Ambulatory Surgery Center Outlook for 2010

With 2009 closed, the preparation for a successful 2010 is here. Most centers have considered the trends and utilization by surgeons and begun the budgeting process to establish goals and objectives for 2010. When setting those goals, the greatest factor for existing centers is capturing the appropriate cases from prior utilizers and recruiting new cases from surgeons seeking the efficiency of an ambulatory surgery center (ASC). Management team members need to assess their individual challenges at their center and work to contain cost, improve production and eliminate waste. Similarly, physician partners need to assess their role in the center in assisting the cost control, reviewing data on cost, preference items and consider case adoption when appropriate.

For centers under development or under consideration, team members should be recasting projections, timelines and fully understanding the progression from planning to operations making assurances that the plan reflects today’s environment. As the economy continues to remain slower than anticipated, the economic downturn results in the need for all members of the partnership to personally guarantee loans, there is additional scrutiny of the deal points, terms are aggressive and the process is slower than in past history.

In general, 2010 has many positive aspects to consider. From an operational aspect the decrease in professional fees result in surgeons seeking an ambulatory setting for partnership as well as the need for efficiencies to impact their total practice. The investment in an ASC is often a great stabilizer to a physician base attempting to control their surgical environment and production. An ASC could be formed easily around a smaller core group of physicians to assist in attaining their goals. As with any partnership, the greater affinity for the groups’ cohesiveness the greater focus on core principles and alignment.

As hospitals continue to have pressures and cuts in personnel, the ASC environment can recruit registered nurses and surgical techs more easily by bringing quality offerings with less pressure on elevated salaries. This will allow ASCs the ability to recruit and retain talented employees and bring value to those employees seeking part-time and PRN work schedule. The ASC setting can be of great value to registered nurses, as the flexibility of part-time and PRN work can fill current needs of local resources. Surgeons will continue to seek potential avenues for an ASC and hospitals may consider expanding the potential for joint-venture opportunities. A counter measure by hospitals may be to employ specialists and reducing the potential for surgical intervention outside the hospital catchment entities. This could reduce the availability of specialists needed to expand or develop existing or future ASCs.

Currently, building and labor costs are lower due to the economic pressures and the need for contractors to keep crews active, resulting in lower costs and rental rates. This is a critical point for existing center remodeling and expansion allowing for tired assets to be updated and keep pace in the local standard of care. Additionally, the start-up facility has the opportunity to increase margin by lower cost space and lower lease rates as the entire construction cost is decreased. This drives great value, as the fixed cost is often over a longer time frame and the savings great over the life of the lease. Additionally, the availability of new, used and refurbished equipment remains of value with the current pressures on companies to move existing equipment and reduce inventory in all categories. Equipment and surgical instrumentation companies are increasing the ability to provide valuable terms and payment methods to meet centers needs.

Reimbursement is always a challenge in any healthcare entity. In the ASC industry the negotiation of contracts and details that must be included in each negotiation is critical to the success of a center. Each year, a careful evaluation of the centers managed care contracts, covered codes, multiple procedures, carve-outs and implant reimbursement must be reviewed and negotiated. Beyond the contracting, the appropriate billing and collections- to-contract standards must be complied to receive each dollar on every case. As the consolidation of payors continues and contract language becomes more complex, it is essential that your team has the appropriate resources to grow net revenues. The collection of co-pay and deductibles must also be conducted in a proactive manner. Each patient must be notified of the expectations at time- of-service and associated costs of the surgical encounter. The evaluation of in and out-of-network must be weighed, justified and aligned with each state’s regulatory guidelines. As the co-pay and deductible becomes more burdensome on the population, the potential for the delay in elective cases being scheduled timely may occur.

As the healthcare debate continues, ASCs continue to be the lower-cost environment to assist in keeping healthcare costs from climbing into the future. Assuring the right case for the right environment is often an indicator that is overlooked in an ASC. Having partners understand the appropriate case type, acuity, co-morbidities and implant reimbursement is key to assisting in the profitability of cases. ASC management teams must communicate trends and encourage participation in the process allowing all employees become knowledgeable in the aggregate center costs. All team members must have the necessary attention to detail, high customer service and clinical excellence required of today’s successful ASC. The center’s management team must proactively manage the center to optimal levels to assure the clinical and financial performance of the center.

At Practice Partners in Healthcare we specialize in de novo and turn-around opportunities, providing a unique development process and management arrangements. Practice Partners is a minority equity holder, leaving the majority to physicians and hospital partners. We bring success-proven management expertise to the clinical, financial and regulatory performance of new and existing surgery centers. Experienced in both CON and non-CON states our team provides seasoned talent for developing and managing physician-owned and hospital-physician joint ventured surgery centers.

Larry Taylor is president and CEO of Practice Partners in Healthcare, Inc.

 

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