4 Steps to Effectively Bring New Surgeons on Board

As the industry matures, more ASCs are facing a set of challenges common in other sectors. Successful surgery centers, for example, are faced with the tricky task of sustaining growth over time, especially as their initial investors retire or otherwise move on. Surgery centers that are underperforming or just breaking even — and traditionally this represents between 25-40 percent of all facilities in the United States — need to find a path to profitability, and to find it quickly.

 

Interestingly, there is an almost identical solution to both of these challenges: bringing new surgeons into the syndicate or partnership that owns the ASC. Provided the surgical center takes a deliberate approach to planning and considers a broad range of factors, the new case types and higher volumes that new surgeons can bring hold the key to long-term success.

 

This notion has been steadily taking hold across the industry. In fact, when we talk to our surgeon-partners across the Blue Chip network of affiliated surgery centers, we find that the most urgent question on their minds today is not whether to bring new surgeons on board, but how to do so most smoothly and efficiently. This represents something of a culture change in the industry; in the past, many investors in existing ASCs followed the conventional wisdom that diluting ownership stakes was to be avoided at all costs. Now, growth strategies take precedence.

 

When identifying strong new ownership prospects, we vet their professional qualifications, ensure a good cultural fit and then smoothly integrate them (and their patients) into existing operations. But, to simplify the process, we like to think from the prospective of surgeon-partners and encourage them to follow four steps:

  • Build commitment
  • Define the opportunity
  • Get personal
  • Manage chemistry and culture

 

Step 1: Build commitment

At some centers, there seems to be a stigma about adding new partners. Perhaps current investors are sensitive about the risk of diluting their ownership stakes. In other instances, some current partners think the need for new surgeons is an acknowledgement that their business has failed.

 

As to the first point, it's important to remember that well-managed ASCs often bring on new surgeons at reduced ownership stakes, with the opportunity to buy more shares later. This is an effective way to plan ahead for future retirements, and avoid last-minute scrambles to find cases. It also accounts for the higher level of risk the initial partners assumed.

 

Regarding the second point, if a center is underperforming, surgeons should recognize that fact based on objective measurements and as soon as possible (which can help avoid future cash calls). But it's just as important to realize that even the most successful ASCs have room for improvement.

 

Indeed, many top thinkers and industry veterans believe ASCs should recruit constantly, in good times and bad. For instance, Scott Becker, JD, an ASC attorney with McGuireWoods and writer, maintains that existing ASCs should aim for 10 percent growth in case volume every year — whether it's taking on new surgeon-partners, replacing retiring owners, adding new specialties or all of the above.

 

Step 2: Define the opportunity

If a few surgeon-investors are reluctant to add new partners, a candid discussion of the opportunity is usually enough to convince them it's a good idea. That conversation should start with complete and accurate data about current volumes, reimbursement rates, OR utilization and the costs to perform cases at the center.

 

Then, ASC leadership should take a look at local market information regarding volume in various specialties, payor relationships and surgeons' outlook toward the local hospitals. Maybe there is another ENT practice in town that's looking for an outpatient environment for their patients. Adding spine cases may make sense. Hernia specialist, colonoscopists and physiatrists may all be viable partners and excellent sources of new cases. Of course, much depends on market conditions, so detailed analysis of the numbers and scenario modeling may be necessary to form a clear plan.

 

At the simplest level, the opportunity may be defined as X number of new cases in this specialty will bring us X dollars in new revenue, with X percentage of that revenue falling to the bottom line. All partners should understand not only the revenue and profit opportunity, but also the impact on overhead and operations. For instance, will new equipment need to be purchased? How will block schedules need to be adjusted?

 

Step 3: Get personal

Assuming the team identifies a few promising specialties that would benefit the business, the next step is more personal. Groups and/or individual surgeons need to be assessed in terms of their fitness for joining the ASC team. When it comes to finding prospective owners, it's very much "whom you know" that matters; in our experience, the best prospects are already out there within the professional and social networks of existing surgeon-owners. So, to find candidates, the existing owners must commit to networking. We recommend assigning this responsibility formally to a few surgeons on the board.

 

Once a few candidates have been identified, there are number of questions to ask and areas to explore — from current caseload and preferred operating times to clinical reputation and personality types. In terms of the center's financials, the most important task is to validate the estimates of new cases that a new partner can bring. Overly optimistic case projections have been major problems for many underutilized outpatient surgical centers. The ASC will also need to share some of its financial information with the candidate investors.

 

In terms of the overall business, ensuring prospective investors are hard workers and team players is just as important. We believe the best way to ensure new surgeons are a good fit is to let them "try before they buy." In other words, encourage new surgeons to bring a few cases to the center so they can experience firsthand the staff, facilities and patient experience. Streamlining the credentialing process, hosting a facility tour for the candidate, and coordinating with his or her scheduler are generally all it takes to get the ball rolling.

 

Step 4: Manage chemistry and culture

High-performing ASCs are notable for their strong cultures. That's why we put such emphasis on the personal side of things. This is not to say that every surgeon-investor must be close friends; nor is this a popularity contest.

 

Since ASC success is very much a team sport, culture matters. The partners must all respect each other and ASC staff members, have confidence in each other's clinical skills and expertise, and recognize the need to share risk and reward. The ownership group should be informed about the fundamentals of the business, though it's not necessary or desirable for the surgeons to micromanage every detail (that's what business partners are for). They should understand the high-level drivers of success (target case volumes, case costing, strong contracts, payer relationships and efficient billing to name a few) and how their actions impact those drivers.

 

In this sense, little things mean a lot — both in building a strong culture and achieving financial success. For instance, scheduling compromises may be necessary. Existing partners may need to adjust their block times to free up space to attract and accommodate new surgeons, while new partners may need to give up their preferred equipment and supplies if it makes economic sense to standardize.

 

Bottom line

The keys to long-term growth are a commitment to continuous recruiting, a baseline understanding of the business and a recognition that culture and teamwork foster long-term success.

 

The good news — which is underappreciated across the business — is that you and the other surgeons at the surgery center likely already know the physicians who can be great partners. It's just a matter of talking to them, sharing the benefits of ASC ownership and ensuring they're a good fit, personally and professionally.

 

Learn more about Blue Chip Surgical Center Partners at www.bluechipsurgical.com.

 

Read more insight from Blue Chip Surgical Center Partners leadership:

 

- 1 + 1 + 1 = 4: A Winning Equation for ASC Acquisitions — Making the Numbers Add Up for ASC Acquisitions

 

- 6 Things to Know About Spine Surgeon Involvement in ACOs

 

- 5 Ways ASCs Unintentionally Waste Money

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