Neal Maerki, RN, CASC, administrator of Bend Surgery Center, discusses his center's history and the factors that make the physician-owned facility successful.
Q: Tell me a little about the history of your center.
NM: Well, the surgery center is about 13 years old, and it started out of the usual need of physicians not wanting to be stuck at 11:00 p.m. doing their elective case because they got bumped for trauma cases. There were a couple of physicians doing a procedure late in the evening, saying, "There's got to be a better way." That's what started the whole genesis of the center. It's been 100 percent physician-owned the whole time, and [the previous center] was owned by a large clinic that had a lot of non-proceduralists and non-surgeons who had to be bought out. That was a pretty big challenge because the center had a pretty big debt structure to pay off.
We lost some competing orthopedists that were involved in the center. We also lost an orthopedist to a fellowship, as well as one of our successful general surgeons. That was about nine years ago, and the ownership group has continued to grow to the point where we have 35 owners.
Q: It can be difficult for ASCs to recruit new physicians following the departure of several key players. What was your recruitment strategy?
NM: The strategy of recruiting physicians is constantly reminding physicians that there are two kinds of surgery centers: one that's growing, and one that's dying. I constantly hound the physicians that we should always be recruiting. They'll say, "Case numbers are really good. I guess we don't need to be recruiting." But the best problem we can have is nowhere to put a physician. The thing that's been really helpful is the center has a good success story and a good name in the community. We're a Joint Commission-accredited facility and have been since 1998, and we currently average 10,000 cases a year with pretty much every sub-specialty.
Q: How did you decide to focus on so many different specialties? Is that a function of the type of physicians involved in your center?
NM: Well, it's a function of the community and the fact that my philosophy is to push on the revenue pedal. To push on the revenue pedal, you have to develop volume. If you have five or six neuro guys doing spine, you don't need a lot of volume. If you're going to do everything else, you [need that volume]. We have the second largest medical group in Bend, Oregon, and we have physicians — ophthalmologists in particular — that are [spread] over three clinical practices. It's a facility that can bring specialists together as individual owners and they don't have to vote on party lines. It's been a huge success that physicians are able to see, "I can be a plastic surgeon and I can be an owner with another two plastic surgeons."
Q: That kind of physician collaboration is sought after in many ASCs. How do you communicate with physicians and make sure their concerns are heard?
NM: We have a very horizontal management team. We have me as the administrator, and we have a nurse manager and then we have a business office manager and a controller, and that's the extent of my administration for almost 90 employees. Physicians know if they have an issue, it can get brought up through the chain very quickly. One recent example was in our dictation area. One physician said, "I don't always have a pen. Can we get a pen holder and a bunch of pens?" Another physician asked if we could get a clock. Those are easy things we can respond to quickly and have in place for the next time a physician shows up. That might not happen in a hospital.
The same holds true on equipment purchases. They don't get everything they want, but if it's something that makes sense, we look at it and see if there's a reasonable ROI on the item they're asking about. It's about being very responsive to their concerns.
We [also] do quarterly distributions. They get a quarterly newsletter that goes out in the mail, and if there are any issues to be voted on, ballots go out in the mail. Because everything comes in a packet, we don't have any physicians saying, "I didn't get the quarterly newsletter." Then we would say, "Well, you cashed your distribution check."
Q: What kind of experience have you had with payors?
NM: I became the administrator here in 2007, and prior to that I was the nurse manager. We ended up going to a third-party negotiator when I took over [as administrator], and that has been very beneficial in increasing our net revenue. There are multiple pieces that make it a benefit: one, the [third-party negotiator] knows what everybody else is getting. They can't tell you that surgery center B and C got exactly this amount, but they can tell you whether you should settle on what you're being offered. They can tell you if you're in the ballpark.
The third party also has the ability to show the benefit [of working with your surgery center] to the insurers. They can say, "If you're willing to give a decent contract to the ASC, the ASC is going to be able to bring these cases out of the hospital and perform them at a lot lower reduction than what you're paying at the hospital." The response from the insurer is, "We don't do that for other ASCs," and the third-party negotiator can say, "Well, are those other ASCs able to bring out those cases that make it worthwhile?" If you bring some of the spine cases from the hospital, or some ACL cases or sinus cases from the hospital, you can demonstrate a benefit.
A third party is beneficial because we're a multi-specialty center. If we were a single-specialty center, it wouldn't be so hard to put all the procedures we perform into a couple of spreadsheets. But if we have to go through all these specialties, it starts to become pretty immense.
Q: We've talked about your strategies for increasing revenue, so I'd love to focus on the other side: cutting cost. What do you do to trim expenses?
NM: Well, one of the things we've talked about with physicians is that there's always the relationship of convenience vs. profitability, and it's an inverse relationship. We don't compress schedules as do many ASCs that have management companies, and physicians are happy with returns to maintain convenience. The cost to convenience is added staffing, which they see when we present them with an annual budget. As long as they're okay with that piece, [we let them make the decision].
We've saved money on some other areas by being able to negotiate with different vendors. We don't allow vendors to bring new products into the facility until they've discussed with me and we've talked about price. A physician can't just call in a vendor, because once the physician has driven the Ferrari, it's hard to talk about the price. The physician has a big grin and the rep sees that, so I have no leverage. I want to talk about prices before we even trial it. We did that with video systems and we were able to save a tremendous amount of money. Reps will say, "Don't you want to do a side-by-side comparison?" and I say, "Not until we finalize pricing."
Another thing we're looking at in Oregon is working on our own GPO. We want to chain up ASCs who aren't involved with a corporate partner or a hospital. We're utilizing that through an LLC model to pull some of the larger ASCs in the state. We want to be able to negotiate with vendors and say, "Here's the volume we can bring you today, but as more facilities join us, that volume will increase." Right off the bat, we've had some success. We have about five centers involved, and we're at the stage where we're negotiating with large vendors that we utilize for sports medicine implants and fixation implants.
Q: Do you have any tips for keeping staff happy and retaining key members?
NM: I would say that one of the things a lot of facilities don't recognize is the importance of staff. We have a very long-tenured staff. We have 14 staff members with 10 or more years at the center, and we have 22 staff members with more than five years, so there are really 36 members who have more than five years experience. Unfortunately, facilities often discount the value of staff. We say we have three customers: the physician, the patient and the staff. We've got to treat all of them well.
We have a quarterly bonus program. We recently made a small modification to that and instituted a mandatory staff meeting policy … and staff members know when the monthly meetings are well in advance. You have to be signed in by 7:00 a.m. or have an excuse approved by your supervisor. If you miss one of the three meetings in the quarter, that's a 20 percent reduction in your bonus for the quarter, and whatever is forfeited is returned to the rest of the staff who attended all three meetings.
We also have a very strong benefit package and profit-sharing retirement plan. We have good medical, dental and vision insurance and we have seven paid holidays a year. It's a very strong benefit package. We have a hospital across the street that we compete with, and we try to stay on their coattails.
Q: Have you made any moves toward adopting EMR?
NM: I was wondering when you were going to ask about that. We moved to ProVation MD [about nine months ago], and we're currently using that for GI physicians, pain physicians and ophthalmology. We've reduced our transcription cost by half already through utilizing that system. We're slowly phasing in the different specialties, but those [three] made the most sense since they have the largest volume. We are looking at an EMR system which is also ProVation. We have HST for our practice management system, and we love that. The numbers that come out of reports are very solid, and a benefit is that HST interfaces with ProVation. It's easy to get caught up in looking at cost savings from EMR, but from the clinical side, my background says I don't want to give the physician a system that doesn't work well.
Q: How did you decide on the systems you use?
NM: We visited five different centers, which I would highly recommend to anybody. When you visit centers, you learn more about what you don't want to do than what you want to do. When we built our current building five years ago, we did the same thing — we looked at centers and determined what we wanted. When we were looking at EHR, everybody was using a hybrid. They had a physical chart and an electronic system, and we wanted to be able to go fully electronic. Some of the stumbling blocks are that in a physical chart, there are lots of physical cues. We have all these stickers — a HIPAA sticker, a lymphedema sticker, advanced directives stickers, stickers for allergies. ProVation developed an alerts page, so every time a caregiver signs into the chart, the first thing that pops up is the alerts page. There's no way to say you didn't see these [warnings and notices that replace the physical cues in the chart].
Q: Training on an EMR can be difficult for ASCs, as it can require sacrificing case volume or experiencing physician and staff frustration. How did you structure your training process for ProVation MD?
NM: We did training ahead of time. We have some power users, and they have essentially trained to be a super user. Then we worked with physicians for about four hours prior to them actually using it. On the day [of go-live], it took five or six cases with the staff before they said, "Okay, we've got it." Even though we don't have the EHR in place yet, we're committed to it, and we started looking at EHR probably seven years ago. Because of my clinical background, I'm not willing to put in a system that won't be successful. We've seen a local hospital on their second system now, and there's nothing worse than doing it twice.
Q: You mentioned that you visited other centers while you were planning to build a new center. What did you learn about "what not to do"?
NM: We learned that overnight stay private recovery rooms without demonstrated volume become white elephants. You basically have a hospital patient room that doesn't get utilized very well and becomes a storage facility. You have to be very careful about how many of those you put in. It's easy from an architectural standpoint to build a building that looks pretty and appealing, but it may not be functional where it needs to be. Thankfully, the architecture firm we worked with was responsive.
Q: Tell me a little about the history of your center.
NM: Well, the surgery center is about 13 years old, and it started out of the usual need of physicians not wanting to be stuck at 11:00 p.m. doing their elective case because they got bumped for trauma cases. There were a couple of physicians doing a procedure late in the evening, saying, "There's got to be a better way." That's what started the whole genesis of the center. It's been 100 percent physician-owned the whole time, and [the previous center] was owned by a large clinic that had a lot of non-proceduralists and non-surgeons who had to be bought out. That was a pretty big challenge because the center had a pretty big debt structure to pay off.
We lost some competing orthopedists that were involved in the center. We also lost an orthopedist to a fellowship, as well as one of our successful general surgeons. That was about nine years ago, and the ownership group has continued to grow to the point where we have 35 owners.
Q: It can be difficult for ASCs to recruit new physicians following the departure of several key players. What was your recruitment strategy?
NM: The strategy of recruiting physicians is constantly reminding physicians that there are two kinds of surgery centers: one that's growing, and one that's dying. I constantly hound the physicians that we should always be recruiting. They'll say, "Case numbers are really good. I guess we don't need to be recruiting." But the best problem we can have is nowhere to put a physician. The thing that's been really helpful is the center has a good success story and a good name in the community. We're a Joint Commission-accredited facility and have been since 1998, and we currently average 10,000 cases a year with pretty much every sub-specialty.
Q: How did you decide to focus on so many different specialties? Is that a function of the type of physicians involved in your center?
NM: Well, it's a function of the community and the fact that my philosophy is to push on the revenue pedal. To push on the revenue pedal, you have to develop volume. If you have five or six neuro guys doing spine, you don't need a lot of volume. If you're going to do everything else, you [need that volume]. We have the second largest medical group in Bend, Oregon, and we have physicians — ophthalmologists in particular — that are [spread] over three clinical practices. It's a facility that can bring specialists together as individual owners and they don't have to vote on party lines. It's been a huge success that physicians are able to see, "I can be a plastic surgeon and I can be an owner with another two plastic surgeons."
Q: That kind of physician collaboration is sought after in many ASCs. How do you communicate with physicians and make sure their concerns are heard?
NM: We have a very horizontal management team. We have me as the administrator, and we have a nurse manager and then we have a business office manager and a controller, and that's the extent of my administration for almost 90 employees. Physicians know if they have an issue, it can get brought up through the chain very quickly. One recent example was in our dictation area. One physician said, "I don't always have a pen. Can we get a pen holder and a bunch of pens?" Another physician asked if we could get a clock. Those are easy things we can respond to quickly and have in place for the next time a physician shows up. That might not happen in a hospital.
The same holds true on equipment purchases. They don't get everything they want, but if it's something that makes sense, we look at it and see if there's a reasonable ROI on the item they're asking about. It's about being very responsive to their concerns.
We [also] do quarterly distributions. They get a quarterly newsletter that goes out in the mail, and if there are any issues to be voted on, ballots go out in the mail. Because everything comes in a packet, we don't have any physicians saying, "I didn't get the quarterly newsletter." Then we would say, "Well, you cashed your distribution check."
Q: What kind of experience have you had with payors?
NM: I became the administrator here in 2007, and prior to that I was the nurse manager. We ended up going to a third-party negotiator when I took over [as administrator], and that has been very beneficial in increasing our net revenue. There are multiple pieces that make it a benefit: one, the [third-party negotiator] knows what everybody else is getting. They can't tell you that surgery center B and C got exactly this amount, but they can tell you whether you should settle on what you're being offered. They can tell you if you're in the ballpark.
The third party also has the ability to show the benefit [of working with your surgery center] to the insurers. They can say, "If you're willing to give a decent contract to the ASC, the ASC is going to be able to bring these cases out of the hospital and perform them at a lot lower reduction than what you're paying at the hospital." The response from the insurer is, "We don't do that for other ASCs," and the third-party negotiator can say, "Well, are those other ASCs able to bring out those cases that make it worthwhile?" If you bring some of the spine cases from the hospital, or some ACL cases or sinus cases from the hospital, you can demonstrate a benefit.
A third party is beneficial because we're a multi-specialty center. If we were a single-specialty center, it wouldn't be so hard to put all the procedures we perform into a couple of spreadsheets. But if we have to go through all these specialties, it starts to become pretty immense.
Q: We've talked about your strategies for increasing revenue, so I'd love to focus on the other side: cutting cost. What do you do to trim expenses?
NM: Well, one of the things we've talked about with physicians is that there's always the relationship of convenience vs. profitability, and it's an inverse relationship. We don't compress schedules as do many ASCs that have management companies, and physicians are happy with returns to maintain convenience. The cost to convenience is added staffing, which they see when we present them with an annual budget. As long as they're okay with that piece, [we let them make the decision].
We've saved money on some other areas by being able to negotiate with different vendors. We don't allow vendors to bring new products into the facility until they've discussed with me and we've talked about price. A physician can't just call in a vendor, because once the physician has driven the Ferrari, it's hard to talk about the price. The physician has a big grin and the rep sees that, so I have no leverage. I want to talk about prices before we even trial it. We did that with video systems and we were able to save a tremendous amount of money. Reps will say, "Don't you want to do a side-by-side comparison?" and I say, "Not until we finalize pricing."
Another thing we're looking at in Oregon is working on our own GPO. We want to chain up ASCs who aren't involved with a corporate partner or a hospital. We're utilizing that through an LLC model to pull some of the larger ASCs in the state. We want to be able to negotiate with vendors and say, "Here's the volume we can bring you today, but as more facilities join us, that volume will increase." Right off the bat, we've had some success. We have about five centers involved, and we're at the stage where we're negotiating with large vendors that we utilize for sports medicine implants and fixation implants.
Q: Do you have any tips for keeping staff happy and retaining key members?
NM: I would say that one of the things a lot of facilities don't recognize is the importance of staff. We have a very long-tenured staff. We have 14 staff members with 10 or more years at the center, and we have 22 staff members with more than five years, so there are really 36 members who have more than five years experience. Unfortunately, facilities often discount the value of staff. We say we have three customers: the physician, the patient and the staff. We've got to treat all of them well.
We have a quarterly bonus program. We recently made a small modification to that and instituted a mandatory staff meeting policy … and staff members know when the monthly meetings are well in advance. You have to be signed in by 7:00 a.m. or have an excuse approved by your supervisor. If you miss one of the three meetings in the quarter, that's a 20 percent reduction in your bonus for the quarter, and whatever is forfeited is returned to the rest of the staff who attended all three meetings.
We also have a very strong benefit package and profit-sharing retirement plan. We have good medical, dental and vision insurance and we have seven paid holidays a year. It's a very strong benefit package. We have a hospital across the street that we compete with, and we try to stay on their coattails.
Q: Have you made any moves toward adopting EMR?
NM: I was wondering when you were going to ask about that. We moved to ProVation MD [about nine months ago], and we're currently using that for GI physicians, pain physicians and ophthalmology. We've reduced our transcription cost by half already through utilizing that system. We're slowly phasing in the different specialties, but those [three] made the most sense since they have the largest volume. We are looking at an EMR system which is also ProVation. We have HST for our practice management system, and we love that. The numbers that come out of reports are very solid, and a benefit is that HST interfaces with ProVation. It's easy to get caught up in looking at cost savings from EMR, but from the clinical side, my background says I don't want to give the physician a system that doesn't work well.
Q: How did you decide on the systems you use?
NM: We visited five different centers, which I would highly recommend to anybody. When you visit centers, you learn more about what you don't want to do than what you want to do. When we built our current building five years ago, we did the same thing — we looked at centers and determined what we wanted. When we were looking at EHR, everybody was using a hybrid. They had a physical chart and an electronic system, and we wanted to be able to go fully electronic. Some of the stumbling blocks are that in a physical chart, there are lots of physical cues. We have all these stickers — a HIPAA sticker, a lymphedema sticker, advanced directives stickers, stickers for allergies. ProVation developed an alerts page, so every time a caregiver signs into the chart, the first thing that pops up is the alerts page. There's no way to say you didn't see these [warnings and notices that replace the physical cues in the chart].
Q: Training on an EMR can be difficult for ASCs, as it can require sacrificing case volume or experiencing physician and staff frustration. How did you structure your training process for ProVation MD?
NM: We did training ahead of time. We have some power users, and they have essentially trained to be a super user. Then we worked with physicians for about four hours prior to them actually using it. On the day [of go-live], it took five or six cases with the staff before they said, "Okay, we've got it." Even though we don't have the EHR in place yet, we're committed to it, and we started looking at EHR probably seven years ago. Because of my clinical background, I'm not willing to put in a system that won't be successful. We've seen a local hospital on their second system now, and there's nothing worse than doing it twice.
Q: You mentioned that you visited other centers while you were planning to build a new center. What did you learn about "what not to do"?
NM: We learned that overnight stay private recovery rooms without demonstrated volume become white elephants. You basically have a hospital patient room that doesn't get utilized very well and becomes a storage facility. You have to be very careful about how many of those you put in. It's easy from an architectural standpoint to build a building that looks pretty and appealing, but it may not be functional where it needs to be. Thankfully, the architecture firm we worked with was responsive.