Building an ASC from the ground up: 4 focus areas when opening a successful center

Frontier Healthcare Holdings, a New York-based ambulatory surgery center management company, teamed with local physicians to open Mulberry Ambulatory Surgical Center in June, marking Frontier Healthcare's first ASC in New Jersey. Frontier Healthcare helped physician owners market the center to attract new physicians, a vital component of any center's success.

"The big difference between a healthy and a non-healthy center is the ability to attract physicians," says Roy Bejarano, president of Frontier Healthcare, a position he has held for nearly five years.

Frontier Healthcare has 12 ASCs throughout New York, all of which have a majority physician ownership. Mr. Bejarano explains this model has yielded positive results for the management company, as "independent physicians tend to be happier."

An ASC management company is well-versed in the ins and outs of opening and running a successful ASC, making relationships with physicians mutually beneficial. Whereas physicians bring the volume and medical expertise, management companies can provide business knowledge to navigate the complex nature of payer relations and physician recruitment.

Mr. Bejarano delves into four key areas that Frontier Healthcare and physician owners focused on when opening and operating Mulberry Ambulatory Surgical Center.

1. Merging with other physicians. When bringing in physicians to a center, the ASC has to manage that physician's expectations, which is something physician investors may have limited experience doing.  

"Some physicians haven't built an equity-oriented business with an in-depth operating agreement before," Mr. Bejarano says. "You have different partners from all different paths of life, and it is really about learning to make the business work."

Mr. Bejarano explains when drafting a contract with a potential physician investor, the ASC should consider several factors including:

•    Whether that partner should have a board seat
•    The partner's veto rights
•    The details of the partner's redemption rights

"You have to change your mindset from thinking internally to thinking holistically about everyone's needs," he adds.

2. Be selective in your physician partners. Although ASCs should continually be recruiting physicians to the center, selection is paramount because an ill-suited partner may detract from a center's profitability. To ensure a beneficial partnership, a center's physicians should think about the agreement as a merger. Rather then solely focusing on penning the best deal, an ASC should consider physicians' character and whether they have that center's best interests at the forefront of their minds.

When choosing partners, the optimal candidate will be reasonable and will prioritize the team's needs. Frontier Healthcare will visit physicians at their current practice location to get a sense of their work ethic as well as the "environment they created for patients," Mr. Bejarano says.

Administrators should go out into the community to learn what the physician's peers think of them. After credentialing physicians, the center should invite physicians who could be a good fit to perform cases at the center for a trial period to ensure the partnership would work for both parties.

3. Going in-network. Centers that are out-of-network may often struggle to spur physician interest, as this model could detract from a physician's income. Frontier Healthcare advises centers to go in-network as soon as possible, and began negotiating with payers as soon Mulberry Ambulatory Surgical Center opened.

4. Transparency.  Centers should also be transparent about various decisions and changes to staff members because the unknown is often unsettling and not well-received. Therefore, Mr. Bejarano recommends ASCs implement an open-door policy to ensure staff members feel comfortable in their work environment.  

Healthcare's transformation to value-based care presents an opportunity for surgery centers that can provide reasonable rates while maintaining high quality care. Frontier Healthcare's key to success is providing patients attractive rates, which will likely ensure the company's success.

"In every industry there are opportunities and risks," he says. "In healthcare, being conservative is prudent. As long as Frontier continues to provide a high quality product and charge reasonable rates, we feel there is a place for us in the industry."

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