5 key strategies for ASCs to jumpstart profitability

Healthcare's push to continually drive down costs provides an opportunity for ASCs to thrive. However, the healthcare industry is competitive and successful centers implement various strategies to ensure they turn a profit.

During Becker's ASC Review's 23rd Annual Meeting: The Business and Operations of ASCs on Oct. 27, a panel including Jeff Péo, chief development officer for Ambulatory Surgical Centers of America, and Hooman M. Melamed, MD, FAAOS, co-director of spine surgery at Marina del Rey, Calif.-based Diagnostic and Intervention Spinal Care as well as director of scoliosis for Marina Del Rey (Calif.) Hospital, delved into key ways for surgery centers to turn a substantial profit.

Here are five key strategies.

1. Work to eliminate barriers for physicians. To grow a surgery center's top line, administrators can speak with the ASC's physicians and find any barriers impeding surgeons' ability to perform procedures at the center. While some obstacles are embedded in the outpatient landscape and cannot be eliminated, administrators can readily work to combat others.

If administrators can amend those challenges preventing a physician from transitioning cases to a hospital or other surgery center, they can avoid losing capital and having to recruit new surgeons to bring in cases to the center.  
 
2. Compress your ASC's OR schedule. While surgery centers can eliminate obstacles for surgeons, ASCs also can lose money by failing to have a compressed schedule. Mr. Péo noted these conversations can be difficult as many surgeons are accustomed to having their cases on a specific day and time.
 
"Your OR is your number one asset," he said. "You have to utilize that time and have all of those expenses compressed into a schedule that can help improve your bottom line."

At DISC, team coordination is crucial and every staff member is aware that coordination is integral to the center's success.

"As doctors, everyone is used to their schedule but you have to put your ego aside. To make things work, you have to work as a team," Dr. Melamed said. "Everyone is equal and your time is no more important than the nurse's or anesthesiologist's time. Everyone has to make sacrifices."

3. Carve out implant costs. A key way to ensure profitability is having fruitful negotiations with distributors and carving out implant costs. Surgeons also may prefer a certain implant, even if that particular implant burns a hole in an ASC's pocket. However, staff members have to prioritize the center's need, especially if surgery centers are working to scale back on expenses.

"Surgeons have to realize they can't use whatever they want," Dr. Melamed said. "You have to work together on implants and biologics that both maximize patient quality and improve profitability for your surgery center."
 
4. Case cost every single case. ASCOA does case costing for every case their surgery center performs, which includes supply costs, expenses, reimbursement and cost-per-minute for OR space. They then take this wealth of data and review it with the ASC's physician group every month so they know where they compare and how their center may be losing revenue.

Competitive by nature, physicians will use these numbers to compare themselves to their peers, which may spark a healthy competition amongst physicians.  

"Case costing is not the easiest thing to set up, but once you set it up, it should roll pretty well," Mr. Péo said.

DISC works to cut down on unnecessary expenses by working together to allocate a certain amount of money on cases.

"We look through the cases and realize we don't need everything from A to Z that we would have at a hospital," Dr. Melamed said.  "We recruit physicians who work within that frame."

Finding physicians that are loyal to an ASC and its success is crucial to turning a substantial profit. Physicians who disregard OR start times could cost a hefty penny for your center, so finding staff members wholly dedicated to an ASC's success is pertinent.

While surgery centers have to be conscious of their costs, Dr. Melamed cautions against forgoing equipment based on the upfront cost even if it improves patient outcomes.

"To make money, you have to spend money. Is not spending the money on a microscope worth one bad complication? No. You can't cut corners. Sometimes you have to spend capital at the beginning to get the best equipment," he said.

5. Market your center. Bringing in cases is a crucial way to turn a profit and as patients becoming increasingly responsible for their healthcare dollars, they will often choose the lowest-cost option. Patient satisfaction scores and reviews could either bring in new patients to a center, or unfortunately, could drive patients into the other practices' ORs.

"Your patients are your own best advocates and the best way to grow your practice," Dr. Melamid said. "Patients go on Instagram, Twitter and Yelp, a major thing in California. These [platforms] have driven patients to surgery centers."

Mr. Péo said making physicians in your market aware of the services your center offers is another strategy to growing case volume.

"You have to broadcast your center to primary care doctors and those doing referrals to your center's doctors," he said. "ASC have to make sure we are pertinent, available and accessible to the marketplace. The marketplace has to understand what we provide to last the next 10 years."

More articles on surgery centers:
5 things to know about Valley Health's $6.2M ASC project
Blackstone buys TeamHealth for $6.1B: 8 key notes
Foundation HealthCare sells ASC business to Healthcrest Surgical Partners: 5 key notes

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