Surgeons make excellent business decisions if they have quality information and trust their business partners. Here's a corollary: ASCs can be highly profitable businesses if they have effective administrators.
In my 20-plus years in the healthcare and ASC business, I've come to view administrators as absolutely essential to financial, operational and clinical success. Obviously, the final area is the most important. Quality patient care always comes first, but the business matters a lot, too. That's why clinically distinguished, profitable ASCs need experienced, multi-talented administrators. If you're planning a new ASC or need to turn around an underperforming one, recruiting the right administrator should be near the top of your agenda.
To make sure you get the right people in place, you need detailed qualification lists, training guidelines and operating manuals. Further, once ASCs are launched, administrators may need support and direction from a skilled business partner to ensure the business is managed in line with best practices and proven operational benchmarks, and so that they're not personally overwhelmed by all they need to do to run a strong center.
This article will focus on what administrators need to know and do in a three key areas:
• Financial management
• Legal, regulatory and licensing issues
• Clinical excellence
I'll also provide some insight about the personal characteristics of highly effective administrators.
Financial management
Administrators must have a clear understanding of the business and financial management requirements of successful ASCs. Typically, that starts with knowledge of balance sheets, income statements and cash flow statements –– the three primary financial statements used under "Generally Accepted Accounting Principles" (GAAP). Other key areas include:
Start-up: When starting an ASC and initiating operations, administrators must know how to:
• establish an accounting system and appropriate controls;
• understand pro-forma financial metrics used for reporting and management;
• account for and recognize revenues;
• develop a fee schedule;
• apply depreciation to various assets; and
• establish and maintain productive working relationships with key supply, equipment and service providers.
Asset management: Key concepts of which administrators should have working knowledge include:
• cash and working capital;
• inventory management; and
• fixed assets.
Accounts receivable/accounts payable: Administrators are responsible for ensuring claims are distributed to Medicare and third-party payors and are paid in a timely fashion, and that the ASC pays its bills, too, while keeping appropriate reserves and balances in all accounts.
Reimbursement: The greater an administrator's knowledge of reimbursement rates and payor contracts, the more likely an ASC is to be successful. Beyond getting the big picture –– that the goal is to handle large volumes of low-cost procedures with advantageous reimbursements –– they should know the details of:
• reimbursement rates for Medicare, health plans and other types of payors;
• implications of out-of-network vs. in-network; and
• workers' compensation cases.
Financial management and reporting: These factors involve the strategic management of the business and performance assessment:
• Financial analysis
• Audits/taxes
• Quarterly and year-end reporting
Budgeting: Financial success starts with careful, accurate budgeting. Administrators will:
• establish the budgeting process;
• define and update operational and capital budgets; and
• provide variance analysis –– budgeted vs. actual.
Obviously, this is a full slate of activities and responsibilities, and not every administrator will have advanced knowledge in all of them. Templates and pro forma models can assist administrators in getting up to speed, while business partners should be available for consultation on an as-needed basis.
Legal, regulatory & licensing issues
Administrators, like everyone in healthcare, must meet a wide range of legal, regulatory and licensing requirements. It's a huge part of the job, requiring close attention to detail and strong organizational skills, especially since regulations change frequently. Here are the main areas that must be addressed:
• State certification: Variations by state can make this a challenging task
• Medicare regulations for ASCs
• Governance: managing and following up on the work of patient care and medical advisory committees, and the board
• Compliance plans: state regulations for physician, employee and patient conduct
• Medical staff credentialing and privileging, including verification of records for new surgeons and ongoing updates for DEA, state boards etc.; managing credentialing service companies
• Employment law
• Reporting adverse events
• Taxation and pension planning
• Anti-trust, anti-kickback and self-referral laws
It's a lot to keep up with, and that's why the ASC ownership should look to their business partners for extra support with standard forms, document workflows and extensive record-keeping checklists. On the plus side, administrators can work directly with legislators and regulators, and shape the legal landscape of the industry. The Ambulatory Surgery Center Association and state ambulatory surgery associations are excellent outlets for administrators to advocate for their centers.
Clinical excellence
While patients always comes first in ASCs, administrators play a critical role in helping ASCs balance the imperative for clinical quality and operational efficiency by overseeing the following:
• Determining clinical goals (e.g., patient satisfaction targets, new procedures, benchmarks) in conjunction with the medical director, and effectively managing resources to achieve the goals
• Managing quality improvement processes
• Supervising and directing all ASC personnel on a daily basis
• Keeping an "open-door" policy and making regular rounds through the facility
• Maintaining collegial relationships with physicians
• Fostering a healthy working environment that promotes staff growth and development
• Ensuring adherence to ASC policies
• Serving as a liaison with other health care providers in the community, promoting the ASC's reputation and maintaining strong networks with suppliers and service providers
• Creating and implementing physician recruitment and retention programs
As for the patient experience, administrators are most responsible for creating a warm, welcoming environment and a sense of patient intimacy. If there's a single top priority, it is being visible and available at all times to support surgeons and staff in meeting patient needs.
Finding and keeping great administrators
It's not just knowledge that makes a great administrator. Qualifications, background and temperament have a lot to do with success. Based on our experience with profitable and clinically outstanding ASCs, we have developed a clear profile of effective ASC administrators:
Qualifications and temperament: In a perfect world, administrators are registered nurses (RNs) who also hold graduate business degrees (preferably MBAs). Such people are hard to find, but the combination of degrees reflects the dual nature of the ASC administrator position. If you can't find an RN-MBA, it's better to have an RN, because the clinical success is the top priority and a strong business office manager can provide support with financial management. Further, the best administrators are typically:
• natural leaders who know how to delegate (both up and down);
• skilled communicators, great listeners and strong motivators;
• knowledgeable about the healthcare industry;
• team players;
• highly organized and detail-oriented;
• calm under pressure;
• unfailingly honest and trustworthy;
• capable of answering to many people, including patients, surgeons and other staff;
• eternally smiling and pleasant with patients; and
• superhumanly energetic.
Recruitment and training: Candidates should be carefully screened and verified, including those recommended by surgeon-owners. Ongoing training and education programs can help administrators strengthen skills or knowledge in specific areas, and stay on top of the latest industry trends.
Compensation: Administrators should generally be employees of the ASC business/partnership, not employed by investors, like a management partner or hospital. This ensures that the administrator's loyalty is clear. Compensation should include a competitive base salary and a bonus payable at the time of profit distributions to the partners.
Bottom line
When it comes to the role of skilled, experienced administrators in successful ASCs, you can pick your metaphor –– they are the keystone, the backbone, the heart and soul, the secret sauce, the engine that powers the business. That's why it's worth investing time and effort in finding the right administrators and supporting them over the long term. They are critical to paying off the full promise of ASCs for patients, physicians and payors.
Learn more about Blue Chip Surgical Center Partners.