5 Ways to Increase Surgery Center Distributions in 2011

Here are five ways physician-investors can increase their ambulatory surgery center distributions in 2011.

1. Expand your service lines.
Look at your existing service lines and evaluate where procedures — or an entire new service line — could be added. If a particular service line lacks a profitable procedure, look to the community for physicians who can perform that procedure, says Brad Harman, MD, a founder partner at Cleburne (Texas) Surgical Center. He says this means doing a careful cost analysis to compare contracts with the generated revenue for each case. "Some specialties have a much higher profit margin than others, so before we add a service line, we need to confirm that the cost is going to come in under what we get in revenue," he says.

Bill Gilbert, vice president of marketing at AdvantEdge Healthcare Solutions, says different centers will have different needs in terms of expanding their service lines. It all depends on case costing and looking at payor contracts to determine which cases will be profitable, as well as whether there are physicians available to perform those procedures.

2. Recruit new physicians. Dr. Harman recommends two ways to recruit new physicians: a corporate marketing strategy and good outcomes. He says your corporate marketing strategy should target referring physicians as well as new physicians.

Dr. Harman says that while a corporate marketing strategy can attract new physicians, the best strategy for recruiting is publicizing your good outcomes. He says if patients want to come to your center, physicians will know about it. If your existing physicians talk to their colleagues about the efficiency, outcomes and ease of scheduling at your facility, other physicians are likely to contact you. "There's no better referral than [one physician] talking to another physician," says Mr. Gilbert.

Mr. Gilbert says this strategy can attract physician-investors whose professional fees have waned in recent years. "This is a time for centers to market themselves to new surgeons," says Mr. Gilbert. "One way is to show the center's books to new surgeons and get them excited about the financial opportunities," he says. "If another center down the road closed and the surgeons are talking about going to a center that's 20 miles away, and you have to go past your center to get there, you need to reach out. You need to show them what the upside is and use the data to show them your center will be a great financial return."

3. Review current payor contracts.
To increase distributions at your ASC, Ken Pettine, MD, co-founder of Colorado's Rocky Mountain Associates in Orthopedic Medicine in Loveland, Colo., recommends adding special procedures, such as spine, and making sure to review care-outs in your contracts. Reviewing your contracts will ensure higher-acuity cases are paid as a carve-out or on a case-rate basis. "Look at how implants are reimbursed, insuring they are paid separately and in addition to the procedure rate," he says.

4. Maintain and grow facility utilization.
Dr. Pettine says the partnerships at your ASC should be reviewed and maintained on a regular basis to ensure a mix of productive physicians. If your center has older physicians looking to retire in the near future, you should be looking to redistribute their units to younger, more active physicians. Todd Mello, principal and co-founder of HealthCare Appraisers, agrees that a center's value can be significantly affected by the distribution of physicians in your ASC. If the majority of your ASC's physicians are older, you should concentrate your efforts on recruitment of active physicians to ensure your case volume doesn't lag in the coming years.

5. Control costs.
Most ASC experts agree that cost-control is the number one way to maintain financial health at an ASC, as reimbursement is more difficult to affect. Dr. Pettine recommends reviewing your ASC's membership with a general purchasing organization. "If you are not a member, join [a GPO], as you will receive discounts on most products and services," he says. He also recommends looking at the products in your inventory to determine whether different products are being used for the same purpose. If you reduce the options on a specific product, you will reduce inventory and therefore save money.

Read more on ASC profitability:

-5 Reasons for ASCs to Be Optimistic About 2011

-5 Points on Paying Bonuses to Surgery Center Employees

-5 Critical Surgery Center Mistakes

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