Operating an ASC in partnership with a health system and a medical device manufacturer is not for the faint of heart. With outpatient surgeries and ASC utilization continuously growing, there are clear opportunities for innovative, focused ASCs — but there are also distinct challenges.
Becker’s ASC Review recently spoke with Marty Rosenberg, CEO of Forté Sports Medicine and Orthopedics, a five-location orthopedic group with ASCs in Indianapolis that built out a new orthopedic hospital and outpatient center at the height of the pandemic.
Mr. Rosenberg reflected on the strategic decisions the group made, the unique benefits of setting up the center in dual partnership with a large health system and with a vendor that brings a full spectrum of products and support services to the table, and key business and operational aspects that ASC leaders need to consider when eyeing such partnerships.
The ASCs of today and tomorrow are not the ASCs of yesteryear
In recent years, the dynamics of designing, operating and managing orthopedic ASCs have changed. These changes have been prompted mostly by the growing acuity of patients that opt to be treated at ASCs, since joint and spine surgeries require the installation of larger, more advanced pieces of imaging and operating room equipment than ASCs have traditionally used.
“The ASCs of today require bigger footprints,” Mr. Rosenberg said, adding that in the pivot from inpatient to outpatient surgery, surgical center operators also must plan for longer recovery and observation times for patients to ensure safe discharges.
Another trend in the ASC space is branching out into the growing market for relatively fast surgeries, such as carpal tunnel releases, which typically only last around 20 minutes and are less equipment intensive. But, to improve overall efficiency for the facility, those interventions may require the addition of smaller ORs.
“If you’re going to build a new ASC, you need to take that into consideration,” Mr. Rosenberg said. “And if you’re going to retrofit your current ASC, there are some unique challenges because it’s hard to change the footprint.”
Mr. Rosenberg highlighted that, for them, partnering with a health system to build their ASC within an orthopedic specialty hospital that also allows for inpatient care, they had to be set up, equipped and staffed in resemblance to, and in compliance with the strict regulatory environment of a hospital – a trade off they were willing to make for the expanded capabilities and access.
Partnering with a health system can give new ASC operators a competitive advantage
As ASCs take on more outpatient cases and engage in more clinically complex care, partnering with a health system can be a way to address some of the associated challenges. This is the path that Forté’s management chose after it started building a 250,000-square foot orthopedic hospital and outpatient center just as the COVID-19 pandemic hit, supply chain challenges followed and the complexity of operating in the parapandemic environment became even more evident.
“Health systems have the talent and pool of individuals who are familiar with that clinical complexity,” Mr. Rosenberg recalled. “So being able to tap into the knowledge and expertise of a health system on some of those things was very, very useful.”
However, there were tradeoffs the orthopedic group had to make in the process: “Health systems don’t move at the same pace as most entrepreneurial private practice groups, so we had to acquire the patience to effectively work within the management of the health system to achieve our objectives.” Mr. Rosenberg said the leadership of the new facility also had to share control related to governance, financial performance and clinical decision-making. However, despite these added complexities, it was a price well worth paying for forging a trusted partnership rather than going it alone.
Considering vendors’ partnership potential can help orthopedic ASCs make an optimal choice
For orthopedic ASCs, choosing the right capital and implant vendor focused on the ASC space — or better yet, a true partner — is a key strategic decision. Some ASCs view that process as a pure business transaction, but Forté approached it from the perspective of looking for value that transcended a typical buyer-supplier transactional relationship.
The context driving this decision is that the market for orthopedic devices and instrumentation is crowded with multiple best-of-breed products or services. Yet, for those offerings to work effectively from the vantage point of an ASC, they need to be “stitched together” or linked through complex interfaces of products and contracts. Mr. Rosenberg observed that this makes many of these otherwise excellent products “fragile” because the underlying contracts can be broken, business relationships can be terminated and the interfaces on which they run can be expensive to monitor and build.
“On the other end of the continuum is a more fully integrated approach where when you put all the individual components together, it works seamlessly,” he noted. “We were looking for that and found that Stryker had a mature ecosystem of products and businesses to support an ASC.” Recognizing Stryker’s mature and comprehensive ecosystem vaulted Stryker from fifth in Forté’s evaluation process of potential partners to the top spot.
Having an integrated ecosystem of value meant that if there ever were a problem with any of the products Forté purchased from Stryker, the manufacturer would be able to quickly address those issues. Additionally, because the high-complexity orthopedic ASC is a customer utilizing all of Stryker’s solutions, the company is well-positioned to make available technicians and other experts on an as-needed basis.
“Operationally, Stryker went from a vendor to a strategic partner, because we didn’t only rely on them for their assets — we relied on them for their knowledge,” Mr. Rosenberg said. “That ecosystem became their competitive advantage compared to other vendors and provided us a much greater return because rolling up all of that expertise and all of those assets into unique financing options allowed us to do everything we did.”
Best of all, all interactions between Forté and the manufacturer were channeled through a single point of contact on Stryker’s end, which removed a major point of friction that providers often report when working with vendors.
Planning, accountability and governance are critical for the success of partnered-up ASCs
Leaders of physician practices who are considering opening an ASC in collaboration with a health system can benefit from the lessons that Forté’s management learned along the way. Mr. Rosenberg distilled those insights into three pieces of advice:
- Plan meticulously, ask the right questions, and make sure all key objectives are aligned and agreed to by all parties. “If you’re not aligned, when you start making real decisions, you’ll have problems.”
- Set deadlines and mutual accountability, with real consequences. “Holding people accountable with consequences is critical — otherwise things just don’t happen.”
- Set up an effective governance structure with clear rules of engagement at a local level. This ensures that the ASC is run effectively and efficiently
As far as partnering with vendors, Mr. Rosenberg held up Forté’s relationship with Stryker as a paragon of what ASC leaders should aspire to: “It’s not just a matter of selling us anchors, screws, implants or video equipment. It’s about helping us see what can we do bigger, better, faster and less expensively.”
Marty Rosenberg is a paid consultant of Stryker. The opinions expressed by Mr. Rosenberg are those of Mr. Rosenberg and not necessarily those of Stryker.