Starpoint Health manages and owns ambulatory surgery centers in California under limited partnership structures with physicians. The company has an ASC in Los Angeles County, Orange County and San Bernardino, and is in the midst of opening a second ASC in San Bernardino. Eric D. Friedlander, CEO of Starpoint Health, identifies six areas the company focuses to keep costs low for its ASCs.
1. Labor force. Starpoint ASCs have very few full-time employees, which is a critical reason why the company has been able to stay financially healthy over the years, Mr. Friedlander says. "We have a core group of employees — primarily nurses — who are full-time employees," he says. "But for the other staff, we use a huge part-time and per diem pool of labor that expands and contracts as the business expands and contracts. We make sure we have enough full-time coverage but then also have a large enough pool to manage our business needs."
Starpoint has developed a pool of part-time and per diem talent, in part through referrals by existing staff members. Part-time employees view working in these roles as an opportunity to demonstrate and improve their skills with the possibility of joining an ASC full-time if an opportunity arises, he says.
"It's known [by part-time employees] that if everything works out, then the carrot is you can then become a Starpoint employee once it's time for us to add a full-time position," Mr. Friedlander says. "It's sort of an on-the-job interview." The company used to use registries but he says this was cost-prohibitive due to the hourly rate and Starpoint found there was often a lack of productivity by the employees from these registries.
2. Days opened. Starpoint maintains a close watch on the schedules and caseloads of its ASCs to identify how many days an ASC should be open. "Our staff and administration is trained to watch the schedules and consolidate cases to, should it be possible, be open fewer days," he says. This helps significantly with labor costs.
3. Outsourced critical components of business. Mr. Friedlander describes Starpoint as a "virtual company"; by this, he means the leadership team has taken the approach of determining "what business are we in and what business are we not in," he says. "The businesses we have identified we are not in, we outsource to somebody we believe is a high quality provider. If you go through all of the functions that we provide, there are very few that we actually have at the corporate office that we keep in house. So we keep focused on what we're very good at and the stuff we don't do well, we outsource."
For example, Starpoint used to handle billing and collections for its facility, but found doing such to be time-consuming and cost-prohibitive, so the company outsourced the processes to GENASCIS. Starpoint also outsources all of its human resources functions. "It's a good for a company who is getting into the ASC business or opening a new facility to take a hard look at what is the cost of actually providing all of these functions and is there a cheaper alternative and a more efficient model."
4. Internal benchmarking. Mr. Friedlander says a particular strength of the Starpoint leadership team is a sophisticated understanding of business and the importance and value of data. The company has developed a large data warehouse which he says "is a repository for information about operations … which allows us to monitor our business through data and compare facility versus facility, physician versus physician. If you have the right physician-partners, you can share this information with them to hopefully change behavior."
Starpoint uses the data it gathers from its facilities and partners to make changes and improvements by individual facility and across all of the company's facilities. This data is also used when Starpoint recruits physicians. "We spend a long time looking at data and determining whether the doctor's business will make sense for our company," Mr. Friedlander says.
5. Minimizing costs at the start. Whenever Starpoint develops a new ASC, the company focuses on keeping the new facility as small in size as possible at the outset. "If you've run all of the models and have all of the doctors together, and believe you're going to need two ORs full-time, don't go build four ORs," Mr. Friedlander says. "Try to have the option in your building to expand into the suite next door to build out a third OR when it makes sense. We've deliberately choked our growth a little bit so we don't overbuild."
If it isn't too cost-prohibitive to build a third or fourth OR in such a scenario, he says ASCs can do so but should just avoid fitting the room with equipment until it is absolutely necessary. "Also, you don't need to buy new equipment," he says. "There's plenty of good second generation equipment out there you can get for one-third of the cost of new equipment."
6. Medical supplies. Mr. Friedlander says ASCs can always do more to keep their supply costs down. "You have to keep a close eye on medical supplies and determine if you are getting the right price and are taking advantage of some of opportunities presented by the [group purchasing organizations]," he says. "Are you questioning your current vendor enough, are you purchasing from 2-3 vendors so you can price shop and have the big players compete for your business? Even for smaller facilities, there are companies that are willing to sharpen their pencil to win your business."
Learn more about Starpoint Health.
Thank you to GENASCIS for arranging this interview.
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