1. Increase capacity. To begin with, the center opened a second gastroenterology lab that doubled the center's capacity for GI patients. The majority of the center's GI physicians are not partners, so it is important for the center to accommodate these physicians' schedules to capture their patient volumes. Our center is very accommodating to all of our medical staff, but we are very cognizant of the contribution our non-partner physicians make to the center.
2. Take advantage of favorable Medicare rates. Management has worked hard to communicate what impact the Medicare reimbursement changes are having on our center. As a result, our center's general surgery case volume has increased significantly, with a particular increase in lap chole surgery. Our physician partners have a renewed commitment to perform all appropriate cases at the center. Administration and scheduling continually communicate with physicians and their offices to avoid "holes" in our surgery schedule.
3. Reduce costs. We managed to reduce our medical supply cost from 26 percent of net revenue in 2008 to 20 percent of net revenue in 2009. We performed a detailed analysis of our medical supply cost under our existing GPO and under a proposed GPO. The proposed GPO offered significant savings; therefore, the center managed a GPO conversion and experienced significant supply cost savings.
4. Eliminate debt. Finally, the center aggressively paid down equipment loans and a line of credit in 2008. While this was painful in 2008, the center has now paid off these debt obligations, freeing up additional cash flow for partner distributions.
Learn more about Upper Cumberland Physicians Surgery Center, a joint venture of physicians, Cookeville Regional Medical Center and HealthMark Partners. Thank you to HealthMark Partners for arranging this story.