Currently, about 50 percent of ASCs are not profitable, says Dr. Lambert, with 25 percent breaking even and 25 percent losing money. This trend has continued over the past few years and will continue to the next several years.
Overall, Dr. Lambert notes a "movement [in the ASC community] to fix centers that are not functioning properly."
The teleconference, moderated by Scott Becker, JD, CPA, consisted mainly of a question-and-answer session in which Dr. Lambert took questions from listeners and via e-mail. Topics discussed included what issues cause problems for struggling ASCs, indications for which ASCs can turnaround and billing and financial issues.
Struggling surgical centers are not limited to new or physician-owned ASCs, Dr. Lambert says. He notes no real pattern for which centers fail or succeed. Some of the most successful turnarounds he has seen are those ASCs he calls "chronic non-performers."
"I've never seen an easy turnaround," Dr. Lambert says, but some of the most difficult cases he has experienced are in those centers which are hovering on "the brink of bankruptcy." However, if a struggling center has the conviction, Dr. Lambert says, it can implement turnaround changes on its own. Here is some of the advice he gave for running a successful center:
1. Keep a close watch for the three main causes of non-profitable ASCs which, according to Dr. Lambert, are as follows:
- Poor management
- Failure of physicians partners to bring all of their cases to the center
- Low reimbursement per case
2. Keep staffing costs at 20 percent of collections or lower. If centers find that they are over this rate, chances are they are open too much and should adjust their scheduling. For example, if a center only has enough cases to fill 16 hours' worth of time instead of 40, the operating hours should be adjusted accordingly. He suggests making these changes incrementally, as it will be easier for administration to persuade staff and physicians that this is the right decision for their center. Dr. Lambert says that by cutting operating hours and full-time staff, his ASCs have been able to achieve this goal and to pay their staff 10 to 20 percent above average.
3. Find opportunities to recruit more cases. A higher case load can lead to better profit. Dr. Lambert says that one of the signs of a center that is "fatally flawed" is that it has no opportunity to recruit more cases. Citing examples from his firm's experience, he notes that entering into areas where all of the physicians are already members of the center limits his ability to recruit new business from the community.
4. Dr. Lambert says that case costing is something that every administrator can do in order to control their costs. An administrator should be aware of what it costs to do every case.
5. Although most struggling ASCs do a decent job of keeping supply costs low, Dr. Lambert says that there are ways in which these costs can be even lower. He suggests that centers join group purchasing organizations that will help them to find supplies at the best cost. He also suggests simple networking as a method to help in this area. "Make friends," he says, "and compare costs. Ask [your colleagues] who their suppliers are and what they're paying for a given item." Dr. Lambert cautions administrators to beware of situations where surgeons have special interests in a type of implant, device, etc., as it can help to drive these supply costs up.
6. Make billing and collection more effective. With better coding and accounts receivable procedures, money will start to come in and staff will become more excited about the center. Dr. Lambert suggests aiming to receive payments in less than 40 days from the procedure.
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