Operating a Surgery Center in a Saturated Market: Q&A With Lee Memorial's Dave Cato

Lee Memorial Health System's Outpatient Surgery Center opened in November 2011 in the middle of a unique market. While the market in Fort Myers, Fla., was saturated with physician-owned single specialty ASCs, Lee Memorial's center is 100 percent owned by the hospital and serves as a multispecialty surgery center. While the surgery center is still a part of the larger Lee Memorial organization, it isn't located on the hospital's main campus.

After 18 months of running the center, Vice President of Outpatient Operations at Lee Memorial Health System Dave Cato discusses the challenges and opportunities he's found operating a surgery center in his unique market.

Q: Why did Lee Memorial Health System decide to build an outpatient center?

Dave Cato: We felt we could offer the market something that wasn't out there: a place for unaffiliated surgeons to come where they can be neutral and perform surgery. The surgeons don't have an investment in the surgery center and our contracts from a payor standpoint are outstanding, so surgeons want to do cases with our system. We run the facility like an ambulatory surgery center from an efficiency and patient satisfaction standpoint.

We track patient satisfaction — it's 96 percent and above — and our on-time starts and room turnover are very important for the surgeons who operate there. We have 96 percent to 100 percent on time starts and our turnover time averages 11 minutes. Even doing multispecialty cases, we do a good job. We have tried to emulate the efficiencies and patient satisfaction you would get from a typical surgery center in our market.

Q: How is performing cases at the surgery center different from performing them at the hospital's outpatient department?

DC: Before we built the surgery center, we were only able to perform outpatient surgery on our acute care campuses. If you have emergency services at the same place as acute care, it slows efficiency and processes for surgeons only doing outpatient cases. We had 9 percent to 10 percent of the market share and we felt we could enter the outpatient surgery market more robustly. The surgery center is currently 100 percent owned and operated by the hospital.

Q: Without a financial investment in the surgery center, what incentive do surgeons have to sure the center successful?

Even though there is no ownership by the physicians, we need to engage and partner with the physicians to make sure the surgery center is successful. There is a multispecialty group that we have a co-management agreement deal with. They don't own equity, but they manage the center for us, which drives a great deal of the success. It's both physician-drive and administration-driven because we work together as a team. We were able to accomplish that out of a management agreement — not equity.

The key to our success is the clinical and efficiency metrics. They are paid a base management fee and then they have a clinical incentive fee that is tied into six metrics: patient satisfaction, transfer rates, antibiotic administration, first case starts, turnover time and wrong site surgery. We wouldn't have the same results without having partnership within this group. It's been a great partnership.

Q: In addition to the physicians in the co-management arrangement, who else brings cases to the center?

We have a mix of physicians—both physicians from our co-management partnership and employed surgeons bring their cases to the surgery center. There are other independent physicians who aren't on our medical staff but chose to bring cases to the surgery center, including orthopedic surgeons, hand surgeons, general surgeons, pain management physicians and plastic surgeons. The reason we get some of the third group is based on the performance and atmosphere we've created. Physicians want to do their surgeries here.

Oftentimes, people who have a choice choose to come with us based our results. Word-of-mouth between surgeons has spread our reputation. We have success based on performance and surgeons talk to each other. Patients also talk to surgeons and tell them about the positive experiences they had at our center in the past.

Q: Are there any challenges you've experienced over the past year-and-a-half?

Our center is a convenient location for patients, but for some surgeons it's worked against us. Depending on where the surgeons are located, traveling to the outpatient surgery center isn't convenient. Some surgeons try to plan an outpatient day so they don't have to go from the hospital to the surgery center. What outweighs that is surgeons know they can do more cases in the surgery center.

Q: Is there anything your center does to become more attractive to surgeons?

The factors surgeons are most interested in are patient satisfaction, on-time starts and turnover times. If they can come out to us and do six cases in four hours where they might have only been able to do four cases in four hours somewhere else, they are more efficient. They are also highly concerned with patient satisfaction.

The anesthesia team also does a tremendous job of facilitating the intake. Those are the main items surgeons are concerned about.

Q: Was there anything that surprised you after the surgery center was up and running?

The number one thing that hit me was the scheduling aspect of it. They are all elective cases and we need to have conversations with insurance companies to make sure the procedure is authorized. We expected cases to be scheduled at least a week out, sometimes a month prior to surgery. We found it was necessary to adjust this expectation because surgeons called and wanted to schedule surgeries in a lot shorter time than we anticipated.

We needed to be more flexible to make sure we could schedule the cases on a shorter timeframe. Now we schedule cases three days out. When the first of the month roles around we may only have 150 cases scheduled, but by the end of the month we have 300 performed. From the health system perspective, that was surprising; however that's what the surgeons and patients needed. We worked with them and adjusted our process to make access easy to our center.

Q: What re your strategic goals for the center over the next few years?

The two most important things are to continue partnering with physicians to help manage and run day-to-day operations. Having a very effective clinical director in place is crucial. We'll also need to partner with the physicians to look at how payment reforms coming down the pipe will affect them and the facility.

Additionally, we will continue to have outstanding customer service and our efficiency will be maintained by everyone on staff. That's the key to our success going forward, regardless of payment reforms.

Related Articles on ASC Turnarounds:
Is Out-of-Network Billing Still a Viable Business Strategy?
What Are the Best Ideas for Orthopedics Now? 3 Industry Leaders Weigh In
5 Points on 23-Hour Recovery Care in ASCs

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