ordered. She also changed scheduling practices to make sure schedulers understood "red flag cases," such as Medicare cases with implants.
Since the center's physicians were not confident in the ability of the operating room staff, Ms. Lampron re-evaluated the necessary experience and education levels for each position and hired experienced ASC staff members to join the facility. She also hired a great OR supervisor, and since the changes, the physicians have noted the staff's expertise.
Learn more about Pinnacle III.
Related Articles on Surgery Center Joint Ventures:
The Christ Hospital Spine Surgery Center: A Case Study in Successful ASC Partnerships
Forming a Successful 3-Way Joint Venture: Lessons From Alegent Health Back & Spine Institute
Healthcare Transactions and Valuation: The Year in Review