5 Strategies to Make Successful Capital Acquisitions

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Capital acquisitions play a large role in the success of ambulatory surgery centers. They affect patient safety by ensuring equipment is up-to-date; physician satisfaction by meeting their needs when delivering care; and the center's revenue by creating efficiencies.

"Equipment is really the life blood of surgery centers. Without having up-to-date equipment, surgery centers would be limiting their ability to generate revenue," says Richard Peters, senior director of product management for the supply chain improvement company Provista. He says the two overarching challenges of capital acquisitions are availability of funding and management resources. Mr. Peters suggests five strategies for ASCs to overcome these challenges and optimize capital acquisitions.

1. Include capital acquisitions in the strategic plan. Mr. Peters says successful capital acquisitions depend on preparation and planning. ASCs can prepare by incorporating capital acquisition goals and possible solutions in their strategic plans. The financing plan for the acquisitions should also be included in the strategic plan, according to Mr. Peters.

2. Learn from others. Management resources include knowledge of how to evaluate capital purchases and awareness of different options available to leaders. ASCs can develop these resources by negotiating with sellers, Mr. Peters says. "Leverage manufacturers to gain the technological expertise required to make decisions [about capital acquisitions]," he says. Questioning sellers can help ASC leaders learn their options in making capital acquisitions. For example, Mr. Peters says facilities that have old equipment they no longer need can dispose of the equipment completely, receive credit (depending on the manufacturer), put the equipment up for auction or sell to other providers.

Another strategy is to speak with ASC leaders who frequently make capital acquisitions. "Start building a network within the community [of] those who might perform capital acquisition on a regular basis. For example, multispecialty clinics acquire capital assets on a regular basis," Mr. Peters says.

Because of the variety of capital acquisitions, gaining knowledge about a specific piece of equipment a center plans to acquire may be most useful. "I would recommend the administrator get to know the CEO or CFO of that clinic and ask a lot of questions about what things they considered when they acquired that piece of equipment," Mr. Peters says.

3. Take advantage of group buy opportunities. Group buy agreements can save ASCs on the initial purchase price and on the total cost of ownership, according to Mr. Peters. Group buys "reduce the initial purchase price based on the level of commitment from the collective group buy participants," he says. The arrangement may also offer pre-negotiating opportunities or special rates, lease options and deferred payment, depending on the company.

4. Consider leasing equipment. Sometimes ASCs can benefit from leasing equipment instead of purchasing it. "It depends on the financial position of the surgery center," Mr. Peters says. Facilities with less funding may benefit from leasing because they can avoid paying a large sum at one time. ASCs should also consider leasing equipment as technology develops.

"Leasing makes more sense if technology becomes available at a rapid pace," Mr. Peters says. Leasing equipment allows for more flexibility. "If your surgery center is replacing equipment on a regular basis before its life span runs to the end, consider leasing because upgrading technology in a lease is easier than acquiring capital before the life cycle is complete," he says.

5. Base decisions on ROA instead of ROI. Mr. Peters says a new, more in-depth approach to evaluating the financial effects of capital acquisitions is calculating return on asset. Compared to the traditional return on investment, ROA accounts for qualitative data as well as quantitative information, such as the purchase price. Important acquisition factors such as physician satisfaction, productivity and price of installation, training and software may also be ignored by ROI.

Mr. Peters says using ROA allows leaders to "evaluate [capital acquisitions] from a holistic perspective. What piece of equipment should be acquired and when? What is the financing mechanism?" While calculating ROI may be easier and faster to develop, ROA provides a more complete assessment of the benefits of capital acquisitions, according to Mr. Peters.

Learn more about Provista.

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