7 Signs the Time is Right for Surgery Center Expansion
"In certain markets there are opportunities for surgeons to create de novo ASC projects. The other option would be for a surgeon or surgeons to partner with an existing surgery center that could accommodate the increased caseload new surgeons would bring to the table,” says Mary Sturm, senior vice president of clinical operations for Surgical Management Professionals. "We continue to see the volume of outpatient surgical procedures expand every year due to improved technology and anesthetic techniques and I think it will continue to go in that direction."
Here, Ms. Sturm and T.K. Miller, MD, an orthopedic surgeon with Carilion Clinic Orthopedics and medical director of Roanoke (Va.) Ambulatory Surgery Center, discuss seven ways you know whether your surgery center is ready for expansion.
1. Operating rooms are at utilization capacity. Analyze your operating room utilization at your surgery center.
"When you have 65 to 70 percent utilization rate, and you have several surgeons on staff, it can be difficult to accommodate for the needs of all surgeons," says Ms. Sturm. "This number is based on the number of surgeons, surgical specialties and overall volume of cases at your surgery center." When you start to exceed this utilization rate, it can become difficult to accommodate surgeon requests for OR time.
To assess utilization, don't just ask surgeons whether they are using their block time; you need to really examine it. Dr. Miller created color coded bar graphs showing room use by each provider for each week and more important a single color for non use. He found this allowed a better overview of facility use by provider and overall. Patterns of consistent under use by surgeon or specialty were easier to determine and allowed schedule shifts to optimize utilization.
In some cases, surgery centers may need to revise block time policies so cases and revenue aren't lost to unused OR time. "Really evaluate the block time utilization and the policies and guidelines you have in place for releasing block time" says Ms. Sturm. "It can be very comforting to the surgeon to know he has one or two mornings per week blocked off, but if that isn't used and you are losing other cases because of it, that needs to be addressed. Other people could be adding lucrative cases in that spot."
2. When you have to turn surgeons away. Turning surgeons away when they want to perform cases at the center means you either aren't efficient enough to squeeze them in, or you need more operating room space.
"The unsettling thing is when you don't know you are losing cases because surgeons can't get on the schedule," says Ms. Sturm. "At our centers, we advise the schedulers not to turn cases away without getting a leader involved in that decision. When you are losing cases because of lack of OR time and you don't get involved as a leader, that's an unsettling phenomenon."
The scheduling staff should be educated on when to get a manager involved in a difficult scheduling situation. "As managers and leaders, we need to use our critical thinking skills on how we could make something work," says Ms. Sturm. "I appreciate the merit of block time for the surgeon to be able to manage his surgery schedule, but all shareholders in the surgery center should step up in their role to be a good steward in the use of OR time and release it if they aren't going to use it."
3. Adding new service lines. The healthcare landscape may have changed since you opened your surgery center 10 or 20 years ago, and now a new group of surgeons in town might be interested in the ASC. If the surgeons are from a different but profitable specialty — such as orthopedics or spine — expanding the surgery center to accommodate them may be beneficial.
"If new providers are coming into the center and bringing a new specialty, or the opportunity to bring new cases into the facility that it wouldn't have otherwise captured, an expansion might make sense," says Dr. Miller. "If you have a provider of new cases and specialties that have nowhere else to work, you can expand to accommodate for them. You know that the ORs in your community are all maxed out, so you can justify expanding the facility."
You must have the space to accommodate high volume cases to make this work efficiently. Make sure the new surgeons will be able to deliver on their case volume before beginning the expansion.
"If you are adding new practitioners, before you make the expansion commitment, they need to be working at your center for several months to prove and demonstrate the volumes they say they will bring in," says Ms. Sturm. "They also need to show their loyalty to the center."
4. Existing surgeons bring in new cases or technology. Even if you aren't adding a new group or specialty, advances in technology mean surgeons can bring more cases into the surgery center that were once performed only at hospitals. For example, orthopedic surgeons are now beginning to perform total joint replacements at outpatient surgery centers and spine surgeons are bringing increasingly complex cases into the ASC.
"Many ASCs are starting to provide total knee and spine programs with existing practitioners who have used the surgery center for years," says Ms. Sturm. "The technology allows them to bring a bigger volume of what used to be hospital-based procedures in surgery centers. You may need an expansion that will accommodate that growth and allow surgeons to bring in new technology for those cases."
The new technology may require extra space in the operating room and if the surgeon will be able to bring enough cases for a high return, the investment could be very beneficial.
5. Increased volumes and new case mix need to provide a reasonable return on investment. Know how many additional procedures are needed to justify the expense of the expansion project and when the center will realize a profit from the expansion.
"When deciding to expand, have a long term outlook on growth so you can position yourself to accommodate for increased case volumes past the first few years," says Ms. Sturm.
Original partners must remember what it felt like the first time they invested in the surgery center and help new partners understand that the return on investment isn't immediate. "Come in with the mentality that you had when you first built the facility — that there is a delay on the return," says Dr. Miller. "Partners who invested in the established surgery center got an immediate return, and now they won't. It might even diminish for a short period of time. Think about that so investors don't have a surprise."
When a new group of surgeons will be moving into the expanded part of the facility, consider asking them to invest in that space so the current partners don't have to take that risk. "When new providers come into town, offer them the same investment capability as you did with the original investors," says Dr. Miller. "The original surgeons won't see their return diminish and they will get feedback that the new guys are taking risk to make sure the addition on the building will be successful."
6. The surgery center becomes inefficient. Surgery centers are extremely focused on efficiency and doing things well. "When you start to notice your efficiency is being impacted by the fact that you don't have the physical space to move patients through your building efficiently, that's pretty telling," says Ms. Sturm.
Another inefficiency mature surgery centers often experience is a lack of space for surgeons to complete non-clinical responsibilities. "You can't have five physicians in a space trying to do charting that only accommodates three," says Dr. Miller. "The other thing you have to think about is storage. When we built our building, we could add non-clinical space to a portion of it; we had the plumbing and building designed to expand."
An expansion project will require some flexibility to continue operations during construction. "Almost all contracts should be able to help you through the expansion project without losing any productivity at the surgery center,” says Ms. Sturm. "Pick a contractor that is accustomed to working around the facility's continued operations."
7. The market isn't already saturated with operating room space. While this will be necessary in certificate-of-need (CON) states, surgery centers in non-CON states should also look around to make sure the market isn't already saturated with surgery centers or hospitals before the expansion. Beware of your community's situation so you know there will be enough case volume to support the expansion.
"A trend you need to be mindful of is to make sure that competing community hospitals are not hiring surgical specialists at a rate that will interfere with referrals to your center," says Ms. Sturm. "That becomes a concern for physician owners of the surgery center as well as the ASC itself. We are certainly seeing the employed surgeon model in a lot of markets."
Assess the practitioners who are going to continue to have a referral source and not be carved out by big hospital systems. "You have to know what the community's utilization is," says Dr. Miller. "Treat every state as a CON state, and justify the new ORs. If you can justify for a CON state, you can justify the expansion on a fiscal basis."
Additionally, a rough economy could negatively impact patient volume and stunt an expansion project.
"There's a fair amount of discretionary surgery done in ASCs. Know what is going on in the marketplace for local industry and business," says Ms. Sturm. Layoffs or businesses closing like was experienced in the recent economic downturn certainly impacted surgery centers.
More Articles on Surgery Centers:
5 Tips for Collecting in Full From Out-of-Network Payors
5 Orthopedic & Spine Surgery Centers Opened in 2012
5 Steps to Optimize Eye Surgery Reimbursement at ASCs
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