ASCs can measure their profitability through financial statements and other performance measurements. Types of financial statements include income statements/profit-loss statements and balance sheets, which provide a “snapshot in time,” according to Mr. Chopra. He said balance sheets should include assets in inventory; equipment on hand; accounts receivable; statements of cash flows, including capital expenditures; investments; and payments to the bank. Mr. Chopra suggested creating monthly financial statements. “This business can change on a dime. You can have a doctor leave, a physician starting or a different medical supplier. That can change your financial picture in a heartbeat,” he said.
ASCs can improve their profitability by tracking performance metrics. Mr. Chopra said the drivers of ASC performance include the following:
• Physician productivity — the number of cases; block time utilization
• Revenues and profitability — EBITDA
• Cash cycle and revenue management — speed in capturing receivables
• Operating efficiency and resource management — labor and medical supplies
• Financial strength and balance sheet
Benchmarking these metrics can provide objectivity through a quantitative approach and create a sense of urgency among physicians and staff, according to Mr. Chopra. Benchmarking is only the first step, however. ASCs then need to develop a strategy, make a budget, form a capital structure and ensure strong governance, he said.
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At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.