The following article is written by Daniel J. Tomes, MD, partner and president of Southwest Lincoln (Neb.) Surgery Center, a Blue Chip Surgical Center Partners facility.
Eighteen months ago, on the eve of opening the Southwest Lincoln Surgery Center (SWLSC), I was very excited about what had been accomplished in developing the business and the opportunities presented by ASC ownership. Specifically, less invasive techniques and advanced technology were driving great advancements in care and continued growth in outpatient spine surgeries. Further, it was clear to me that patients love the comfort and convenience of outpatient surgery centers.
Located on the campus of one of Lincoln's hospitals, the spacious 7,500-square foot center boasts two operating rooms. SWLSC offers a range of services beyond outpatient spinal procedures, including neurosurgical, pain management, ophthalmology, orthopedics, dental, general, and plastic surgery. Although the center has faced its share of obstacles, both foreseen and unforeseen, I find that I am still excited to be an ASC owner. I like treating patients in this environment and remain confident that we will enjoy continued clinical and business excellence.
Overcoming obstacles, exceeding expectations
My primary motivations for investing in an ASC were to:
- work more productively and efficiently;
- partner with the right group of physician-colleagues; and
- pree up more personal time to spend with my family.
There is no doubt that these ideas have turned into reality at SWLSC. But it is important to remember that we had to overcome a number of obstacles to achieve these goals.
For instance, in setting up the ASC business, I faced economic uncertainty, hesitant partners and colleagues too busy to focus on anything other than their patients. To surmount these obstacles, we knew that we needed the right mix of cases, rock-solid contracts and an effective, creative business model that included plans for growth. Lastly, strong relationships with a core group of medical doctors and an experienced business partner were key ingredients for our success. We strove to put all these elements in place.
Outpatient spine in small- and mid-sized markets
Lincoln, the state capitol of Nebraska, has a population of 280,000. The city is home to a large University of Nebraska campus and is a great place to raise a family. The medical community in Lincoln is comprised of two somewhat polarized hospital systems. Most consumers have Blue Cross/Blue Shield insurance, although there are a few smaller plans as well. The challenges posed to us by being located in a small town were not unique to spine ASCs; centers of all kinds face similar difficulties. However, larger towns generally have a greater potential volume of cases.
Finding consistent revenue streams was one of our primary struggles in the center's first few months of operations. We knew opening the center that we would not have sufficient volume to be a "spine-only" center. In addition, many of the doctors had been involved in unsuccessful attempts at developing a new ASC in Lincoln. These attempts failed mainly because the doctors themselves were too busy to complete the necessary legwork and believed in the "build-first" thinking that is prevalent in the industry. Finally, the two competing hospital systems created a barrier in finding new partners, while each also makes it difficult to bring in cases from the other.
In negotiating these obstacles, we defined some key objectives for our center: patient satisfaction, clinical excellence, enhanced surgeon productivity as well as an improved quality of life for our surgeons. To put it simply: We wanted the ability to eat dinner with our families on a regular basis. To achieve our objectives we first had to find the right surgeon-owners. The majority of physicians at SWLSC were already doing their surgical cases at the nearby acute care hospital. There is a combination of younger and experienced partners, all with an unrelenting commitment to success. Next, we had to locate the appropriate business partners. A highly respected neurosurgeon colleague, Dick Roski, MD, counseled us about what qualities to look for in a business partner and directed us to meet with Blue Chip Surgical.
Building the right model
Working with Blue Chip, we formulated the proper business model — one with the right specialty mix, strong contracts and accurate projections. We had to get creative with our case mix. And we know we needed to open clear lines of communication with the neighboring hospital. We worked hard to avoid any "us vs. them" thinking in our dealings with the hospital.
Finally, we worked to establish a strong framework for operational discipline and Blue Chip aided us in the many practical details and requirements for launching a strong ASC business. Those details included architecture and construction, financing, technology and back-office operations. Our business plan was trust-based, with shared risks and rewards. It has been helpful in fostering a culture of excellence at SWLSC, one that supports a quality patient experience, strong patient outcomes and financial success.
Solid results thanks to a creative ppproach
Thanks to our strong plan of action, a strong staff and capable management team, the SWLSC quickly became a clinically distinguished community leader. There are eight surgeon-owners and multiple other surgeons who bring cases to the ASC. Currently, our volume is about 100 cases a month. These case volumes and the associated revenue, which has been solid and steady, have largely met our projections.
Clinically, our patients experience extraordinarily low complication rates, and not one infection has been recorded in our first two years. Our patient satisfaction rates have been very strong, at or above 77 percent. We have become a community leader with a reputation for innovation. We foster and encourage close relationships between surgeons and anesthesiologists.
The key to our success has been mastering the case mix. The ophthalmology and Medicare contracts have made a strong contribution to the business. The mix of surgical procedures with pain management treatments has also worked well, given our flexibility to schedule appointments in predetermined "blocks." Higher-volume pain management treatments are an excellent way to fill in between the lower-volume (but higher-revenue) surgical treatments. We have also worked with workers' compensation programs, which has yielded yet another viable revenue stream.
Another element in our success has been a willingness to be creative with our business. For instance, we decided to participate in the Nebraska state penitentiary care program as means to bolster our case volume and incoming cash.
I have learned a lot about running a successful business in the last 18 months. When operating in a small town, there are limits on your growth, so your center should be multi-specialty. Also, consider taking advantage of different reimbursement options. We have found a winning mix by taking on workers' compensation, eye procedures and Medicare cases. And we have done our best to think outside the box. Don't forget to encourage operational discipline with the center staff; claims, billing, co-pay collection and scheduling are vital to the success of an ASC and cannot be overlooked. That said, it is important to think beyond just the numbers; a culture of trust is just as critical to successful ASCs.
Bright prospects and work to do
The future of SWLSC is bright, but that doesn't mean that we will rest on our laurels. No, we are continually recruiting new partners and seeking "same-store" growth. We actively tend our relationships with both our neighboring hospital and its competing system. There is room for growth and the solid foundation we have in place means we can grow effectively and intelligently, without compromising clinical excellence or our quality patient experience. Financially, we are in solid shape, too. Of course, ASC ownership is not just about making money. I can say that my partners and I are very satisfied with the environment we have created to treat patients and how the center is helping us maintain a high quality of life.
Thank you to Blue Chip Surgical Center Partners for arranging this column. You can learn more about Blue Chip and read more surgeon stories at www.bluechipsurgical.com/insights.
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