At the 19th Annual Ambulatory Surgery Centers Conference in Chicago on Oct. 26, Douglas Melton, CPA, finance director for Helena (Mont.) Surgicenter, and Marti Potter, administrator of Jersey Shore Ambulatory Surgery Center in Somers Point, N.J., discussed challenging issues facing surgery center administrators in a panel moderated by Melissa Szabad, partner of McGuireWoods.
1. Competition over procedures. First, Mr. Melton commented on the challenges associated with competition in the market place. Helena Surgicenter was built in 1998 and has been the only ASC in the area since. Helena, Mont., is a small community of 25,000 individuals, and the surrounding valley area only has about 10,000 residents. Despite the small population, another surgery center is being built close by.
"We did not have a non-compete clause, so a physician and a dentist who are owners at Helena Surgicenter are opening the new center. It is a unique challenge because it will result in about a 24 percent reduction in the number of procedures we do. We are scrambling to figure out how to replace that volume," said Mr. Melton.
2. Outsourcing. According to Ms. Potter, outsourcing can be a challenge for administrators. "The amount of services you outsource will depend on where [the surgery center] is located. We are in southern New Jersey, so we are not near a big city to support services that we could do in-house. Usually we outsource our accounting and preventive maintenance, but there is an ongoing list," said Ms. Potter.
Mr. Melton also outsources preventive maintenance on the surgery center's equipment, but said that most administrative and house-keeping duties are done in-house.
3. Volume versus ownership disputes. According to Mr. Melton, a big challenge for his surgery center is negotiations between physicians over ownership and volume amounts.
"Due to physicians coming in to the surgery center and then leaving, we have had ownership percentage change over time. At one point, general surgery and obstetrics and gynecology owned 45 percent of the shares with orthopedics owning 35 percent— taking the hospital's ownership out of the equation," said Mr. Melton. "Orthopedics does 46 percent of volume though, so there is constant internal politics related to the distributions and the notion on the part of the orthopedic surgeons. They think we should distribute shares based on volume rather than on ownership percentage."
4. Physician recruitment. Another challenge for administrators is physician recruitment. "We are constantly trying to re-evaluate how to recruit new physicians with an affordable investment option for them. It is one of the things that we often outsource because sometimes familiarity breeds contempt," said Mr. Melton. "Sometimes you need an outside expert to come in and give a fresh perspective."
8 Qualities of Forward-Thinking ASC Administrators
1. Competition over procedures. First, Mr. Melton commented on the challenges associated with competition in the market place. Helena Surgicenter was built in 1998 and has been the only ASC in the area since. Helena, Mont., is a small community of 25,000 individuals, and the surrounding valley area only has about 10,000 residents. Despite the small population, another surgery center is being built close by.
"We did not have a non-compete clause, so a physician and a dentist who are owners at Helena Surgicenter are opening the new center. It is a unique challenge because it will result in about a 24 percent reduction in the number of procedures we do. We are scrambling to figure out how to replace that volume," said Mr. Melton.
2. Outsourcing. According to Ms. Potter, outsourcing can be a challenge for administrators. "The amount of services you outsource will depend on where [the surgery center] is located. We are in southern New Jersey, so we are not near a big city to support services that we could do in-house. Usually we outsource our accounting and preventive maintenance, but there is an ongoing list," said Ms. Potter.
Mr. Melton also outsources preventive maintenance on the surgery center's equipment, but said that most administrative and house-keeping duties are done in-house.
3. Volume versus ownership disputes. According to Mr. Melton, a big challenge for his surgery center is negotiations between physicians over ownership and volume amounts.
"Due to physicians coming in to the surgery center and then leaving, we have had ownership percentage change over time. At one point, general surgery and obstetrics and gynecology owned 45 percent of the shares with orthopedics owning 35 percent— taking the hospital's ownership out of the equation," said Mr. Melton. "Orthopedics does 46 percent of volume though, so there is constant internal politics related to the distributions and the notion on the part of the orthopedic surgeons. They think we should distribute shares based on volume rather than on ownership percentage."
4. Physician recruitment. Another challenge for administrators is physician recruitment. "We are constantly trying to re-evaluate how to recruit new physicians with an affordable investment option for them. It is one of the things that we often outsource because sometimes familiarity breeds contempt," said Mr. Melton. "Sometimes you need an outside expert to come in and give a fresh perspective."
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