1. Volume is down.
“There is a concern out there with volume,” Mr. Carrera says. “Most [specialties] haven’t reported a drop off, but plastic [surgery] businesses have — of about 40 to 50 percent.”
Centers have responded to this concern by implementing self-directed plans, tightening their belts and reorganizing and evaluating, he says.
For example, “If there is a gamble in a facility physically expanding, that project will be put on hold or the center is going to look for alternatives to expanding their space by lengthening hours and days of the week,” Mr. Carrera says.
But ultimately, “It is more important to make sure your center is managed as well as possible” than to worry about the smaller issues your facility faces like staffing, operating capital, supply ordering, collection, construction or volume, he says.
2. Collecting will be more important than ever.
“In regards to coding, billing, and collecting — collecting will be more important than it has been in the past,” says Mr. Carrera. “While some ASCs were content to sit on their accounts receivable in the past, now they will be more aggressive. Many centers are considering outsourcing these services. Their in-house services ran fine for them before but never exceptionally. We (at Pinnacle III) are seeing more interest in our coding, collection, and billing services now than ever before.”
3. There will still be opportunities for strong facilities.
“First, there is still money available for good deals and strong projects. Second, stronger centers are going to have several opportunities as a result of the current market. Lenders say there is money available for strong projects, whether they are start-up centers, mergers, acquisitions or programs,” Mr. Carrera says.
“While weaker centers may be forced to reduce their services or close, stronger centers are going to encounter some attractive financial and developmental opportunities,” he says. “From a financial standpoint, things like purchasing equipment and starting programs will be easier.”
The unsteady market may create some tax benefits, he says.
“From a development standpoint, consolidation will occur through attrition in the market,” says Mr. Carrera. “Strong centers will perhaps be able to pick up physicians and additional partners as other facilities close. Or physicians, who were going to start their own centers or join new ones, may no longer do so. Finally, it also affords stronger surgery centers a second chance to obtain new investors.”
Mr. Carrera (rcarrera@pinnacleIII.com) has 20 years of experience in healthcare and spends much of his time at Pinnacle III offering expert advice regarding operational and financial controls, management and business development. He received his BA in physical therapy from Wayne State University in Detroit and worked for HealthSouth Corp. before becoming the president of Pinnacle III. Learn more about Pinnacle III.
Rob Carrera of Pinnacle III Discusses 3 Trends for Surgery Centers in 2009
1. Volume is down.