Running a Profitable Ophthalmology Surgery Center: Q&A With James Dawes of Center for Sight
Q: What are the biggest expenses for an eye surgery center?
James Dawes: The first is personnel. In our case we find that around 18 percent of our revenues go toward staffing, which includes our employed CRNAs. Second are direct costs for intraocular lenses. About one-third of our IOLs are presbyopia-correcting, and our direct costs are somewhat higher than most eye surgery centers, which typically perform fewer advanced IOL cases than ours.
In addition, we perform a high volume of cornea cases that require corneal tissue which comes at a very high cost. Finally, because we perform LASIK and laser cataract procedures in our ASC, costs related to maintenance and royalty fees for the lasers are a large component of cost.
Q: How do you keep costs down, considering the expenses related to running an eye ASC?
JD: We manage personnel costs by consolidating as many cases as possible on the same day of the week and closing the ASC on days where surgical volumes are low — for example, Fridays. We've also found that employing our own CRNAs and controlling the billing of anesthesia allows for greater profits than outsourcing anesthesia.
Focusing efforts on measuring and reducing costs per case has been a major priority for us. For example, all our cataract surgeons have identical preference cards, with little or no deviation, allowing us to keep costs under control.
Q: What are the biggest factors that impact reimbursement in your ASC? What is your payor mix like, and how do you make up for low Medicare reimbursement?
JD: We are fortunate that a large percentage of our total ASC revenue comes from elective services, such as LASIK, cosmetic facial surgery, and refractive cataract surgery with advanced lenses. Elective services are the only category of revenue that allows us to control margins by setting our own fees.
No doubt, Medicare and third-party payments will continue to decline, and we have placed significant emphasis on achieving great patient outcomes and satisfaction, allowing us to succeed in the elective market.
Q: How do you continue to bring high patient volumes to the center?
JD: Patients come from one of three sources. The first is independent optometrists. We actively co-manage surgical patients with optometry and have two full-time employees who regularly interface with these referring physicians. Secondly, our clinic employs sixteen optometrists. These physicians account for almost 45 percent of our surgical base. The third source is word of mouth referrals directly to the surgeon, which are a function of great outcomes and superior service.
Q: Which factors do you believe are critical to the financial success of your center?
JD: Number one, we are fortunate to have very little managed care and have had great success in growing elective services. Secondly, we perform nearly 14,000 surgical procedures per year and with relatively fixed overhead, higher volumes translate into financial success. Lastly, we have a very hands-on nurse manager of the ASC, who is focused on staffing, cost controls and efficiency.
Learn more about Center for Sight.
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