Some physicians are astute when it comes to the business side of running an ambulatory surgery center, but for others, calculating return on investment and creating a marketing strategy takes them out of their comfort zones.
Kristine Mighion, MD, MBA, managing director and CEO of Healthcare Consultants International and host of Intimetv.com’s Healthcare Executive show, and Marion Lee, MD, MBA, Centers for Pain Management in Tifton, Ga., and immediate past president of the Georgia Society of Interventional Pain Physicians, offer five business lessons for ASC physicians.
1. Keep thorough records and look for trends. Keeping complete records not only allows a physician to better understand the operations of a center, from expenses to case mix to cost per procedure, but also helps identify trends and opportunities for improvement.
"Understanding the importance of accounting and record keeping for any business is key," Dr. Mighion says. "That tends to be an area where doctors are not as strong. They don't get tend to be exposed to those concepts, and they don't tend to think that way."
She says physicians should have their ASCs track number of patients, type and quantity of procedures, as well as total revenues and revenue per procedure. They should review the records monthly or quarterly, and look for trends from month to month, quarter to quarter, and year to year. An analysis of these metrics can inform a physician whether the center does a lot of small procedures with lower returns or fewer large procedures with bigger returns, and as a result can help a physician plan the best procedure mix for the future. This analysis can also detect rising expenses and pinpoint exactly where, when and why the increase took place.
2. Keep track of return on investment. Dr. Mighion says this is a method for physicians to determine how long it takes to recoup money invested in their center. To calculate ROI for an investment,, divide the annual amount of money that investment generates by the total amount invested. For example, if a $100,000 investment in a specific project generates an additional $20,000 each year, the ROI is 20 percent. This also means it will take five years for the center to recoup the physician's original investment. A ROI of 20 percent is a good rate and is typical of what venture capitalists and other investors strive to earn on their investments over five years. However, if a center must invested heavily in capital purchases, such as operating room equipment or a new expansion, then it may be reasonable to plan for a lower ROI and a longer time to breakeven on that investment.
3. Realize how hard it is to manage people. Dr. Mighion says the hardest part of running a business, regardless of whether it's an ASC or an ice cream store, is managing staff, but being aware of and acknowledging that challenge can go a long way.
"If you know that, you can set your expectations and hopefully decrease your frustration level that may arise from managing staff," she says.
A critical component of effective management is adopting a 360-degree management style, which means physicians listen to the complaints and suggestions from staff and staff listens to the complaints and suggestions from the physicians, Dr. Lee says. Allowing staff members to have more say in how the center is run is also a great way to motivate them, he says.
While many centers offer bonuses for motivation, getting employees invested in how the center's success goes further for retaining and recruiting the best employees, he says. Asking staff members to solve a problem, such as how to reduce waiting times to get patients into operating rooms, can motivate employees, and the solution is more likely to be implemented compared to when the order comes from the top down.
4. Develop a strategy. Dr. Mighion says it's important for a center to set goals, develop a strategy for reaching those goals and measure success.
"You can set goals and say this is how we're going to do it, but if you don't know how to measure your success, it's hard to know to what extent you’ve actually succeeded in achieving your goals," she says.
For example, a center might set the goal of getting 100 new patients for a certain procedure by the end of the year. The strategy might be to create a robust marketing plan that targets the right people who are potential patients for that procedure. Success would be determined by whether or not the 100 new patients were obtained, as well as the ROI on that marketing project. Centers should calculate how much money was spent on the marketing plan and how much new revenue came in to see if the plan was successful.
5. Continually market the center. A marketing plan is a specialized part of a center's strategy, Dr. Mighion says. She has seen success with a variety of marketing strategies — including radio, television and print advertisements — and it really comes down to knowing a center's audience and market. For example, if most of a center's patients are older, an Internet-heavy marketing plan might not be the best option, she says. Figuring out who the center should target as possible patients and how, is part of market research, and this can be done in-house if staff has time, or it can be outsourced, she concludes.
Related Articles on ASC Turnarounds:
8 Tricks to Save More Money at Your Surgery Center
10 ASC Must-Reads From the Week of Nov. 14
8 Ways to Involve ASC Physicians in Physician Recruitment
Kristine Mighion, MD, MBA, managing director and CEO of Healthcare Consultants International and host of Intimetv.com’s Healthcare Executive show, and Marion Lee, MD, MBA, Centers for Pain Management in Tifton, Ga., and immediate past president of the Georgia Society of Interventional Pain Physicians, offer five business lessons for ASC physicians.
1. Keep thorough records and look for trends. Keeping complete records not only allows a physician to better understand the operations of a center, from expenses to case mix to cost per procedure, but also helps identify trends and opportunities for improvement.
"Understanding the importance of accounting and record keeping for any business is key," Dr. Mighion says. "That tends to be an area where doctors are not as strong. They don't get tend to be exposed to those concepts, and they don't tend to think that way."
She says physicians should have their ASCs track number of patients, type and quantity of procedures, as well as total revenues and revenue per procedure. They should review the records monthly or quarterly, and look for trends from month to month, quarter to quarter, and year to year. An analysis of these metrics can inform a physician whether the center does a lot of small procedures with lower returns or fewer large procedures with bigger returns, and as a result can help a physician plan the best procedure mix for the future. This analysis can also detect rising expenses and pinpoint exactly where, when and why the increase took place.
2. Keep track of return on investment. Dr. Mighion says this is a method for physicians to determine how long it takes to recoup money invested in their center. To calculate ROI for an investment,, divide the annual amount of money that investment generates by the total amount invested. For example, if a $100,000 investment in a specific project generates an additional $20,000 each year, the ROI is 20 percent. This also means it will take five years for the center to recoup the physician's original investment. A ROI of 20 percent is a good rate and is typical of what venture capitalists and other investors strive to earn on their investments over five years. However, if a center must invested heavily in capital purchases, such as operating room equipment or a new expansion, then it may be reasonable to plan for a lower ROI and a longer time to breakeven on that investment.
3. Realize how hard it is to manage people. Dr. Mighion says the hardest part of running a business, regardless of whether it's an ASC or an ice cream store, is managing staff, but being aware of and acknowledging that challenge can go a long way.
"If you know that, you can set your expectations and hopefully decrease your frustration level that may arise from managing staff," she says.
A critical component of effective management is adopting a 360-degree management style, which means physicians listen to the complaints and suggestions from staff and staff listens to the complaints and suggestions from the physicians, Dr. Lee says. Allowing staff members to have more say in how the center is run is also a great way to motivate them, he says.
While many centers offer bonuses for motivation, getting employees invested in how the center's success goes further for retaining and recruiting the best employees, he says. Asking staff members to solve a problem, such as how to reduce waiting times to get patients into operating rooms, can motivate employees, and the solution is more likely to be implemented compared to when the order comes from the top down.
4. Develop a strategy. Dr. Mighion says it's important for a center to set goals, develop a strategy for reaching those goals and measure success.
"You can set goals and say this is how we're going to do it, but if you don't know how to measure your success, it's hard to know to what extent you’ve actually succeeded in achieving your goals," she says.
For example, a center might set the goal of getting 100 new patients for a certain procedure by the end of the year. The strategy might be to create a robust marketing plan that targets the right people who are potential patients for that procedure. Success would be determined by whether or not the 100 new patients were obtained, as well as the ROI on that marketing project. Centers should calculate how much money was spent on the marketing plan and how much new revenue came in to see if the plan was successful.
5. Continually market the center. A marketing plan is a specialized part of a center's strategy, Dr. Mighion says. She has seen success with a variety of marketing strategies — including radio, television and print advertisements — and it really comes down to knowing a center's audience and market. For example, if most of a center's patients are older, an Internet-heavy marketing plan might not be the best option, she says. Figuring out who the center should target as possible patients and how, is part of market research, and this can be done in-house if staff has time, or it can be outsourced, she concludes.
Related Articles on ASC Turnarounds:
8 Tricks to Save More Money at Your Surgery Center
10 ASC Must-Reads From the Week of Nov. 14
8 Ways to Involve ASC Physicians in Physician Recruitment